CMBS loans are priced by taking the appropriate swap or Treasury rate and adding a credit spread, which compensates the lender for their work during the loan application and underwriting process.
CMBS Pricing: What You Need to Know
Pooling and Servicing Agreements for CMBS Loans
Pooling and Servicing Agreements (PSAs) are highly detailed legal documents that define all aspects of a CMBS loan, including the rights and responsibilities of the borrower, the lender, the master servicer, the special servicer, and the CMBS investors.
Agency CMBS vs. Non-Agency CMBS
There are two types of commercial mortgage-backed securities (CMBS), agency CMBS, which consist of loans pooled by government-sponsored entities (GSEs) including Ginnie Mae, Fannie Mae, Freddie Mac, and non-agency (private) CMBS, which consist of loans pooled and securitized by private lenders, such as JP Morgan or Goldman Sachs.
What is a Master Servicer?
CMBS loans are not serviced by the lender who issued the loan and are instead serviced by third-party entities referred to as master servicers. In many situations, the master servicer will assign the day-to-day servicing duties to another entity, known as a primary servicer.