I'd like to better understand why a Borrower may want to consider splitting their loan into an A1 and A2 Note.
Under what circumstances does that makes sense?

How are the notes paid back?
[{"id": "fyzjzxf", "text": "I cant speak for all, but as a borrower, i dont care how many times they split the note, as long as the servicer remains the same and I only have to send in one payment.  From what I know, splitting the note is for the lender's benefit, so they can sell slices of the loan. If the loan is being securitized, then lender will split the note to go into multiple offerings.\n\nIf you're talking about A-Note/B-Note, then that's a whole different story.", "replies": [], "depth": 1}, {"id": "fz0c347", "text": "I am not quite sure what you are asking but we separated our loan at one of our massive properties that is office and retail. That way we can sell office portion if we ever decide to as we specialize in retail.", "replies": [], "depth": 1}, {"id": "fz0jeog", "text": "Please elaborate your question: are you talking about 2nds or two different notes?", "replies": [{"id": "fz0jpnw", "text": "I'm talking about an A1 Note and an A2 Note. Say original note was for $50 million and now there's a $25 million A1 Note and another $25 million A2 note.", "replies": [{"id": "fz0kqlo", "text": "Are you talking about refinancing? Please elaborate.", "replies": [{"id": "fz0l8f3", "text": "That's the thing... I don't know... I'm asking what may be some of the common reasons as to why a Borrower or Lender would want to split the note.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fz1hyal", "text": "Splitting the Loan into varying tranches can be noteworthy for the purposes of securitization. Note position also dictates repayment of the debt (senior status is paid first). Senior notes have better security but lower ROI compared to the subsequent positions. \n\nSlightly different if this is a SASB deal? And I assume you are not talking about supplemental debt.", "replies": [], "depth": 1}, {"id": "fza6y0c", "text": "I think you\u2019re referring to the lender bringing another lender in (very common) to participate. They\u2019ll split the note but that will have no impact on you, same servicer just different collateralization  and loan docs", "replies": [], "depth": 1}, {"id": "fzbmamk", "text": "If I originate a note at say 4.0% I can lay off an A1 tranche at a lower rate (say 2.5%) because that investor is protected by the lower tier trances - remember losses on a securitized loan flow from Z-&gt;A. The A2 tranche has a rate that gaps out a little (say 2.75%) because they\u2019re taking on more risk. Eventually you\u2019ll tranche it to the point that the lowest tier class (what you own) absorbs 20% of the losses but you get a yield of like 10%+ on a loan that only yields 4%. If you want to get really creative you can take your seasoned B notes and do a re-REMIC/ CLO and really juice those fuckers and eek out a 20. \n\nI guess the easiest way to think about it is getting a loan for your loan. The higher tier debt is perceived as less risky so you can get paid more of the yield for your loan. Also you can make your lending dollars go a lot further by making more loans by not having to hold the whole thing.", "replies": [], "depth": 1}]