Pooling and servicing agreement (PSA)
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
The primary legal document governing an ABS transaction, specifying trust operations, bondholder rights, servicer obligations, and waterfall rules.
Pooling and servicing agreement (PSA) in plain English
The Pooling and Servicing Agreement (PSA) is the master rulebook, the giant contract, that governs an asset-backed deal from start to finish. It spells out how the trust holding the loans operates, what rights investors have, what the servicer (the company collecting payments) must do, and the "waterfall," meaning the exact order in which incoming cash gets paid out. Think of it as the constitution plus instruction manual for the whole transaction: if any dispute or question comes up, everyone flips to the PSA for the answer. Nothing important happens in the deal unless this document says how.
Also called: PSA
Practice Pooling and servicing agreement (PSA)
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