Saturday, October 29, 2011

CMBS special servicers challenged by rising troubled loans

With some 13% of commercial mortgage-backed securities in special servicing, the largest players in the market say they are bracing for bigger loans and more volume in their pipelines.

In addition, at least one panelist predicted more delinquent CMBS would move to REO status.

The comments were made during a panel discussion on CMBS special servicing at the Urban Land Institute's annual conference in Los Angeles. The four panelists, from LNR Asset Services, Midland Loan Services Inc., CWCapital Asset Management LLC and C-III Asset Management LLC, hold 90% of all CMBS assetsheld in special servicing.

Significant numbers of large balance loans will be maturing over the next five years, with a good portion of those in 2012, panelists said. Large balance loans also bring with them more complexity as they come highly structured with mezzanine and subordinated positions.

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