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A mortgage servicing rights (MSR) trade conveys the right, and the duty, to service mortgage loans, with the servicing fee, float, and ancillary income, but not the loans themselves. The MSR purchase and sale agreement prices the portfolio, fixes the sale and transfer dates, allocates risk, and governs remedies across bulk, flow, and co-issue trades and full-MSR and excess-spread structures.

The representations and warranties define what was promised; the as-of dates and knowledge qualifiers narrow what can breach. The protection periods, holdback, recourse definition, and indemnification cap decide which losses remain, which remedies survive, and how long the tail runs.

Price is typically quoted as a multiple of the servicing fee on unpaid principal balance. Most is paid on the sale date, with the balance at transfer or on release of any holdback, trued up to the final tape, plus recoverable advances. Price may win the bid; the paper decides whether the economics survive it.

A bulk sale transfers a defined existing portfolio, usually after an interim servicing period. A co-issue (flow) trade transfers servicing as each loan is sold or pooled, through Fannie Mae’s Servicing Marketplace®, Freddie Mac’s Co-Issue XChange®, or Ginnie Mae’s PIIT program.

Excess servicing spread is the part of the servicing fee above the base fee, which the servicer keeps. An ESS buyer acquires that cash flow, subordinate to the agency, while the servicer keeps the duties, the agency relationship, and the base fee. The paper must define what is paid, from which collections, and what happens on payoff, recapture, or servicer default.

For post-delivery transfers, Fannie Mae requires a Form 629 request at least 60 days before the sale or transfer date, whichever comes first. Freddie Mac approves a Subsequent Transfer of Servicing, requested 45 to 60 days ahead. Ginnie Mae must approve a Transfer of Issuer Responsibility, and its guide sets the request timeline. Submission is not consent, so each approval belongs in the closing conditions.

It is a three-party agreement among the servicer, its secured lender, and Fannie Mae, Freddie Mac, or Ginnie Mae. The agency consents to a pledge of servicing rights, while subordinating the lender to the agency. Most agency MSR financings depend on one, and its terms override the deal documents. For excess servicing sales, Fannie Mae uses a subordination of interest agreement (SOIA).

The agency guides set the floor. Generally, a Fannie Mae or Freddie Mac transferee assumes the selling reps and repurchase obligations unless an approved bifurcation leaves them with the originator. A Ginnie Mae transferee Issuer assumes all Guaranty Agreement duties. The indemnity, recourse definition, survival period, and cap decide whether the buyer can push that loss back to the seller.

Tape integrity, collateral and certification status, delinquency pipelines, and advance recoverability all require review. So do escrow and custodial reconciliations, and agency and state compliance. A finding becomes leverage only when it attaches to a condition, a holdback, or a remedy before settlement.

Agency consent, RESPA and Regulation X transfer notices, MERS transfers, P&I and T&I custodial funds, advance reimbursement, loan data, and MSR lien releases must all be sequenced. The sale, transfer, and agency reporting dates bind the seller, buyer, subservicers, custodians, and the agency. One missed handoff can turn a funded trade into a failed transfer.