Originally published in The Fine Print
Many commentators have expressed that
the next wave of real estate investment opportunities will come
from maturing/ defaulting CMBS loans. "CMBS" refers to
"commercial mortgage backed securities" in which, instead
of being held by a single bank, a mortgage loan or pool of mortgage
loans is held by a bank or other institution as Trustee for the
benefit of multiple bond or certificate holders. Typically, in a
CMBS loan, a "master servicer" is responsible for
managing the borrower payments and distributions to bondholders
while the loan is current and not in default, and a "special
servicer" is responsible for managing the loan and the
mortgaged real estate asset when there is a default or imminent
default. The rights and obligations of the master servicer and the
special servicer are set out in a "PSA", i.e., a Pooling
and Servicing Agreement.
