CFA Level I · CFA Level I Exam · Fixed-Income Securitization
The primary role of the servicer in a securitization is most likely to:
The servicer's main role is to collect payments from the borrowers and pass them on to the SPE or trustee, while also handling delinquencies. Assigning ratings is done by rating agencies, and designing the tranche structure is done by the arranger and its advisers.
- Acollect payments from borrowers and pass them to the SPECorrect
- Brate the tranches issued by the SPE
- Cdetermine the legal structure of the bond tranches
Explanation
The servicer handles collections, handles delinquencies and remits cash flows to the SPE or trustee. Rating agencies assign ratings, and structuring is done by the arranger and its advisers.
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