- A bipartisan group of more than 100 members of Congress are asking the Federal Reserve and the Treasury Department to set up a lending facility for businesses struggling to pay mortgages on hotels, shopping malls, and office buildings.
- Many of the businesses that borrow money in the ~$550B market for commercial mortgage-backed securities haven't been able to negotiate debt relief during the pandemic, leading some to worry that they could lose their properties to foreclosure, the Wall Street Journal reports.
- “Without a long-term relief plan in the face of an elongated crisis, CMBS borrowers could face a historic wave of foreclosures starting this fall, impacting local communities and destroying jobs for Americans across the country,” the lawmakers said in a letter due to be delivered on Tuesday.
- The rigid structure of the CMBS market makes it more difficult for borrowers to get temporary payment relief, unlike homeowners, which have been able to pause mortgage payments for as much as a year.
- CMBS borrowers seeking to pause their payments must work through "special servicers," which are hired to negotiate on behalf of the bondholders that own the loans.
- Hotel owners who have contacted their special servicers say they have encountered silence, long waiting periods, and demands for cash upfront, the WSJ said. Meanwhile, hotel occupancies are drastically lower as a result of the pandemic.
- Some interested tickers: STWD, BXMT, CLNC, LADR, HASI, CLNY
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