FSR Insights: The impact of servicer advancing on private label residential mortgage-backed securities (RMBS)

August 2013
  • Print-friendly version
FSR Insights: The impact of servicer advancing on private label residential mortgage-backed securities (RMBS)

At a glance

Investors who own or purchase private label residential mortgage-backed securities (RMBS) should pay attention to the potential impact of servicer advances on the future cash flows of mortgage-backed securities.

Investors who own or purchase private label residential mortgage-backed securities (RMBS) should pay attention to the potential impact of servicer advances on the future cash flows of mortgage-backed securities.

Although an asset-backed bond may be paying timely principal and interest and have sufficient credit enhancement, a high servicer advance level can be a signal the servicer may stop or reduce advancing at some point in the near future causing the security to experience payment shortfalls.