Business and Personal Finance Dictionary

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• SERVICING SPREAD
  
  A percentage of a loan’s or security’s principal amount that is paid to a third party as compensation for servicing. For example, in a mortgage pass-through security, the interest paid to the investors is typically one-half percent less than the weighted average coupon rate paid by the underlying borrowers. In that example, the one-half percent difference is the servicing spread.
  
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