With the current weak economy, the problem of imminent defaults, or loans that are current but expected to go sour, is becoming more common in CMBS deals.

In these situations, determining what constitutes a loan in imminent default - therefore resulting in a servicing transfer - is left to the judgment of either the master or the special servicers on the affected CMBS transactions. The language typically used in traditional CMBS Pooling and Servicing Agreements (PSAs), which is often open to interpretation, is at the root of the subjective nature of this exercise.

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