Improving MSR Pricing Using Cloud-Native Loan-Level Analytics (Part II)
- MSR investors are more exposed to acute climate risk than whole loan or securities investors are. MSR investors are not in a favorable position to recoup cash flows lost to climate disruptions.
- Climate risk can be acute, chronic, or transitional. Each affects MSR values in a different way.
- Integrating climate scenario analysis into traditional credit and prepayment modeling – both of which are critical to modeling MSR cash flows and pricing — requires a loan-by-loan approach.
- Climate risk cannot be adequately expressed or modeled using a traditional rep-line approach.
