The securitized loan market, long dormant in the recession of the last four years, appears poised to recover much of its pre-recession share of the lending market in 2013. These low-interest, high-transaction cost loans are often the best option for borrowers of large loans on well-stabilized properties.
The benefits of these loans come with a cost, however, and borrowers who have been away from the world of securitized loans need to keep in mind the need to negotiate for as much future flexibility as possible.
Once a loan is securitized into a real estate mortgage investment conduit, a borrower's legal and practical ability to make changes with respect to the collateral reduces dramatically, unless they are clearly permitted under the loan documents.
Because the rules governing REMICs limit changes to the collateral, and because it will be difficult to reach someone with whom one can even discuss desirable changes, it is critical in negotiating these loans to thoroughly think through changes to the property and its tenants that could possibly be desirable over the term of the loan.
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