CMBS Workouts: Truth or Fiction?

CMBS Workouts: Truth or Fiction?

Like the mythical Unicorn of days gone by, many people say that they know people that have successfully completed positive CMBS Workouts, but few have first-hand experience.

As restrictive as CMBS Loan Servicers, and, REMIC (“Real Estate Mortgage Investment Conduit”) rules are, CMBS Workouts are, to say the least, difficult and very complex to complete. Many of our clients call us after having tried to complete CMBS Workouts on their own, only to throw up their hands in frustration before seeking our assistance.

There are definite DO’s and DONT’S to successful CMBS Workouts. The “lender” (Noteholder) on your CMBS loan is NOT your local bank. In addition to the inherent restrictions of REMIC rules, CMBS is NOT a relationship based business. The Servicer is not concerned about the borrower or their interests in the collateral property(s).

What you say, what you DON’T say, how and when you say it are all CRITICAL factors in working with your servicer to achieve CMBS Workouts. Unless you have a REALLY big loan, complex, convoluted structures are often discarded simply out of convenience by the servicer. Simpler more “straight forward” structures tend to be more successful.

The Servicer holds all the leverage and, pursuant to your loan docs, doesn’t even have to talk to you. The key to mythical CMBS Workouts is approach, structure, and having an experienced guide to help you navigate the murky waters that are CMBS lending.

If you have questions about your situation/loan, and think you might need some help, give us a call, we are happy to offer every client a free, no obligation consultation. We won’t hit you with high pressure sales, and we won’t try to take your money if we can’t add value to the equation.