In one sentence
In a securitization, the party holding the loans for the benefit of bondholders and administering the trust per the governing documents.
The longer version
The trustee holds legal title to the securitized loans and administers distributions to bondholders under the pooling and servicing agreement. It is a fiduciary role defined by the deal documents.
Trustee requirements shape certain loan-level mechanics, especially around assumptions, modifications, and defeasance.
Common questions
- What does a trustee do in a securitization?
- Holds the loans for the benefit of bondholders and administers the trust under the governing documents, including distributions and reporting.
- Does the trustee service the loans?
- No. Servicers administer the loans. The trustee oversees the trust and acts if a servicer fails to perform.
- Is a securitization trustee the same as a deed of trust trustee?
- No. A deed of trust trustee holds title as security for a single loan. A securitization trustee holds a pool of loans for investors.
Keep reading
- How life companies run commercial mortgage operationsThe long servicing tail.
- Loan participations: a working guideLead and participant, document flow, ongoing obligations.
- The post-closing audit trailWhat examiners ask for and how to have it ready.
- Commercial loan softwareWhere this sits in the lending stack.