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CRE Finance World, Summer 2012

Analyzing Special Servicer Performance Figure 9 Figure 11 Pct of cured balance receiving a mod (ex. GGP) Distribution of disposed seriously delinquent assets Source: NSI, See Footnote 2 Source: NSI, See Footnote 2 Special servicers’ propensity to take title Figure 12 Figure 10 Dist. of outstanding seriously delinquent assets Resolution Dlq (count) Source: NSI, Trepp, See Footnote 2 Source: NSI, See Footnote 2 Examining the set of disposed loans, 67% by count and 59% by Time to resolution balance were seriously delinquent prior to resolution (Figure 10). Loans that have been resolved since after transfer to special servicing since January 2008 have spent an average of 13.5 Of the three largest special servicers, CWCAM appears most likely months with the special servicer (Figure 13). Over time, this average to take title to a property prior to disposition (Figure 11). For assets resolution time will increase as 20.2 months have elapsed since that were seriously delinquent prior to disposition, 47%, by count, outstanding specially serviced loans were transferred. of those serviced by CWCAM were REO, while C-III and LNR both reported percentages of 30%. Midland and Torchlight report an Along with differences in resolution strategies for seriously delin- even smaller percentage of REO assets, at only 16% and 14%, quent assets, the average resolution time varies across the special respectively. servicers, ranging from 12.3 months for CWCAM to 15.1 months for Midland. Although CWCAM reports the shortest resolution time, This trend is likely to continue as we see a similar pattern when the firm reports a higher-than-average number of months since examining each special servicer’s outstanding portfolio. Among transfer for the assets currently within their portfolio. In addition CWCAM’s current portfolio of seriously delinquent assets, 64% to being more likely to take title of a property, CWCAM reports are REO, dropping to 39% for LNR and 31% for C-III (Figure 12). the lowest average resolution time for REO assets, at 19.8 months A publication of Summer issue 2012 sponsored by CRE Finance World Summer 2012 35


CRE Finance World, Summer 2012
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