Servicer
Asset-Backed Securities glossary · Asset Specific Nuances
Definition
The party responsible for collecting receivables, administering delinquencies, and processing payments.
Servicer in plain English
The servicer is the company that does the day-to-day grunt work of running the loans: collecting monthly payments, chasing people who fall behind, and passing the cash along to the bondholders. The investors who own the bonds don't want to phone thousands of borrowers themselves, so they pay a servicer to handle it — like a property manager who collects rent and deals with tenants so the landlord doesn't have to. How well (and how fairly) the servicer collects directly shapes how much money actually reaches investors, so a strong servicer really matters.
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