Kurt Johnson: No. And we do kind of mark with our banks on a pretty regular basis, and they’re very consistent with our market, our mark-to-market rather. And keep in mind, we do use third-party valuation firms and we tend to be right down the middle in terms of valuation. So we are very aligned with our banks.
Eric Hagen: Yes. One more if I may. Can you talk about how you’d recapture expectations or even the framework around recapturing loans differs for the MSRs that you buy from third parties like you’re onboarding right now or in the process of onboarding versus the loans that you originate in-house?
Christopher Marshall: Yes. I’d say the loans that we buy from others. This is Chris, Eric, good morning.
Eric Hagen: Good morning.
Christopher Marshall: The loans we buy for others, our recapture rates tend to run at about double the industry average. So we have always set the pace for the industry in terms of that. So we buy a pool from someone else, we’ll recapture it in the 50% level for someone who has already done a transaction with us that we’ve already refinanced, we capture it, approaching 80%. So there is a difference. But even with a freshly purchased pool originated by someone else, we’re going to recapture twice the industry average.
Jay Bray: And for the pools we’re buying, I think it depends on the coupon, right. Ultimately how in the money or out of the money, the portfolio is. But obviously it’s modeled in that manner. So every pool is loan level kind of from a modeling standpoint. And the recapture answer will depend on where the overall portfolio is and where the coupon is within that portfolio.
Christopher Marshall: Every potential purchase we look at, we look at our past history recapturing loans from that seller. So we model – our expected recapture is obviously one of the major factors in price, in assembling our bid. And when we back test, how well we perform against those models, it’s extremely very, very strong performance. I mean the gap between what we expect and what we actually see is extremely close.
Eric Hagen: Yes. Thanks for all the good detail there. Thank you, guys.
Operator: And our next question comes from Derek Sommers from Jefferies. Your line is now open.
Derek Sommers: Hi. Good morning, everyone. How do you evaluate allocating capital towards bulk MSR purchases versus scaling the correspondent channel? And how dynamic is that capital allocation?
Jay Bray: We look at it all the time, I think at the moment our view is the bulk opportunities. As we’ve discussed, there’s a lot of supply, there’s significant return opportunities there. And that’s where we see at the moment, where we should be allocating more capital. Correspondent is, it’s a channel that we like, it’s a channel that we’re active in. But we’re really – we look at this, frankly on a daily basis, formally on a weekly basis from a capital allocation standpoint and make the decisions based on where we think the best opportunity is.
Derek Sommers: Got it. Thank you. And then one more quick one, will the 75% interest rate hedge be kept on for second quarter?
Christopher Marshall: Yes. You should assume that that hedge is – we’ve talked about expanding our hedge at the appropriate time and we think this was the appropriate time to do it. So for the foreseeable future that it will be our position. It may not be forever, but you should not expect any change in that position.
Derek Sommers: Got it. Thank you very much.
Operator: Thank you. And I am showing no further questions. I would now like to turn the call back over to Jay Bray for closing remarks.
Jay Bray: Thank you, guys. Really appreciate you joining the call. Have a great day and we will certainly be around for additional questions.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
