The EPI controls what can and cannot be done with the position of trust. It sets out the rights, obligations and obligations of all parties involved. It determines how the service is paid and where the mortgage fees go. An owner can find the EPI in which his loan was grouped, especially during a forced execution procedure. Security is now the owner of the mortgages that are included in the package. The mortgage pool becomes a negotiable asset or mortgage guarantee and is sold on the secondary market. Often the buyer is a trust. Trusts are made up of investors who receive payments from the Trust. Just as your mortgage interest was originally paid to the bank, it now goes to the trust and is part of the payment to investors in security. A service provider (therefore, PSA) collects mortgage payments and distributes the money to investors. Unfortunately, CMBS pooling and service agreements are extremely long for borrowers — sometimes more than 500 pages (usually 100 pages or more of definitions alone). PSAs define the exact rights and responsibilities of each party for the duration of a CMBS operation, including the borrower, the master service that generally processes borrowers` day-to-day requests, the specialized service provider that makes a loan when the borrower becomes insolvent, and investors who generally have little say, but who can generally replace a specific service provider if they feel that the particular service provider is not in the best interests of investors. While PSA`s roles should be standardized across the industry, PPE are all a little different in practice, which has actually exacerbated confusion among Pipe Loan borrowers.
When a mortgage is sold, it is part of a securitized mortgage pool. After the loans have been bundled and sold, the buyer – often a trust – uses a service provider to collect monthly payments and distribute that money to investors. This securitization agreement is referred to as the pooling and service agreement or PSA. The pooling and service agreement is subject to the Security and Exchange Commission (SEC) as long as securitization has been made public. Restrictive pooling and service agreements often prevent lenders and credit providers from changing the structure of a loan, even if it would be in the best interests of the borrower and investors. The lender, such as the bank or mortgage lender, collects hundreds of loans in one package.