CMBS  Lenders

SUMMARY

These lenders usually make riskier loans than life companies. Most CMBS lenders bypass requirements of others such as historical operating history or market size. In return for this risk, CMBS loans usually carry higher interest rate. Origination fees are also higher for a CMBS lender because of the complexity involved with these transactions. Their precise underwriting templates usually call for a minimum $5 million loan amount along with heavy reserves for the owner.

PROS & CONS

  Higher Loan-to-Values
  Bypass Occupancy Issues
  Tertiary Markets Lending

 ✗  Higher Transaction Fees
 ✗  More Reserves

BACKGROUND

A commercial mortgage-backed security (CMBS) lender takes a collection of single mortgage loans then combines it into one securitized pool. This securitized pool is then transferred to a trust. The trust then issues a series of bonds that are sold to investors. The objective of the CMBS lenders is to fund a loan (usually off of a line of credit) with the specific intent of selling the loan after it has closed. The pool of loans is usually sold within 90 days after loan closing.