Litigation Risks For CMBS Special Servicers

Law360, New York (April 20, 2009, 12:00 AM EDT) -- Rising delinquencies in the commercial mortgage sector may be precursors to a new wave of credit crisis-related litigation, this time involving commercial mortgage-backed securities (CMBS).

Since 2004, about $700 billion in commercial debt has been carved up and sold to investors as CMBS. In recent years, securitized commercial loans have had historically low delinquency rates.

Yet, since September 2008, the delinquency rate has more than doubled, to 1.8 percent, and some analysts are predicting that the default rate may skyrocket to as high as 30 percent....
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