PSA Agreements Address Advances

Pooling and servicing agreements for two recent commercial mortgage-backed securities deals rated by Fitch Ratings have incorporated explicit terms on servicer advance reimbursements.

According to the agreements, any advance deemed recoverable before it gets corrected, together with interest accrued, is to be reimbursed with first priority on the collection date from principal payments. And if the available principle is not sufficient for full reimbursement, the reimbursement is to be deferred to the next collection period. Interest payments are not to be utilized for the reimbursement of the advances.

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