Commercial Servicers Have Work to Do.

A survey of commercial mortgage borrowers commissioned by the Mortgage Bankers Association and the Commercial Mortgage Securities Association finds that one area that needs improvement is servicing. Survey respondents were asked what were their experiences with different capital sources and what were the factors that could be improved on.

A number of the factors they mentioned as being least satisfied with - loan assumption, prepayment and defeasance, escrow and collateral release, physical modification of real estate and loan modification - relate to the servicing function, which means that servicers have scope to improve upon their performance. Respondents also specifically cited servicing as an area that needs to be improved on. In the commercial mortgage-backed securities arena especially, borrowers were unhappy with the lack of flexibility in modifying loans based on their need to manage the collateral real estate. They also cited post-closing servicing issues as a CMBS concern.

The survey was conducted by a Minneapolis-based research firm, Gantz Wiley, and a sample size of 156 borrowers, a size considered statistically relevant by Gantz Wiley, were asked about their borrowing experiences and perceptions. The information sought was on how they opted for a specific capital funding source - such as CMBS, commercial banks, insurance companies or pension fund - their preferences across funding sources and suggestions on how to improve the borrowing process.

The respondents - who are borrowers on the four major commercial property types (retail, apartment properties, office and industrial) and are members of the Urban Land Institute, the International Council of Shopping Centers and the National Multifamily Housing Council - were surveyed over the telephone. The respondents had borrowed at least twice in the last two years, with two different funding sources.

Jack Cohen, CEO, Cohen Financial, and chairman of the borrower survey task force, told Commercial Servicer that 17 different factors were looked at so as to find out what was important for the borrowers in choosing a financing source. The five that ...