Commercial Mortgage Backed Securities

Commercial Mortgage Backed Securities (CMBS) loans are underwritten and funded by a qualified conduit lender, then sold to a trust. Those trusts pool many single loans of varying size, property type, and location, then issues bonds that vary in yield, duration, and payment priority. CMBS loans offer borrowers the opportunity to lock in rates comparable to those offered by life companies for a relatively extended period of time (most common is 10 years). CMBS lenders are usually willing to do very high-dollar deals (for which it can be difficult to source qualified lenders), and do commercial loans in tertiary markets, whereas other lenders prefer to be in or near major markets.

Lending Metrics

CMBS loans are appealing for many borrowers because they push on all of the lending metrics: high leverage, long amortization, long-term fixed rates, and non-recourse. Commercial Mortgage Backed Securities have had a reputation for difficulties with servicing; in response, Venture Mortgage Corporation, along with other SAM Members, offers a designated, in-house, local primary servicer combined with personal client attention for the life of its loans.

Benefits

  • Up to 75% loan-to-value typical; 80% loan-to-value for multi-family
  • Will lend wherever the real estate makes sense, regardless of market location
A comprehensive regarding recent updates in the CMBS lending sector, written by Vice President Erik Johnson, can be found here.