B-Notes Under Pressure: Payment Priorities and Impact of Special Servicing Fees and Other Expenses on Distributions to B-Note Holders

November 17, 2009
The ongoing credit crisis and deterioration of commercial real estate have significantly increased the number of distressed commercial real estate loans. In this environment, it is critical for B-Note Holders to have a clear understanding of their legal rights. This update, the fourth in a series addressing frequently asked questions on the ownership of B-Notes in A/B Loans that have been securitized, examines how collections on A/B Loans are allocated between the A-Note Holder and the B-Note Holder as well as some of the types of fees, costs, and shortfalls the B-Note Holder will bear in connection with a default or workout of an A/B Loan.