The servicer is the entity that collects principal and interest payments from obligors and administers the portfolio after transaction closing. Regularly the originator acts as servicer, although this is not always the case. For example, in most Non-Performing Loans (NPL) transactions, specialised servicers tend to carry out this role. Servicing includes customer service and payment processing for the obligors in the securitised pool and collection actions in accordance with the pooling and servicing agreement. Servicing can also include default management, collateral liquidation and the preparation of monthly reports. The servicer is typically compensated with a fixed servicing fee.
Acting in a fiduciary capacity, the trustee is primarily concerned with preserving the rights of investors. The responsibilities of the trustee will vary from one case to the next and are described in a separate trust agreement. Generally, the trustee oversees the receipt and disbursement of cash flow as prescribed by the indenture or pooling and servicing agreement and monitors compliance with appropriate covenants by other parties to the agreement. If problems occur in the transaction (e.g. defaults), the trustee focuses particular attention on the obligations and performance of all parties associated with the securities issued, particularly the servicer and the credit enhancer. Throughout the life of the transaction, the trustee receives periodic financial information from the originator/servicer delineating amounts collected, amounts charged off, collateral values, etc. The trustee is responsible for reviewing this information and ensuring that the underlying assets produce adequate cash flow to serve the securities issued. The trustee is also responsible for declaring default or amortisation events.
Investment banks mainly perform structuring, underwriting and marketing of the securitisation transaction.
Tax and accounting advisers
These advisers provide assistance on the accounting and tax implications of the proposed structure of the transaction. Usually, issuers aim to choose structures that will allow minimising the tax impact on the securities issued.
Usually, the securities issued are assessed by a rating agency to allocate a rating to them. A wide range of investors require a minimum rating of investment grade or higher. The rating process is currently dominated by the rating agencies: Standard & Poor's, Moody's, Fitch or Dominion Bond Rating Service. They use their accumulated expertise, data and modelling skills to assess the expected loss of debt securities issued by the securitisation vehicle. In general, rating agencies review the following factors:
- Quality of the pool of underlying assets in terms of repayment ability, maturity diversification, expected defaults and recovery rates;
- Abilities and strengths of the originator / servicer of the assets;
- Soundness of the transaction's overall structure, e.g. timing of cash flow (or mismatch) and impact of defaults;
- Analysis of legal risks in the structure, e.g. effectiveness of transfer of title to the assets;
- Ability of the asset manager to manage the portfolio;
- Quality of credit support, e.g. nature and levels of credit enhancements.
In Luxembourg the annual accounts of securitisation vehicles have to be audited by one or more independent auditors ("Réviseurs d'entreprises agréés").
Calculation and reporting agents
This entity calculates the waterfall principal and interest payments due to creditors and investors.