How do you see workouts trending in the next year?
[Ann Hambly answers] “Put yourself in a position where everything you did was subject to scrutiny by a group of people with very different motivations than yours. This is the position a CMBS special servicer is in. And as a result of being second-guessed for everything they’ve done in the past few years, they tend to be very careful. What does this have to do with workout trends in 2013 and beyond? Everything.”
“When the workout selected by the special servicer is the best option for all certificate holders, there’s little likelihood of future scrutiny. Now let’s take an over-leveraged property and assume the special servicer agrees to a discounted pay-off with the borrower. No matter what the number is, another bond holder in the pool could possibly second-guess the decision and the specific dollar amount of the discounted pay-off…”