New Servicing Agreements
Due to our hands-on servicer representation, we understand the complexities and practical applications of servicing agreements from the day-to-day servicing perspective. This allows us to focus on key issues when we negotiate new servicing agreements for our clients, including:
- delineation of responsibilities
- fee structures
- documentation deliveries
- CREFC reporting packages
- servicer termination events
- advancing requirements
- terrorism insurance
- Sarbanes-Oxley
- Dodd-Frank
- Reg AB and Reg AB 2.0
- Rule 17g-5
- Rule 15Ga-1
Loan Assumptions and Transfers of Interest
Our team helps clients develop assumption/transfer programs and form documentation, and with our clients we close hundreds of transactions annually. Our loan assumption practice ranges from small, single property assumptions to large, multisite, multistate portfolio transactions and also includes numerous transactions involving 1031 tax-free exchanges, tenant in common structures and preferred equity structures. Our transfer-of-interest practice ranges from simple transfers of minority ownership interests to complex, multistep, multitier transfers, mergers and entity conversions involving private and publicly traded companies. We regularly assist clients in interpreting pooling and servicing, co-lender, participation and intercreditor agreements and loan document provisions, as well as in structuring transactions to ensure compliance with these agreements and the provisions of the tax code governing REMIC trusts and debt obligations generally.
We help clients obtain rating agency confirmations and special servicer and bondholder consents. We have working relationships with all major rating agencies and their outside counsel, bondholders and all servicers to facilitate this process.
Loan Assignments and Satisfactions
Alston & Bird attorneys regularly represent servicers in connection with California, New York, Florida and other mortgage tax state loan assignments (for CMBS, Fannie and FHA loans) and with complex loan payoffs and satisfactions involving complex capital stacks.
Consents and General Servicing
One complexity involved in servicing commercial mortgage loan portfolios is processing, reviewing and approving (or denying) the multitude of borrower consent requests. While protecting the interest of the lenders or the trusts at all times, we take a proactive, pragmatic approach when reviewing consent requests for our servicer clients. We routinely advise servicer clients with respect to the following:
- alterations and improvements
- amendments, extensions, modifications or waivers to loan documents
- cash management and clearing bank agreements
- co-lender, intercreditor and participation agreements
- condemnations
- condominium construction, conversions and releases
- easements
- franchise agreements
- lease reviews, amendments, assignments and terminations
- land exchanges
- mezzanine and equity financings
- partial releases
- property management agreements
- rate cap confirmation and collateral assignments
- restrictive covenants
- subordination, non-disturbance and attornment agreements
- subordinate financings
- substitutions of indemnitors
Defeasances
Alston & Bird represents servicers, consultants, securities intermediaries and successor borrowers in coordinating the defeasance of CMBS loans and other securitized assets. We represent successor borrowers, servicers, consultants and securities intermediaries in program-wide restructurings, float sharing agreements, the purchase and sale of successor borrowers, the purchase and sale of the residual value owned by successor borrowers, prepayment of defeased loans and other “post-defeasance” issues and transactions. Our attorneys address a broad range of defeasance issues:
- compliance with intercreditor agreements, participation agreements and/or mezzanine servicing agreements
- compliance with mortgage loan documents
- compliance with pooling and servicing agreements, CDO servicing agreements or subservicing agreements
- REMIC advice
- obtaining rating agency confirmations
- perfecting security interests in securities intermediary accounts
- qualifying successor borrowers
- substantive nonconsolidation
- “DVP” prepayments
- qualified securities
Successor Borrower
Alston & Bird represents successor borrowers and their sponsors in establishing their programs, closing transactions and various post-defeasance transactions. Our knowledge of rating agency guidelines, servicing standards, tax and regulatory issues and special purpose entities allows us to structure various successor borrower programs. In addition, we have been on the forefront of various industry issues, including use of various qualified securities, Q status, “DVP” payments, prepayments and sale of successor borrowers.
REMIC Advice
Our tax attorneys have a thorough knowledge of the federal tax code’s provisions regarding REMIC and the exchange of debt instruments. Relevant expertise includes:
- loan assumptions and transfers of borrower interests
- collateral improvements
- restructurings to effect “UPREIT” status
- mezzanine financings and upper-tier investments
- releases and exchanges of collateral
- optional prepayment issues in connection with loan defeasances
- post-securitization establishment of escrow accounts
- addition, substitution and release of indemnitors
- workouts, bankruptcy and foreclosures
- ensuring that REO property constitutes “foreclosure property”
- “qualified liquidations”
- various loan modifications
- obtaining private letter rulings
Securities Law Advice
It is critical that a servicer’s outside counsel be proficient in the interpretation and application of securities laws and regulations. We represent servicers, special servicers, issuers, underwriters, rating agencies and trustees in numerous public and private offerings of asset-backed and mortgage-backed securities. Our attorneys have a thorough knowledge of the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act and all related regulations. Our Reg AB and Reg AB 2.0 experts have played leading roles in the interpretation and application of Reg AB and Reg AB 2.0 in the CMBS, RMBS and ABS arenas, and have served as lead Reg AB and Reg AB 2.0 counsel to several large financial institutions with significant market presence in these asset classes.
Special Servicing
Default Protection
Alston & Bird works with servicers to prevent and correct defaulted loans secured by commercial and multifamily properties. We believe a proactive approach often prevents future losses. We assist clients in collecting outstanding monthly payments and penalty charges, enforcing lockbox and cash management agreements and collecting outstanding financial statements and reports. Our team monitors bankruptcy dockets and provides a comprehensive list of proposed and confirmed lease terminations, thereby alerting clients to potential problems.
Defaulted Loans/Workouts
In workout scenarios, our clients need a team that has done it all, and we deliver. Our team consists of lawyers and non-lawyers who have substantial expertise in a broad spectrum of disciplines and maintain one focus—helping our clients achieve their objectives. We regularly represent financial institutions in a variety of defaulted loan workout transactions involving bank-held, CMBS and CDO loans. Typical transactions include workouts, forbearances, discounted payoffs, reinstatements, note sales, deeds in lieu, foreclosures, REO management and sales. In each workout transaction, we strive to help our clients avoid unnecessary costs by avoiding litigation, when prudent. However, when litigation is necessary in connection with foreclosure or otherwise, we work (with local counsel, to the extent needed) to zealously enforce lenders’ rights through the courts in jurisdictions throughout the country.
Risk Mitigation
Alston & Bird’s Risk Mitigation Team seeks to identify and minimize financial risk, on both an individual asset and systemic basis, to major financial institutions resulting from lending practices and asset positions. The Risk Mitigation Team, comprised of lawyers with a diverse and broad base of legal knowledge, experience and skills, works together to provide practical, comprehensive and optimal solutions for its clients.
Litigation
Our transactional lawyers, bankruptcy lawyers and litigators work together in a team-oriented manner to provide comprehensive solutions for our clients in resolving issues related to defaulted real estate investments.
Our lawyers have provided litigation advice and support in connection with numerous debt restructuring situations. We are currently advising some of the largest financial institutions and special servicers in connection with restructurings and workouts related to billions of dollars of outstanding loans. Our litigation experience includes:
- foreclosures (including non-judicial and judicial)
- enforcement of guaranties
- enforcement of notes
- receiverships
- control rights
- rights of first refusal
- contract interpretation litigation (including, with respect to waterfall provisions, under intercreditor agreements)
- breaches of contract
- note sales
- deeds-in-lieu
- deficiency collection actions against borrowers and guarantors