Explain the property release provision and its significance in a single-borrower / multiproperty CMBS transaction
What will be an ideal response?
Because there is a single-borrower, there is concern that the borrower can benefit by removing the best properties from the mortgage pool by prepaying the balance and selling those properties. This action would result in a deterioration of the structural protection afforded the bondholders. The objective of property release provisions is to protect the investor against such an action by the borrower. Two examples of a property release provision are (i) a requirement that if any property is sold, the borrower must retire more than the initial mortgage balance in the pool (say, 125%) and (ii) a sale may not take place if the DSC ratios after a proposed sale are less than prior to the sale.
You might also like to view...
With the increase in the use of social media, it is important to ________ those who don't follow the rules of ethical communication
A) limit website access from B) not respond to C) diligently guard and defend against D) identify corporate policy for E) hide unhappy customers and their potential for damage away from
A firm failing to consider the impacts of their actions on their supply chains is referred to as having a _______.
a. focused mentality b. critical mentality c. sheltered mentality d. silo mentality
A three-tiered client/server model includes which of the following?
A) Web server B) application server C) database server D) All of the above.
The mean and standard deviation of an exponential random variable are equal to each other
Indicate whether the statement is true or false