Puerto Rico Pooling and Servicing Agreement (PSA) is a legal document that outlines the terms and conditions for the sale and servicing of mortgage loans by a company to a trustee for inclusion in a trust fund. The PSA serves as the governing agreement between the company and the trustee, ensuring compliance with applicable laws and regulations throughout the mortgage loan transfer process. This agreement involves the securitization of mortgage loans, allowing the company to transfer these loans to a trust fund, which is managed by the trustee. By pooling multiple mortgages, the company can create mortgage-backed securities (MBS) or collateralized mortgage obligations (CMO), which can be sold to investors. The Puerto Rico PSA typically includes the following key components: 1. Mortgage Loan Sale: The agreement delineates the terms under which the company sells the mortgage loans to the trustee. It outlines the eligibility criteria, such as minimum credit score, loan-to-value ratio, and borrower qualifications. 2. Transfer and Assignment: This section specifies the legal process of transferring the mortgage loans from the company to the trustee. It covers the necessary documentation, endorsements, and record-keeping requirements. 3. Servicing Rights: The PSA defines the roles and responsibilities of the loan service, who collects monthly payments, handles borrower inquiries, and performs administrative tasks on behalf of the trustee. It often includes provisions for the compensation and termination of the service. 4. Trust Fund Establishment: The agreement establishes the trust fund, which holds the mortgage loans. It outlines the rights and obligations of the trustee, including the distribution of principal and interest payments to investors. 5. Representations and Warranties: This section outlines the representations and warranties made by the company regarding the quality and accuracy of the mortgage loans being sold. It addresses the potential risks associated with the transferred loans. 6. Default and Remedies: The PSA includes provisions for dealing with loan defaults and breaches of the agreement. It specifies remedies available to the trustee and investors, such as repurchase of defective loans or replacement with substitute loans. 7. Indemnification: This section covers the indemnification obligations of the company to the trustee and investors in case of losses, damages, or liabilities arising from the mortgage loans. Different types of Puerto Rico SAS may exist, depending on the specific characteristics of the mortgage loans being securitized. Some common variations include Prime SAS, Subprime SAS, Adjustable Rate Mortgage (ARM) SAS, Fixed-Rate Mortgage SAS, and Jumbo Loan SAS. Each type caters to a different segment of the mortgage market, with varying risk profiles and investor preferences. In conclusion, the Puerto Rico Pooling and Servicing Agreement contemplates the sale of mortgage loans to a trustee for inclusion in a trust fund. It specifies the terms and conditions of the transfer, servicing, and management of the mortgage loans, ensuring compliance with legal requirements and providing clarity to all parties involved in the securitization process.
Puerto Rico Pooling and Servicing Agreement contemplating the sale of mortgage loans to Trustee for inclusion in the Trust Fund by the company
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