What Is a Pooling and Servicing Agreement (PSA) In the Mortgage Industry?

A pooling and servicing agreement (PSA) lays out the rules governing a bundle of securitized mortgage loans.

A "pooling and servicing agreement" (PSA) is the legal document that lays out the rights and obligations of specific parties over a pool (group) of securitized mortgage loans.

To understand PSAs, you first need to understand basic mortgage transactions and the securitization process. Most people who take out a home loan sign a promissory note and a mortgage (or deed of trust).

  • Promissory note. A "promissory note" is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment.
  • Mortgage. The "mortgage" (or "deed of trust") provides security for the loan that's evidenced by the promissory note.
  • Securitization. In a process called "securitization," multiple loans, including both the promissory note and the mortgage, with similar characteristics are pooled, often held in a trust, and then sold in the secondary market.

How Pooling and Servicing Agreements (PSAs) Work

The PSA is the contract that governs the relationship between the various parties in the securitization process and controls what can and can't be done with the trust. The PSA will say, among other things:

  • the exact steps needed to create a trust
  • how bundled mortgage loans are transferred into the trust
  • how securities are issued, and
  • the duties, rights, and obligations of each party.

For instance, the PSA might describe the servicer's compensation. Often, a servicer is entitled to retain the late charges, nonsufficient funds (NSF) fees, reconveyance fees, assumption fees, and other fees that it collects.

The PSA will likely also carefully describe the loan servicer's responsibilities about collecting payments, handling loss mitigation (including the authority to modify loans), and foreclosure.

How to Get a Copy of the Pooling and Servicing Agreement

If the securitization is public, the PSA will be filed with the Securities and Exchange Commission (SEC), and you can usually find a copy on EDGAR (Electronic Data Gathering, Analysis, and Retrieval) at www.sec.gov.

However, not all trusts are listed with the SEC, so you might not be able to find the PSA related to your loan using this method.

When to Hire an Attorney

PSAs are very complicated and can be hundreds of pages long. If you're facing a foreclosure and your loan has been securitized, consider talking to an attorney to help you understand the intricacies and the issues surrounding securitization as it pertains to your individual situation.

A foreclosure attorney can also explain different options that might be available to prevent a foreclosure and can tell you if you have any defenses to the foreclosure.

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