CMBS Loans, Conduit Loans
Multifamily Loans
CMBS vs. RMBS: What You Need to Know

Mortgage backed securities (MBS) come in two main varieties; commercial mortgage backed securities (CMBS) and residential mortgage backed securities (RMBS). While CMBS are backed by large commercial loans, referred to as CMBS or conduit loans, RMBS are backed by residential mortgages, generally for single family homes. Residential mortgage backed securities may be backed by a variety of different kinds of residential loan products, such as home equity loans, as well as FHA loans.

CMBS vs. RMBS: What You Need to Know
CMBS Loans, Conduit Loans
Multifamily Loans
CMBS Structure: What You Need to Know

A CMBS, or Commercial Mortgage Backed Security, consists of a group of commercial property loans that have been pooled together and securitized, in order to be sold to investors. These securities are broken into various layers, or tranches, each of which has a different level of credit quality, carries a different amount of risk, and offers a different return for investors.

CMBS Structure: What You Need to Know
CMBS Loans, Conduit Loans
Multifamily Loans
CMBS News Updates: Spring 2019

In the first quarter of 2019, a variety of trends and events have impacted the state of CMBS and conduit financing in the United States. Looking back at the 2018 year, while overall commercial loan transaction volume was up, CMBS issuances fell approximately 12%, to just under $77 billion. Overall, CMBS delinquency rates rose slightly, and, experts believe that troubled retail properties, including shopping malls, may be in for additional trouble if they cannot find a lender willing to refinance their debt.

CMBS News Updates: Spring 2019
CMBS Loans, Conduit Loans
Multifamily Loans
What is a CMBS B-Piece?

When CMBS loans are pooled together to create commercial mortgage backed securities, these securities vary in credit quality and payment priority. Typically, they are divided between investment grade securities, (AAA/Aaa through BBB-/Baa3) and sub-investment grade securities (BB+/Ba1 through B-/B3). While the A-class bondholders are paid first, B-piece bondholders must wait until all A-class bondholders are fully paid before they receive any compensation. Due to their higher risk, however, B-piece CMBS offer investors significantly higher returns when compared to A-rated CMBS.

What is a CMBS B-Piece?
CMBS Loans, Conduit Loans
Multifamily Loans
CMBS Loans vs. Agency Loans for Multifamily ...

When it comes to getting financing for a multifamily property, Fannie Mae and Freddie Mac multifamily loans, also known as agency loans, are some of the most popular options on the market. When compared with CMBS financing, these agency loans have a variety of similarities and differences. Both agency and CMBS are typically non-recourse and fully assumable, and offer highly competitive interest rates. However, agency loans usually offer even lower rates than CMBS, with rates starting at 3.75-3.9%.

CMBS Loans vs. Agency Loans for Multifamily Financing

CMBS Prepayment

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Lockouts in Relation to CMBS Loans

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Lockouts in Relation to CMBS Loans

For borrowers, prepayment penalties can be one of the most challenging aspects of CMBS loans. In addition to prepayment penalties, however, most conduit loans have a lockout period, a period of time in which the loan cannot be prepaid at all.

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Prepayment Penalties for CMBS Loans

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Prepayment Penalties for CMBS Loans

If you take out a CMBS loan, and you want to pay off the loan early, perhaps because you’re selling the property, you’ll usually have to pay a prepayment penalty. Prepayment penalties are designed to compensate the lender, or, in the case of CMBS loans, the investors, for the loss of income that will result from a borrower paying off their loan early.

 
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