A Brighter Outlook For CMBS
The CMBS market is surging, while the number of delinquent loans put into special servicing has dropped.
Some try to bridge the gap between special servicers and borrowers. A property can end up at a special servicer not merely when it is in default, but even when it is in imminent danger thereof, and this is when the borrower should start to work with special services, says Shlomo Chopp, Managing Partner of Case Property Services. The trouble is that most properties are underwater and, from an economic perspective, the borrower cannot simply put the property on the open market, Chopp says. "Then, they don't transfer to special servicing when a property is in imminent default," he said. "They keep feeding the property, throwing good money after bad. The borrower that continues to pump in money to support the mortgage, absent getting concessions from the lender, is throwing good money after bad." Lenders will cooperate, he says, depending on the terms. "You need to bring their terms closer to yours, to get cooperation," he said. "If you can do that, they'll restructure the loans. You need a comprehensive strategy that includes putting in more capital.”