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Just like collateralized debt obligations (CDOs) and collateralized mortgage obligations (CMOs), CMBS are also sold in the form of bonds. Multiple mortgage loans that form the CMBS, act as collateral if the borrowers default on the mortgage payments.\u00a0<\/b><\/p>
If everything goes well, the investors receive their returns in form of principal and interest paid by the borrowers<\/b><\/p>
Loans are usually held within a trust and vary widely in terms, types of assets, and amounts.\u00a0<\/b><\/p>
The underlying loans collateralized by CMBS include mortgages for real estate such as complexes, factories, office parks, hotels, office buildings, apartment buildings, and shopping centers. These mortgages are often held within the same trust.<\/b><\/p>
A mortgage is generally considered non-recourse debt any consumer or commercial debt that is secured only by collateral.\u00a0<\/b><\/p>
This means, that if the borrower defaults on the payments, the lender cannot take any of the borrower’s assets outside of the collateral.<\/b><\/p>
As CMBS are complex investment vehicles, they require a wide variety of market participants.\u00a0<\/b><\/p>
These participants may include a credit rating agency, the trustees, investors, the certificate servicer, the lead servicer, the primary servicer, and the special servicer. Each of these participants fulfills specific responsibilities to ensure the proper functioning of CMBS.<\/b><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t