Cleanup call
Asset-Backed Securities glossary · Asset Backed Securities
Definition
The optional right, typically held by the servicer or sponsor, to redeem all outstanding bonds when the pool balance has declined to a small threshold (commonly 10%).
Cleanup call in plain English
A cleanup call is an option — a right, not an obligation — that lets the servicer or sponsor pay off all the remaining bonds early once the loan pool has shrunk down to a small leftover amount, often around 10% of its original size. The reason is practical: running a deal costs money and effort, and once only a tiny sliver of loans is left, it's not worth the hassle of keeping the whole machine going. It's like a store that stays open all season but, once only a handful of items remain, just buys the rest itself and closes up. Investors get paid off in full, and the deal is wound down cleanly.
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