Servicing Process Flow Example

Proceeds are invested to earn Float (interest) income between the collection of the payment from the customer and remittance. Typically between 5 and 10 days.

Pays Servicer principal & interest (6%)

Remits principal and 5.65% in

Remits principal and 5.50% in

Remits principal and 5.65% in

Remits principal and 5.50% in

interest

interest

Servicer

k

Agency or Pass

Investors

r

Thru Vehicle

r

(Bond Holders)

Retains 35 bps of 6% coupon to cover costs to service Holds Escrow deposits at no cost until remitted

Agent retains a guarantee fee of 15 bps in exchange for default risk Pass thru vehicle retains portion of cash flows to absorb default risk

■ Investors receive principal and 5.50% in coupon payments for initial investment

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