Commercial Mortgage-backed Security - Industry Participants

Industry Participants

Primary servicer (or sub-servicer) (Also see primary servicer)

In some cases the borrower may deal with a primary servicer that may also be the loan originator or mortgage banker who sourced the loan. The primary servicer maintains the direct borrower contact, and the master servicer may sub-contract certain loan administration duties to the primary or sub-servicer.

Master servicer

The master servicer’s responsibility is to service the loans in the pool through maturity unless the borrower defaults. The master servicer manages the flow of payments and information and is responsible for the ongoing interaction with the performing borrower.

Special servicer (Also see special servicer)

Upon the occurrence of certain specified events, primarily a default, the administration of the loan is transferred to the special servicer. Besides handling defaulted loans, the special servicer also has approval authority over material servicing actions, such as loan assumptions.

Directing certificateholder / controlling class / B-piece buyer

The most subordinate bond class outstanding at any given point is considered to be the directing certificateholder, also referred to as the controlling class. The investor in the most subordinate bond classes is commonly referred to as the "B-piece buyer". B-piece buyers generally purchase the B-rated and BB/Ba-rated bond classes along with the unrated class.

Trustee

The trustee’s primary role is to hold all the loan documents and distribute payments received from the master servicer to the bondholders. Although the trustee is typically given broad authority with respect to certain aspects of the loan under the PSA , the trustee typically delegates its authority to either the special servicer or the master servicer.

Rating agency

There will be as few as one and as many as four rating agencies involved in rating a securitization. Rating agencies establish bond ratings for each bond class at the time the securitization is closed. They also monitor the pool’s performance and update ratings for investors based on performance, delinquency and potential loss events affecting the loans within the trust.