In one sentence
In securitized structures, the servicer administering performing loans and passing troubled ones to special servicing.
The longer version
The master servicer handles day-to-day administration of a securitized pool: payments, escrows, reporting, and monitoring. When a loan sours past a defined trigger, it transfers to the special servicer.
The master servicer's records and the transfer file matter enormously when a loan moves to special servicing under stress.
Common questions
- What does a master servicer do in CMBS?
- Administers performing loans in a securitization, collects and remits payments, and advances certain payments to bondholders when borrowers miss them.
- What is a servicing advance?
- A payment a master servicer makes to bondholders or for property expenses when a borrower does not pay, recoverable later from the loan.
- When does a loan move from the master servicer?
- When a defined trigger occurs, such as a default or imminent default, the loan transfers to the special servicer.
Keep reading
- How life companies run commercial mortgage operationsThe long servicing tail.
- The post-closing audit trailWhat examiners ask for and how to have it ready.
- Loan participations: a working guideLead and participant, document flow, ongoing obligations.
- Commercial loan softwareWhere this sits in the lending stack.