Advisory Shop Offers to Help Negotiate CMBS Loan Workouts in Bulk
Hart Advisors Group, which helps borrowers negotiate modifications of their troubled CMBS loans, is proactively looking to address what many expect will be a deluge of mortgage delinquencies.
The Dallas company, founded in the wake of the Great Financial Crisis, has developed a program through which it would, for a discounted flat fee, process multiple borrowers' loan modification or forbearance requests, package them in a streamlined fashion and present them to the appropriate CMBS servicers.
The company was founded and is run by Tanya Little, who previously was chief operating officer of RBC Capital Markets' real estate mortgage business.
As special servicers have been downsizing because of a sharp reduction in their active portfolios - to $13.4 billion last month from a peak of $91.2 billion in September 2010 - they're expected to be strained in their ability to process what could be a mountain of upcoming requests for loan modifications or forbearance agreements by borrowers whose properties have suffered a drop in cash flow as a result of the coronavirus pandemic. The expectation is that servicers will give borrowers perhaps a 60- or 90-day window to get any delinquencies addressed before transferring loans to special servicing. When that happens fees start accumulating, as would default interest.
But that window, if it in fact materializes, might not be enough for every loan that gets into trouble. That's where Hart says it could help.
"Our intent is to look at the long-term projections for every asset and get it done right," Little said, adding that loans against properties in secondary or tertiary markets might need more than 60 or 90 days to recover.
Hart will take loans that were performing as scheduled before March 1 and compile all relevant financial data and business plan information in a uniform manner for every loan it represents and present that data, with workout proposals, to the appropriate servicer. Those proposals could include additional forbearance, an interest-rate reduction, waiver of reserve replenishment, waiver of fees or term extension. The goal, Little said, is to avoid special servicing.
"We're trying to be proactive and help our clients get through this," Little said. "We're their advocates."
Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.
Commercial Real Estate Direct
Commercial Real Estate | Wednesday, 25 March 2020 | News