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A Guide to Commercial Mortgage-Backed Securities

29 Jan 2014

Samuel Lichtenfeld, a Partner in the Corporate and Real Estate Practice Groups at Freeborn, wrote the White Paper, "A Guide to Commercial Mortgage-Backed Securities: What You Should Know about the “New” Environment."

About This White Paper: 

Commercial real estate investors need to make smart choices on where they get funds. Commercial mortgage-backed securities (CMBS) are becoming popular again, because they offer an easy way to access capital.

However, the rules changed after 2008. Many terms are no longer negotiable. And some lenders try to protect themselves by asking for onerous conditions—which should be renegotiated. How will you know which is which?

This paper will help. It shares useful background on the market—focusing on traditional CMBS and Fannie/Freddie programs. Then it examines examples of troublesome text in loan documents and couples these with suggestions on when it makes sense to renegotiate versus what you can’t change. A table compares terms for traditional CMBS and Fannie/Freddie programs, so you may easily see the difference.

There is a growing requirement for investors to become a single-purpose entity (SPE). The end of this paper includes an appendix with specific requirements for SPEs, written in plain English.

 

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