Fitch Ratings has issued the first of a series of reports that address recent investor allegations about “servicer specific deficiencies.”
The reports review investor concerns about strategies used by special servicers to dispose of securitized distressed commercial mortgage assets, Fitch said.
The ratings agency is carefully assessing the matter, which has “risen in recent months around conflicts of interest” between the CMBS special servicers and investors.
According to senior director, Adam Fox, Fitch is doing its homework by gathering data and feedback from special servicers.
Topics discussed include information disclosure, the use of affiliates and fees, transparency of information on workouts and, “most notably of late, how conflicts of interest are mitigated,” he said.
Fitch’s first expanded report focuses on LNR Partners LLC, the largest CMBS special servicer in the country.
Fitch analyzes how LNR used its affiliate online trading marketplace Auction.com to sell distressed debt. It reviews fees ultimately paid by the trust to the affiliate for loans that were disposed online at Auction.com while they were under special servicing.
The other reports will be issued later this year. They will highlight both best practices and servicer-specific deficiencies, alongside hindsight on corporate governance and conflicts of interest, investor disclosure and affiliated companies.