Pays Servicer principal, interest & escrow
Retains service fee to cover costs to service Remits principal, security interest and guarantee fee to agent Remits taxes and insurance to appropriate authorities
Conforming: Agency retains a guarantee fee in exchange for accepting default risk Non-conforming: primary structures -pari passu, senior subordinated or seller retains credit risk.
■ If securitized, investors receive principal and stated security coupon interest
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