The term primary servicer refers to companies that monitor and manage loans. The primary servicer of a loan can be the loan originator, the mortgage banker or a third party and maintains direct contact with the borrower. If the loan falls into default or needs special attention, a special servicer would undertake this role.
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Defeasance and how it works with Wells Fargo
Transcription
MUSIC LILLIAN FAHR: Defeasance is a complex process that can seem overwhelming for borrowers – but it doesn’t have to be! Let’s see how it works. Defeasance is a substitution of loan collateral. In the Commercial Mortgage Backed Securities, or CMBS, industry, a defeasance replaces the real estate collateral securing a loan with a portfolio of government securities. The loan continues to be held by the CMBS trust but the income stream from the government securities, which replicates the remaining loan payments, becomes the source of repayment. A defeasance can facilitate a property sale or refinance, by releasing the mortgage on the real estate securing the loan. The defeasance process begins with the borrower’s delivery to the loan servicer of a good faith deposit and a notice of intent to defease. The defeasance consultant then guides the borrower through the process. The consultant works with the borrower, servicer, securities intermediary, accounting firm, attorneys, and anyone else involved to make sure the closing deadline is met. Borrowers should reach out to a qualified defeasance consultant such as Wells Fargo as early as possible to learn about defeasance closing requirements and timelines. In most cases, a defeasance has a three-day closing process, though it can be shortened to two. Wells Fargo has one of the nation’s most reliable and experienced defeasance teams, working together with borrowers since 2004. For more information and a free quote, start a conversation with us today. MUSIC
The role of a primary servicer
- Analysing the borrower’s financial situation for example reviewing financial statements and business plans and monitoring their performance against their business plans.
- Analysing and monitoring the assets on which the loan is secured by regular visits to the property for inspection as well as reviewing lease agreements, management terms and tenant covenant strength.
Mortgage servicing volumes
The latest Mortgage Bankers Association end of year survey shows the top CMBS servicers and servicing volumes within the industry.[1]
Total C/MF Loans Secured by Collateral OUTSIDE the US as of December 31, 2010
| Rank | Company | Amount ($ millions) | Number of Loans | Average Loan Size ($m) |
|---|---|---|---|---|
| 1 | Hatfield Philips International, an LNR Company | $28,756 | 194 | $148.2 |
| 2 | Deutsche Bank Commercial Real Estate | $24,845 | 169 | $147.0 |
| 3 | PNC Real Estate / Midland Loan Services | $11,541 | 1,461 | $7.9 |
| 4 | GEMSA Loan Services LP | $9,649 | 565 | $17.1 |
| 5 | Manulife Financial / John Hancock | $8,770 | 1,890 | $4.6 |
| 6 | Capital Services Group | $4,238 | 3,941 | $1.1 |
| 7 | Berkadia Commercial Mortgage LLC | $2,359 | 169 | $14.0 |
| 8 | LNR Partners Germany, an LNR Property Company | $1,022 | 543 | $1.9 |
| 9 | Bank of America (Merrill Lynch) | $867 | 31 | $28.0 |
| 10 | TriMont Real Estate Advisors | $748 | 45 | $16.6 |
| 11 | Pacific Life Insurance Company | $519 | 20 | $26.0 |
| 12 | Prudential Asset Resources | $334 | 12 | $27.9 |
| 13 | The Bank of New York Mellon - Asset Solutions Division | $78 | 30 | $2.6 |
References
This page was last edited on 2 August 2020, at 01:12