Company: WFC-PC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0000072971-25-000201
Chunk: 151

Company: WELLS FARGO & COMPANY/MN
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 6
Chunk 151
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-agency portion of our commercial mortgage third-party servicing business.Table 6.2 provides key weighted-average assumptions used in the valuation of residential MSRs and sensitivity of the current fair value of residential MSRs to immediate adverse changes inthose assumptions. See Note 12 (Fair Value Measurements) for additional information on key assumptions for residential MSRs.Table 6.2:  Assumptions and Sensitivity of Residential MSRs($ in millions, except cost to service amounts)Jun 30, 2025Dec 31, 2024Fair value of interests held$6,417 6,844 Expected weighted-average life (in years)6.46.4Key assumptions:Prepayment rate assumption (1)8.1%8.1 Impact on fair value from 10% adverse change$(186)(191)Impact on fair value from 25% adverse change(448)(461)Discount rate assumption9.7%10.1 Impact on fair value from 100 basis point increase$(264)(270)Impact on fair value from 200 basis point increase(505)(519)Cost to service assumption ($ per loan)103 103 Impact on fair value from 10% adverse change(128)(134)Impact on fair value from 25% adverse change(319)(334)(1)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

Wells Fargo & Company85

Note 6:  Mortgage Banking Activities (continued)

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others, which might magnify or counteract the sensitivities.We present information for our managed servicing portfolio in Table 6.3 using unpaid principal balance for loans serviced and subserviced for others and carrying value for owned loans serviced.As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses. The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors and are generally reimbursed within a short