Commercial Property Executive: CMBS in Flux

Indeed, as special servicers get a grasp on the workload, the process to resolve the troubled loans should be relatively quick, said Shlomo Chopp, managing partner at Case Property Services, a New York-based real estate advisory firm that specializes in restructurings and turnarounds. That’s because of changes CMBS lenders made to their loan documents following the financial crisis. Back then, borrowers could try to prevent foreclosures through litigation. Today, such an action will trigger recourse and could dampen the prospect for widespread loan modifications. “To deal with these problems last time, we would litigate with the lenders and drag things out for a year until we got a new appraisal, and then we would educate the lender and appraiser on the issues of the property,” explained Chopp, who is also managing partner at investment management firm Case Equity Partners, “but borrowers can’t do that now, and we’re going to see an inordinate number of people losing their properties.”