Servicing asset
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
The economic right to future servicing fees in excess of fair compensation for servicing.
Servicing asset in plain English
For doing all that collection work, a servicer earns a fee. A servicing asset is the value of the slice of that fee that's MORE than what it actually costs to do the job — in other words, the built-in profit from servicing, treated as something you own and can put a price on. Imagine you're paid $100 a month to mow a lawn but it only costs you $60 in time and gas; the extra $40 a month, stretching into the future, is a valuable thing you could even sell to someone else. Because that future profit stream has real worth, accountants let the servicer book it as an asset on the balance sheet.
Learn these first
Related Asset-Backed Securities terms
Asset-Backed Securities practice questions · Asset-Backed Securities flashcards · Asset-Backed Securities study guide