Credit Servicing

From Open Risk Manual
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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