Servicing a wrap: who collects, who proves the underlying got paid

Both setups exist and they behave very differently under stress.

The tighter one is a servicer that collects the full 2,600, disburses the underlying 1,800 directly to the senior lender, and remits the 800 spread to the seller. The buyer's money never sits in the seller's account. That's the version a buyer's attorney will push for, and the version that makes the wrap defensible if things go sideways later. The looser one is a covenant in the wrap note that the seller will keep the underlying current and provide statements on request, plus a right for the buyer to cure the underlying directly and offset against the wrap payment. That's weaker, because by the time the buyer discovers a missed payment the arrears already exist.

On your exposure: you're handling funds owed to a lender you have no contract with, so your authorization comes entirely from the servicing agreement and any written arrangement the seller has in place with the senior lender. Whether a servicer can even make payments into someone else's loan without triggering questions depends on that lender's own rules, and you'd need to confirm what they'll accept in writing rather than assume a third-party payment posts cleanly. Get a lawyer in your state to look at whether your role creates any duty to the buyer beyond the agreement text, because that answer varies.

The piece your setup doesn't address is escrow. If the underlying has taxes and insurance impounded, the senior lender's payment can change every year and your 1,800 becomes 1,940 while the buyer's 2,600 stays fixed. The spread absorbs it until it doesn't. Write an annual reset mechanism into the wrap or the seller's yield erodes without anyone noticing.

The offset right sounds good on paper but I'd want to know how a buyer even finds out the underlying is behind. Nobody sends the buyer a statement on a loan he isn't on. Unless the seller signs an authorization letting the buyer call the lender for status, the covenant is a promise you can't audit until a notice shows up on the door.