CMBS Forbearance Isn’t Out of the Question

CMBS loans are notoriously rigid. At the first sight of an issue, they can slip into special servicing and borrowers generally have limited options when an asset is experiencing a problem. However, the pandemic is a little different. Borrowers have been able to negotiate payment deferrals, deferral of obligations to replenish certain reserves and the transfer of reserve funds to needed reserves, according to Susan Graham, a partner at Allen Matkins, who has represented clients that have been able to secure these terms.

“Servicers were initially overwhelmed with requests for forbearance and modifications,” Graham tells GlobeSt.com. “At first, the servicers were slow to respond in any meaningful way. Many of those borrowers withdrew their requests, but many still needed and requested relief. Since the number of requests was still so high, if the servicers didn’t cooperate and try to find some solution to the problems, the servicers would have been faced with an equally overwhelming number of loan defaults.”