TeachMeFinance.com - explain excess loan servicing
excess loan servicing -- an asset established when loans are sold to yield a rate to the buyer that is higher or lower than the original contractual rate and the loan seller retains the servicing of the loans. The present value of the difference between the amount to be collected from the borrower and the amount to be paid to the purchaser of the loans (the point spread differential), less normal servicing costs, is the excess servicing amount recorded as the seller's asset at the time of sale. The excess servicing amount increases the gain or decreases the loss on the sale of the loan.
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