The minimum servicing criteria as outlined in Regulation AB for Item 1122 consist of four main categories: General Servicing Considerations, Cash Collection and Administration, Investor Remittances and Reporting, and Pool Asset Administration. These categories describe major components of the servicing function, with each category containing servicing criteria that have been designed to have general applicability to the servicing of all asset-backed securities.
These newly adopted minimum servicing criteria are geared towards today's ever-growing and complex asset-backed securities industry. Previous servicing criteria, such as the USAP audit, was simply "...not designed for the breadth of asset classes included in ABS offerings...and does not address aspects of the servicing function that may be important in servicing asset-backed securities." (1)
(1) Securities and Exchange Commission 17 CFR Parts 210, 228, et al. Asset Backed Securities: Final Rule