Merrowent Mortgage

Merrowent Mortgage is a fictional residential mortgage servicer that does not originate loans; it services an existing, seasoned book on behalf of fictional investor pools and portfolio owners. Every month it collects principal and interest, administers escrow, disburses property tax and insurance, manages delinquency and loss mitigation, and processes prepayments and payoffs. Its income is a servicing fee of 22 to 47 basis points on an unpaid principal balance of about $2.0 to $2.2 billion across some 6,500 loans, so the fee it earns is a thin slice of the balance it services. The book runs off gently as prepayments and payoffs season it.

Operating Profile

• Servicing cadence: each active loan generates one monthly principal-and-interest plus escrow payment and one month-end portfolio snapshot.
• Escrow posture: every account is a running ledger, so each month closes at the prior balance plus what was collected less what was disbursed.
• Delinquency posture: servicing status moves month to month through Active, Delinquent, Forbearance and Reinstated, and liquidation always follows foreclosure.
• Credit spread: about 6.1% of loan-months sit 30-plus days past due, from 3.6% at Super Prime to 13.4% at Subprime.
• Payment posture: about 94% of payments post on time, 5.7% post late with a 4% fee capped at $125, and 0.4% are missed and collect nothing.
• Modelling notes: the borrower file lists every relationship, and adjustable-rate loans hold one indexed rate rather than re-amortising at each reset.

Recent Business Events

• 1Post-holiday delinquency rose modestly across the book before easing into spring, a normal seasonal pattern for residential servicing.
• 2The annual escrow analysis repriced each borrower's deposit in their own review month, lifting accruals where tax and insurance premiums had risen.
• 3Steady prepayment and payoff activity produced gradual runoff of serviced balance, taking the book from 6,500 loans to 6,202 over the two years.