Backup Servicing

Reliable Backup Servicing for Continuity in Structured Finance and Credit Facilities

Backup Servicing is a contingency solution that ensures continuity of loan administration in the event the primary servicer becomes unable or unwilling to perform its duties. Concord’s Backup Servicing offering is designed to act as a “plan B” for capital markets, structured finance, and private credit transactions, providing a reliable and seamless transition path so that investor cash flows, borrower relationships, and reporting integrity are preserved in times of disruption. The service is built to protect your loan portfolio and ensure the continuity and stability of your loan servicing operations. A well-structured backup servicer role is a critical safeguard in securitization and credit facilities, often required by rating agencies and lenders. 

Concord’s Backup Servicing includes:

• Trigger Event Design & Readiness: Define the contractual events (e.g., primary servicer default, insolvency, performance breach) that would trigger the backup servicer’s takeover, and maintain continuous readiness to assume operations.
• Data Synchronization & Shadow Servicing: Periodic (or real-time) replication of servicing data from the primary servicer (loan balances, payment history, customer accounts, delinquencies) to Concord’s systems to ensure currency and transition readiness.
• Conversion Management & Portfolio Onboarding: A structured plan for swift conversion of the servicing portfolio, including system integration, data ingestion, borrower transition, payment processing setup, and continuation of customer communications.
• Continuity of Collections & Cash Flow Management: Once active, Concord processes borrower payments, remittances, reconciliations, delinquencies, default work-outs, and distributions, minimizing interruption.
• Operational Governance & Compliance: Maintain robust controls, audit trails, regulatory compliance, notice to borrowers, and communication protocols during transition and steady-state phases.
• Reporting, Analytics & Stakeholder Updates: Provide transparent reporting to investors, trustees, rating agencies, and other stakeholders both during the transition and on an ongoing basis, ensuring trust in the continuity of servicing.

Key Benefits:

• Continuity of Cash Flows & Minimized Disruption: The risk of payment interruption or servicing gaps is materially reduced, protecting the value of the asset pool and ensuring investors continue to receive distributions without delay.
• Investor Confidence & Structuring Requirement: Many structured finance and fund lenders require a backup servicer in the capital stack to satisfy rating agency, trustee, or investor governance standards.
• Reduced Operational & Transition Risk: With pre-built readiness, Concord can quickly and efficiently convert operations if needed, reducing the time and cost associated with emergency takeover.
• Governance & Oversight Assurance: Acting as a neutral, third-party servicer during distress events provides investors with better assurance of fairness, control, and auditability of servicing actions.
• Mitigation of Servicer Credit Risk: The existence of a backup servicer acts as a hedge against servicer failure, insolvency, or underperformance—protecting investor interests even if the primary servicer falters.
• Support in Portfolio Transfers & Transactions: As portfolios change hands (e.g., in stressed debt sales or securitization transitions), Concord’s backup servicing capabilities make transitions smoother and more credible. Concord is already positioning itself for portfolio acquisitions and transitions in ABS and credit markets. 
• Alignment with Structured Finance Best Practices: Backup servicing arrangements (cold, warm, hot) are an established best practice in securitization, ensuring that a performing entity remains on standby to take over with minimal friction.