Loan servicing agent
A loan servicing agent keeps a register of lenders, who is owed what, and handles interest and principal payments to the lenders on the borrower’s behalf.
An unglamorous role; part of the pluming of the financial system for which the agent is paid a mere annuity, and with respect to which the agent, therefore, accepts as little risk as it can. Agency documentation, as is common for trust and agency service providers tend to be needlessly convoluted and, rather like legal opinions, spend most of their length specifying in aggravating and usually outrageous detail every contingency for which the agent is not responsible, and many of life’s vicissitudes the agent might sustain for which the lenders and borrowers are.
Still, whatever your documents say, being a loan service agent can involve quite a lot of risk, if you are in the habit of accidentally repaying almost a billion dollars of principal to lenders when it isn’t due.
See also
- Citigroup v Brigade Capital Management for the cautionary tale to end all cautionary tales.
- Barclays Bank Ltd v WJ Simms a less apoplectic outcome in the English courts
- Gross negligence