The Borrower's Pros and Cons of a CMBS Conduit Loan
[{"id": "dm1vtk3", "text": "This article is seriously lacking my friend. You must not have any experience or know anyone who has had CMBS loans? I agree with everything you said, its all true, however you missed some huge cons to having a CMBS loan.\n\n1. If your loan goes into default and you get transferred to the special servicer, you will be responsible to pay for all 3rd party reports, legal fees, special servicer fees (.25% of UPB per year, often prorated per month if in default for less than a year), default interest, loan modification fees and will be required to contribute new equity to get a loan modification.\n\n2. Arbitrary cash flow thresholds are spelled out in the Loan Docs that can trigger cash management periods for months.\n\n3. Selling the property before maturity can be extremely difficult because the buyer will have to assume the loan, the buyer will be underwritten, the property will be underwritten (again) and there may be additional reserves required. Again, more fees.\n\n4. Special servicers are generally unresponsive and do not give a borrower the time of day when borrowers are trying to communicate with them.\n\n5. There are many conflicts of interest within the CMBS loan servicing industry.\n\nIt is an extremely complex and bureaucratic beast to navigate through, it can be done, but I just feel that article is extremely misleading.", "replies": [], "depth": 1}]