Beware

Feb 23, 2016Blog

If you are paying your CMBS loan off at maturity and you previously modified your loan – BEWARE!

Most modifications contain conditional waiver of some or all of the default interest and late fees owing at the time of the modification. These amounts were only waived if the loan never goes into default again (that was the condition of the waiver). At the time of any future default, all conditionally waived default interest and late fees are immediately due.

So, in the process of refinancing your loan at maturity, if you miss the payoff by just a few days (or the expiration of your grace period), you are technically in default (maturity default). All that conditionally waived default interest and late fees will now be due!

Plus, don’t forget about the late fee you will be charged on the balloon payment. I wrote a separate blog about that.

We are seeing this happen at maturity now on a regular basis! Beware!