CMBS B-Pieces and The Multifamily and Commercial Lending Market

CMBS B-Pieces and The Multifamily and Commercial Lending Market

CMBS loans are among the most popular types of financing for multifamily and commercial real estate, with approximately $77 billion in CMBS financing issued in 2018 alone. As many already know, CMBS loans are designed for securitization, meaning that one borrower’s loan will generally be grouped with many others to generate a commercial mortgage-backed security, which is then sold to investors on the secondary market.

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Master Servicers for CMBS Loans: What Borrowers Need to Know

Master Servicers for CMBS Loans: What Borrowers Need to Know

Unlike a traditional bank or credit union loan, a CMBS loan is not serviced by the lender that originated the loan. A third-party loan servicing firm, known as a master servicer, will typically take on this responsibility.

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Special Servicers for CMBS Loans

Special Servicers for CMBS Loans

One potential downside to CMBS is that these loans are not serviced by the lender that originated them, and are typically placed under the supervision of separate loan servicing company referred to as master servicer. But what if things go south and a borrower defaults on their loan? That’s when another company, called a special servicer, comes in.  

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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).

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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.

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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.

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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).

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