medium · Asset-Backed Securities asset-nuances
In a CMBS structure, the 'Special Servicer' is tasked with working out a defaulted $20M retail loan. The Special Servicer proposes a loan modification that reduces the interest rate and extends the maturity.
Who has the right to approve or reject this proposal?
- The Controlling Class Representative (CCR), who typically represents the holders of the most subordinate outstanding bond class.
- The Trustee, who acts as the legal owner of the assets on behalf of all bondholders.
- The Class A-1 bondholders, as they are the senior-most class and must ensure their principal is protected at all costs.
- The Master Servicer, as they are responsible for the routine administration and cash flow reporting of all loans in the pool.
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