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Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

LONDON-Because the crisis has altered the finance-institutional landscape and often eliminated firms originally involved in securitized debt, loan servicers are playing a growing role, says the Managing Director of European servicing group Hatfield Philips, owned by US private equity group LNR Property.

“We’ve gone away from administration, and become loan managers now,” Clarence Dixon told PIE in an interview. “Although the loans are still very clear-cut, the situation of the borrowers has changed, the situation of the lenders has changed, the situation of the facility agents has changed, the situation of the swap providers has changed – all the key parties have often changed, and the only party that’s been involved in the transaction from start to finish has been the servicer. The servicer’s role has de facto changed from being purely administrative to more custodial, and the need for due diligence by all parties, often with competing wishes, has brought its own challenges but equally increased the scope to add value.”

London-based Hatfield Philips has serviced more than 359 commercial loans with a combined value of £29bn and acted as special servicer for over £31bn. Collateral locations included UK, Germany, Italy, Sweden, France Switzerland and Benelux. Dixon says the group, rated by S&P and Fitch as primary and special servicers in Europe, is currently active in some 250 loans in 18 different portfolios.

Bondholders in a White Tower transaction of the giant Talisman portfolio chose recently to move from Hatfield to CBRE’s new Special Servicing unit. But Dixon says such shifts come with the territory.

“We don’t comment on specific loans, but there are always instances where noteholders come to us and ask if we want to take over a loan – and there are other occasions where the noteholder has the option to switch elsewhere. That’s fine, that’s normal business; we don’t have an opinion on that,” he says.

Since the Commercial Mortgage Backed Securities segment came to a shuddering halt last year a huge number of negotiations have been running to establish authority and responsibility within the loan.

Dixon says it is imperative that a servicer act precisely according to documentation though on occasion it is forced to make decisions where issues are not clear. The main challenge with Special Servicing – managing distressed or delinquent portfolios of loans – is that it simply has not existed in Europe before, he says; Europe’s only experience was in residential. The industry remains under high stress now handling loans from the boom years, he says.

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