A backup servicer is a company that is appointed to take over the servicing of a securitized loan portfolio if the primary
servicer is unable to do so. The backup servicer is typically appointed in the
securitization transaction documents and is typically a financial institution or other experienced servicer.
The backup servicer plays an important role in ensuring the continued servicing of the loan portfolio in the event that the primary servicer is unable to do so. The backup servicer is typically required to have the same level of expertise and experience as the primary servicer and to be able to take over the servicing of the portfolio without interruption.
The appointment of a backup servicer is an important risk mitigant for securitization transactions. It helps to ensure that the loan portfolio will continue to be serviced even if the primary servicer is unable to do so. This can help to protect the interests of investors in the securitization transaction.