As a great songwriter once wrote, "the times they are a-changin'..." For the first time since its inception in the early 1990's, the United States CMBS market and CMBS servicer capabilities are being tested by the very economic stress that was the impetus for the creation of the CMBS market.

The servicing of distressed real estate loans is presenting many problems for borrowers as their loans become troubled due to the continued downward spiral of the market. One of the major challenges for borrowers are the various restrictions on CMBS loans that severely limit the flexibility of loan servicers (who take the place of lenders in the CMBS framework) when working out distressed loans. This limited flexibility means that many loans that may have been worked out in the past (e.g., properties that are fundamentally sound but are facing short-term economic distress resulting from excessive vacancy or unexpected one-time expense) cannot be worked out due to the fact the loan has been securitized.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.