Why it’s so important?
Pool of mortgages that constitute the collateral for CMBS is serviced under the terms of a Pooling and Servicing Agreement (PSA). The PSA describes in detail how the loans are serviced. The PSA is an incredibly detailed and complex document. A typical PSA can exceed 500 pages in length.
The PSA is not generally made available to borrowers or others although many PSAs are filed with the SEC. Each CMBS pool has its own PSA document which, while similar to other PSAs, will have its own specific deal terms.
The PSA typically requires all CMBS servicers to act in accordance with a “servicing standard” that is no less rigorous than the standard they use to service their own loans. The PSA also requires the servicers to meet REMIC requirements and to protect the bondholders.