A servicer is a company that is responsible for collecting payments from borrowers, managing the assets, and enforcing the security interest in the event of a default.
Here are some applications of a servicer in securitisation:
- To collect payments: The servicer collects payments from the borrowers on behalf of the investors. This ensures that the investors receive their interest and principal payments on time.
- To manage the assets: The servicer manages the assets that are being securitised. This includes collecting payments from the borrowers, monitoring the performance of the assets, and enforcing the security interest in the event of a default.
- To enforce the security interest: If the borrowers default on their loans, the servicer can enforce the security interest by selling the assets. The proceeds from the sale of the assets will then be used to repay the investors.
Overall, a servicer is an important part of the securitisation process. It collects payments from the borrowers, manages the assets, and enforces the security interest in the event of a default.