Investigation of Defeasance Consultant Practices Relating to Commercial Mortgage Backed Securities (CMBS)

To: All Commercial Mortgage Backed Securities Borrowers (CMBS Borrowers)

We are currently investigating certain defeasance consultants and their practices with respect to Commercial Mortgage Backed Securities (CMBS) loan defeasance. Borrowers may have been overcharged by defeasance consultants.

Defeasance of a securitized commercial mortgage is a process in commercial real estate finance by which a borrower substitutes other income-producing collateral for a piece of real property to facilitate the removal of an existing lien without pre-paying the existing note. Borrowers often retain defeasance consultants to assist them in releasing the borrower’s secured collateral during the “prepayment lockout” period.

Defeasance consultants have a legal duty to their clients to accurately disclose the defeasance consultant’s fees and compensation.

Many borrowers have alleged that their defeasance consultants wrongfully took undisclosed fees and other compensation from them. These borrowers have alleged that their defeasance consultants breached their contracts and engaged in other fraudulent activity in connection with the defeasance of their clients’ CMBS loans.

All CMBS Borrowers who have had their CMBS loans defeased through a defeasance consultant or advisor may contact us for further information.