Like I mentioned in a previous post, when dealing with a conduit loan assumption you should expect it to be more hassle and take longer than you think it should. I felt prepared for that. However, dealing with Key Bank on our current deal is maddening. We originated the loan with Column Financial, and Key Bank is the Master Servicer. The deal calls for our buyer to assume our existing financing.
When we first submitted the application for the assumption we planned on closing the deal by the end of August. Thankfully our buyer (the assumptor) is very motivated to close the deal and has been very prompt in providing all of the requested documentation about himself and his entity.
After several phone calls and emails looking for confirmation that we were on track for an end-of-August close, I finally received an email saying that closing in August will be impossible. I called again this morning to find out what the new timing would be (of course Key Bank didn't include that vital bit of information in the original email response). I looks like we are more likely close around the end of September. The explanation for the delay... there are other borrowers with looming exchange deadlines. Pam, the rep I've been working with hasn't been able to get our package together to submit to the Special Servicer who is the second step in the assumption process. AAAARRrrrrggggg!
OK, so lets assume you are in my shoes someday. What should you do? Here's some suggestions. I'll let you know how they work.
- Create urgency. Since I don't have a looming exchange deadline, I'm going to tell them that my buyer's resolve is wavering and they better not make me lose the deal.
- I'm going to contact our rep at Key Bank who works in origination (not servicing) and see if he can exert some pressure.
- I'm going to contact the head of Key's Conduit Lending group here in the West, Louis Weisman, and see if he can help me. Key originated a $5M loan on a self storage property we acquired in 2005 and Louis wants to put the permanent financing in place now that the property is leased up. Hopefully he'll see helping me as getting a leg up on the competition.
- I'm going to talk to the correspondent lenders who originated the loan and see if they can exert any influence even though they are not with Key Bank.
I wondered out loud in a previous post if there is room in the market for "premium servicing". I'm not sure I would pay for it up front when it was so uncertain whether I was going to need the "premium" part. However, in the present circumstances I would gladly pay an addition $1-5K to get some speedier service and a guarantee that we would close by a reasonable date.
I also wonder if a lot more assumptions are in the pipeline because the spread on conduit loans have increased to around 200+ bps over the treasury with lower LTV and higher DSCR thresholds. The current conditions in the lending market certainly make assuming a loan a lot more attractive these days.