By Ann Hambly –
Now that we are two weeks into the new NFL season, it again becomes clear how important a good quarterback is to winning the game. A good quarterback is only as good as the game plan laid out weeks in advance of the big game.
In CMBS, a borrower advocate is very similar to the quarterback and can certainly make the difference between winning and losing the big “game”, only there is a lot more at stake in this game! That means you should choose your advocate very carefully.
Back in 2005, 1st Service Solutions was the only CMBS borrower advocate. During the early years of CMBS defaults (2008, 2009 and 2010), there were many people in the industry that spent their time originating CMBS loans, being a lawyer for a CMBS loan, or even a broker and since that wasn’t lucrative at that time, they hung a shingle outside and called themselves a borrower advocate. Some of these new “borrower advocates” have never worked in servicer shop, have never sat in a servicer credit committee and are virtually learning the rules of the game along with the borrower.
Do special servicers like borrower advocates? The answer is YES and NO!
Yes, because a knowledgeable borrower advocate helps set the borrowers expectations about what will be expected of them as they go thru the restructure process. A knowledgeable borrower advocate will spend time educating the borrower about what can and can’t be done in CMBS and much like a football game, will help lay out a good game plan ahead of time. This not only saves time for the special servicer but really set the playing field for a game that can be played by both parties.
NO because there are so many inexperienced advocates. The special servicer winds up having to spend their time negotiating with the advocate and explaining to them why certain requests didn’t work – basically educating the advocate. Also, consider for a minute that the borrower is like a defendant in a court case and the special servicer is the plaintiff (given a defaulted loan). The special servicer would much prefer that the borrower defend themselves as opposed to having a knowledgeable advocate working with them; especially one that knew the judge and knew his/her hot buttons.