Mortgage Excess Servicing
What it is:
How it works (Example):
The annual yield on an MBS is divided into three components: interest and principal for the holders and fees for the servicer and underwriter. Excess mortgage servicing is the percentage yield left over once these three payments have been made to the appropriate people.
For example, suppose an MBS pays an annual yield of 10%. The holder receives 9%, the servicer receives 0.30%, and the underwriter receives 0.20%. The mortgage excess servicing would be 0.50% (10% - 9% - 0.30% - 0.20% = 0.50%).