How the CMBS Securitization Process Works: A Guide

How the CMBS Securitization Process Works: A Guide

When a conduit lender issues a CMBS loan, they will pool it in with a variety of other loans in order to create a commercial mortgage backed security (CMBS). These CMBS are similar to bonds, in the sense that they are traded on the open market. From an investing standpoint, CMBS are often compared to RMBS (residential mortgage backed securities), which are securities based on residential mortgage loans.

Read More

Rental Assistance Demonstration (RAD): A Guide

Rental Assistance Demonstration (RAD): A Guide

Rental Assistance Demonstration, or RAD, is a Department of Housing and Urban Development (HUD) program, which seeks to help investors preserve affordable housing across the U.S. To do this, the RAD program allows investors using four HUD legacy programs the ability to convert their housing into long-term Section 8 contracts. This helps investors by giving them more flexibility in terms of acquiring the financing to repair their properties, including making it easier to apply for the LIHTC (Low-Income Housing Tax Credit Program).

Read More

The Pros and Cons of CMBS Loans: A Guide

The Pros and Cons of CMBS Loans: A Guide

While CMBS loans all but disappeared after the 2008 market crash, in the last 4-5 years, the CMBS market has been stronger than ever, with nearly $88 billion of loans issued in 2017, and October 2018 numbers showing a loan volume of nearly $65 billion from the beginning of that year. CMBS came roaring back for a variety of reasons, including the fact that they often provide the highest leverage loan a borrower can get for properties in secondary and tertiary markets. However, CMBS loans aren’t ideal for everyone— as they can provide a particularly poor loan servicing experience rife with significant prepayment penalties.

Read More

CMBS Lenders vs. Life Companies: What You Need to Know

CMBS Lenders vs. Life Companies: What You Need to Know

CMBS lenders and life companies often compete in the same space for large real estate deals. Both have significant advantages and certain disadvantages. For instance, life company loans typically offer lower rates and significantly better loan servicing, while CMBS loans are much easier to get approved for and offer benefits including interest-only periods (and even full, interest-only loans).

Read More