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Research Focus
Subordinated Rolling Equity:
Analyzing Real Estate Loan Default in the Era of Securitization
The Commercial Mortgage Backed Securities market has changed the legal structure of commercial real estate finance in the United States. Not only have the players changed in the holding of real estate debt but also the documents underlying the transaction have evolved. This article analyzes how these changes may affect the rights and obligations of the parties in the event of a real estate downturn. The new structure decouples traditional debt oriented rights from risk of investment loss. The article suggests several methods to minimize such a disjunction.
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