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.
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