I’m Just an Auctioneer — But Here’s What 20 Years Around CMBS Distress Has Taught Me
20 Feb, 2026 - Tranzon Auction Properties
February 20, 2026
Mike Carey on LinkedIn
Why CMBS Foreclosures Feel Different (and Why That Matters Right Now)
I’m not a lawyer, servicer, or structured finance expert. Just an auctioneer who has spent the better part of 20 years operating around distressed real estate and watching how deals actually play out on the ground.
And one thing that becomes very clear over time is this:
A CMBS workout is not a bank workout with a different logo on the letterhead.
It’s a different system entirely.
We’re starting to see more true CMBS foreclosures moving forward, and for borrowers, sponsors, attorneys, and junior lenders, the process can feel frustrating. Conversations stall. Requests take time. Solutions that feel obvious don’t get traction.
From what I’ve observed, the disconnect usually comes down to expectations.
Banks make decisions. CMBS servicers operate inside rules.
When you’re working with a local or regional bank, the loan typically sits on that bank’s balance sheet. The people across the table hold the risk and have authority to shape the outcome. They can factor in relationships, borrower history, local market knowledge, and pragmatic solutions.
That doesn’t mean banks are easy — but they are often flexible.
CMBS is structured differently.
Once securitized, the loan lives inside a trust governed by a Pooling & Servicing Agreement. The servicer you’re speaking with isn’t negotiating on their own behalf, they’re working within a framework designed to protect multiple classes of investors.
That framework introduces process.
And process introduces friction.
This is why CMBS loans can feel harder to modify
Over the years, what I’ve consistently seen is that portfolio lenders tend to restructure more frequently than securitized lenders. The reasons seem fairly intuitive:
Decision authority is distributed rather than centralized
Servicers must document that any action meets a defined servicing standard
Structural considerations can limit the range of available solutions
Special servicing adds governance layers that simply don’t exist in a bank workout
From the borrower side, this can feel like resistance.
More often, it’s constraint.
The special servicing transfer is usually the moment everything changes
Many sponsors say the same thing after transfer: “The tone shifted.”
That’s because the loan has entered a formal resolution channel. There are updated valuations, internal strategy discussions, modeling, and investor reporting happening behind the scenes.
What felt like negotiation can start to feel like evaluation.
If you’re expecting a relationship-driven bank workout, that shift can be disorienting.
Why this matters right now
With maturities approaching, higher rates, and values resetting across certain asset classes, more sponsors are encountering special servicing for the first time. A common reaction is to push harder for flexibility.
But the more useful question is often:
What decisions are actually possible inside this structure?
That framing doesn’t eliminate the difficulty — but it can make the process more predictable and help shape strategy.
From my vantage point in the auction world, CMBS foreclosure isn’t simply enforcement.
It’s often the natural outcome of a system built around process, documentation, and investor alignment rather than relationship banking.
Understanding that difference won’t change the structure. But it can change how you navigate it. And in distressed real estate, clarity is rarely a bad starting point.