If a default occurs in a non-recourse commercial mortgage-backed security (CMBS), the lender will most likely:
A) recover prepayment penalty points paid by the borrower to offset losses.
B) use only the proceeds received from the sale of the property to recover losses.
C) initiate a claim against the borrower for any shortfall resulting from the sale of the property.

Question

Quizplus · Accepted Answer

In a non-recourse CMBS, the lender can only look to the property securing the loan to recover losses in the event of a default. They cannot initiate a claim against the borrower for any shortfall, nor can they recover prepayment penalty points. Therefore, the lender will most likely rely solely on the proceeds received from the sale of the property to recover losses.

If a Default Occurs in a Non-Recourse Commercial Mortgage-Backed Security