CMBS Overview

Securitization Business and Process

The CMBS business and process may involve multiple layers of subordinate financing outside a senior loan in a securitized trust. Due to the rapid growth of CMBS from 1996-2008, the landscape was changed for the process of working through troubled RE loans. CMBS loans have a master servicer, special servicing and controlling certificate holder. Further, each loan has an asset manager and all modifications require the approval of the operating committee of the special servicer and controlling certificate holder.

CMBS Restructuring Process and MDO Expertise

The majority of CRE loans today are held in the securitized format via a CMBS or CDO Trust. The volume of loans held in securitization makes it difficult for a borrower to get from their point of contact to an ultimate decision maker. In the case of a CMBS loan, there is a master servicer, special servicer and controlling certificate holder. Each has their respective role but a loan is typically transferred to special servicing upon a continuing monetary default. The process for a successful modification is cumbersome as each loan has an asset manager who is the main point of contact for the borrower. In order for a modification to be successful, the terms must be approved by the special servicer operating committee and often times the controlling certificate holder depending on the nature of the request.

MDO Capital management has extensive experience in the process and relationships at the operating committee level of both special servicer and controlling certificate holder. The special servicer contact is public information however; the controlling certificate holder is generally not discussed as the special servicer acts as a fiduciary on the controlling certificate holders behalf. The key to success is the complete understanding of the process as well as the relationships with the decision makers.