Many commercial real estate loans originated in the United States are resold to investors as commercial mortgage-backed securities (CMBSs). Under these programs, lenders originate the loans, but then later resell them as parts of larger pools into the CMBS market. In the fourth quarter of 2007, the national crisis in residential subprime lending spilled over into the commercial real estate loan arena, causing increased volatility in the CMBS market. As a result, many lenders are experiencing difficulties reselling their commercial real estate loans into the CMBS market. In this new lending environment, lenders are increasingly seeking to renegotiate, or even back out of, their loan commitments and/or rate lock agreements with investors. Lenders often use the material adverse change (MAC) clauses in their documents to renegotiate investors’ loan commitments and/or rate lock agreements.
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