This report outlines Moody's view of a baseline, "credit neutral" mezzanine loan structure and how they apply that view in rating mezzanine loans.
- Mezzanine Loan Agreement - comparable to CRE mortgage loan agreement.
- Underwriting - same third party deliverables as a mortgage loan
- SPE - Borrowers should be special purpose, bankruptcy remote entities. They should have independent directors and non-consolidation opinions at the same thresholds that apply to REMICs.
- Pledge of 100% membership
- Recourse Carve-out Guaranties
- Cash Management - hard lockbox
- Maturity - same date as mortgage loan
- Certificated entities - opt-in to Article 8 of the UCC
- Title Insurance - ALTA 16 Mezzanine financing endorsement
- Intercreditor agreement - expects the 2002 CMSA form of agreement
- Interest Rate Caps