A servicing fee is a fee that is paid to the servicer of a securitisation. The servicing fee is typically paid by the issuer of the securities and is used to compensate the servicer for its services.
Here are some applications of a servicing fee in securitisation:
- To compensate the servicer: The servicing fee is used to compensate the servicer for its services. These services include collecting payments from the borrowers, managing the assets, and enforcing the security interest in the event of a default.
- To cover the costs of servicing: The servicing fee is also used to cover the costs of servicing the securitisation. These costs include the costs of collecting payments from the borrowers, managing the assets, and enforcing the security interest in the event of a default.
- To provide a profit for the servicer: The servicing fee can also provide a profit for the servicer. This is because the servicer typically charges a fee that is higher than the costs of servicing the securitisation.