Dear All:
I am so confused among these terms: the seller, the issuer and the servicer. Could you please give an example. is the servicer and the seller the same?
thank you so much for your time.
Ford gets receivables for the cars they sell. Ford sells these receivables to an ibank. Ford is the seller. Ibank gathers the receivables, securitizes them, and issues the ABS to investors, so the ibank is the issuer. Ford is in charge of collecting the receivables and giving it to the ibank, so Ford is the servicer.
I haven’t looked at this section for a while, so someone correct me if I’m wrong.
The seller is typically the originator of the assets, i.e. Ford in the above example. The seller transfers the assets to the issuer, typically a bankruptcy remote SPV. The servicer is often an affiliate of the seller, but can be a third party. The servicer is responsible for the ongoing administration of the asset pool including any invoicing, collections, reposessions, reporting, etc. There’s actually at least one other party to any securitization, the trustee, but I don’t believe that’s covered in the curriculum. The trustee administers the SPV and deals with payments to bondholders, etc.
look at the diagram in the text book. If I remember right it is in a blue box…