CMBS workouts run through the special servicer under the pooling and servicing agreement, with codified fees, standardized timelines, and certificate-holder constraints. Bank workouts run through an internal workout group with more flexibility on terms and timing but less predictability, outcomes depend on the bank's regulatory and reserve position.
What does the CMBS process look like?
Transfer to special servicing on a codified trigger, formal workout proposal from the borrower, special servicer evaluation against best-recovery analysis for the trust, modification or other resolution if approved, codified fees throughout. Timelines are predictable but slow (six to twelve months for modification approval).
What does the bank process look like?
Transfer to the workout group, direct negotiation with a credit officer, more flexibility on terms (rate cuts, fresh equity requirements, timeline), but the lender's regulatory position can drive the outcome. Banks under capital pressure may push to exit defaulted loans even at a loss; well-capitalized banks can be patient.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Quarterly Banking Profile · Federal Deposit Insurance Corporation · 2026-Q1
- Semiannual Risk Perspective · Office of the Comptroller of the Currency · 2025-12