Why Do I need YOU?
JUNE, 2017
by: Kevin Duty

Every so often, during our initial consult call with a potential client, we get asked a question somewhat along the line of the title of this blog. Sometimes it is: “What do you bring to the table that I can’t accomplish myself?” Or, “How do you make the Special Servicer do what I want them to do?”.

To be frank, when we hear these questions, it prompts us to ask a series of probing questions of the borrower to determine; if/when/how many CMBS workouts the borrower has experienced prior to talking with us. Usually, the answer is “None” or “I did one (or more) two or three years ago”.

That is a very revealing statement. Many borrowers have a long resume of CRE experience and may have worked out a loan with a Life Company, Bank or other Lender. Some have even had experience working out CMBS loans in past years. As a result, they think they know what they need to know to proceed on their own. In fairness, some borrowers are very successful working out their loans by themselves. They should be congratulated! Those borrowers achieve something very rare.

However, for most borrowers a few simple facts should be VERY telling;

  1. MANY borrowers who reach out to us do so after they; run into the buzz saw that is CMBS Special Servicing, make no progress with the Special Servicer, can’t understand why, are facing imminent foreclosure and call us begging for us to help them.
  2. Quite a few of our repeat clients are LARGE institutional CRE investors that seek our assistance in a workout scenario.
  3. In some instances, Special Servicers recommend to borrowers that they reach out to us for assistance!

“Having experience in working out other CRE loan products will have little bearing on what will be faced with their CMBS loan”

The reality of CMBS, that we tell virtually EVERY borrower we consult with is that CMBS is unlike ANY other CRE loan product. Having experience in working out other CRE loan products will have little bearing on what will be faced with their CMBS loan. Even having past CMBS workout experience won’t help, much, if that experience was more than 6-12months ago. By its nature CMBS is an evolving industry. Governing rules have/will continue to change. Strategies that were in vogue a year ago are no longer applicable. We even have borrowers that tell us “the servicer said I shouldn’t reach out to you.” OF COURSE they don’t want us involved. That would level the playing field! Why would the lender want the equation to be equal? Getting us involved certainly doesn’t help the Servicer?!? It helps the BORROWER!

So, what do we bring to the table? What can we provide that you can’t do on your own? Simple. 50+ years of experience working in leadership positions in major CMBS Servicing Shops. Not only do we “know them”, WE WERE THEM! That provides us with an INTIMATE knowledge of how CMBS works, PARTICULARLY what goes on behind the scenes that borrowers aren’t even aware of.

In summary, a great analogy for this topic is: We all pay taxes and can read the tax code, but, would you rather go into an IRS audit by yourself, or with a former IRS agent by your side, working for you? And would you get a better outcome on your annual taxes by having a tax expert or by buying the latest version of tax software and doing it yourself?