Some clients that Ann Hambly has guided through the tedious loan-modification process describe her as a prescient leader. After all, she founded borrower advocacy firm 1st Service Solutions to help borrowers deal with commercial mortgage-backed securities (CMBS) loans in 2005 before the financial markets meltdown.
Hambly pictures herself as a Sherpa, one of the Nepali natives who guide climbers in the Himalayas. “Borrowers who need to make changes to their CMBS loans can either climb the mountain alone, or they can hire a Sherpa to guide them through the process,” says Hambly, “someone with a deep, intimate understanding of CMBS.”
Hambly hatched the idea of borrower advocacy when she was CEO at Prudential Asset Resources in Dallas. “Borrowers used to be able to talk directly to their bankers,” says Hambly. “But when CMBS came along, the minute you needed help there was no one to talk to.”
In the first year of 1st Service Solutions, the concept of borrower advocacy was virtually unknown. Hambly had to educate potential clients about her services. Today, there are more than two dozen companies in the space.
“We work with people who want to buy property with CMBS debt in place, to expedite assuming the debt,” she says. “And we get payment modifications even when there are multiple layers of people to work through.”
Jeffrey Boyd, president and CEO of North Coast Investors Group, says other firms he tried to work with couldn't negotiate effectively with the special servicer on his loan. “Then we found Ann Hambly,” he says. “Ann and her team helped us develop a concise and well thought-out plan that the servicer accepted. Largely due to their knowledge, we still own our property today.”
Hambly expects loan defaults to provide plenty of work over the next year or so. The default rate for loans made in 2006 is about 50%, she says, compared with a 1% default rate for loans made in 2005 or earlier.
“Lending was simply too aggressive in 2006 and 2007,” she says. “There will be continuing problems with debt maturing in 2014 and beyond.”