- SERVICER: party that collects principal and interest payments when mortgages or other assets are securitized and sold to investors. Among its administrative duties, the servicer forwards payments to investors and transmits periodic activity reports to credit-rating agencies and investors owning asset-backed or mortgage-backed securities. In banking there are several distinct types of servicers: a primary servicer performs routine servicing and initiates collection proceedings on past-due loans; a master servicer oversees servicing activities when assets from multiple originators are pooled together in a single securitization; a sub-servicer collects payments on behalf of a master servicer; a back-up servicer stands ready to step in should the primary servicer fail in its duties; a special servicer handles collection and foreclosure efforts on delinquent loans and other problem loans.
- collateral control in asset-based lending, by which a lender (or a factor in factoring) monitors its collateral position. Collateral control, also known as policing, can be done by the lender or by a third party. It (1) assures an account is in good standing; (2) confirms shipments of goods; (3) protects against diversion of funds; and (4) provides a monthly aging schedule of receivables.
In general: regular maintenance and routine repairs to equipment.
Finance: act of billing, collecting payment, and filing reports on a loan. For example, servicing for a mortgage loan includes loan analysis, default follow-up, and management of tax and insurance escrow accounts. It is often performed for a fee by mortgage bankers after loans are sold to investors.
the act of billing, collecting payment, and filing reports for a mortgage loan; may also include loan analysis, default followup, and management of tax and insurance escrow accounts. Often performed for a fee by mortgage bankers after loans are sold to investors.
Example: Gray, a mortgage banker, originates loans and markets them in groups to large investors. On each loan originated, Gray receives a monthly fee for servicing, thereby freeing the investors of loan management burdens. The fee is 3/8 of 1% of the loan balance.
