Credit Servicing
From Open Risk Manual
Definition
Credit Servicing is the management or administration of existing credit agreements such as mortgages or other loans. It means one or more of the following activities:
- collecting or recovering from the Borrower, in accordance with national law, any payments due related to a creditor’s rights under a credit agreement or to the credit agreement itself
- renegotiating with the borrower, in accordance with national law, any terms and conditions related to a creditor’s rights under a credit agreement, or of the credit agreement itself, in line with the instructions given by the Credit Purchaser, where the Credit Servicer is not a credit intermediary as defined in Article 3, point (f), of Directive 2008/48/EC or in Article 4, point (5), of Directive 2014/17/EU
- administering any complaints relating to a creditor’s rights under a credit agreement or to the credit agreement itself
- informing the borrower of any changes in interest rates or charges or of any payments due related to a creditor’s rights under a credit agreement or to the credit agreement itself
Issues and Challenges
- In the context of Securitisation one of the requirements for high quality transactions is that the underlying exposures in the pool need to be serviced according to similar servicing procedures
