A review of commercial mortgage loan servicing best practice in the USA

Abstract

This paper analyses the commercial mortgage loan servicing business in the USA, including historical background, the various loan servicing business models in use, the characteristics of the large third-party loan servicing companies, the duties involved in US-style commercial mortgage loan servicing, the differences between servicing of portfolio (on book) loans and loans securitised in pools, servicing fees and loan servicing technology. Readers considering investing in US commercial mortgages may benefit from information on US servicing practices. Although some of the US loan servicing duties may not be applicable in other countries, the international reader may also benefit from considering specific duties such as collateral review and portfolio surveillance, understanding the differences between portfolio loan and securitised loan servicing, noting the application of technology to operational processes freeing up staff for personal contact with lenders and borrowers, and noting how technology can produce a better servicing product for lender and borrower, through such features as borrower and lender websites and document imaging. Copyright © 2003 Henry Stewart Publications