The primary incentive for syndicating loans in today’s market is diversifying risk and, thus, increasing the granularity of a lender's loan portfolio. The syndication market has recently gained significant momentum for “value-added” lenders who are willing to incur above average risk by placing loans in higher leveraged loan positions in the capital stack or provide financing outside a conduit structure for construction projects, land acquisitions and/or lease-up projects. The syndication market provides mortgage originators with an opportunity to create a customized lending product which extends beyond the standard requirements of the rating agencies. While most mortgage loans are sold into the CMBS securitization market, mortgage loans held for syndication still represent a significant share of the loans made by many real estate lenders. 1 Due to the rapid growth in volume and the escalating size and complexity of mortgage loans and the projects securing such loans, lenders have been forced to further develop methods to adequately diversify their risk. The multifamily property category accounted for $103.2 billion of that total, leading all real estate loan originations in dollar volume. Here, the authors explain the significant legal issues surrounding such transactions.Īccording to a recent study, lenders closed $244.2 billion of commercial/multifamily mortgage loans in 2012. Syndication continues to grow in popularity among lenders.
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