Introduction Given the large volume of debt that needs to be refinanced or otherwise treated over the 2009-2012 period, mezzanine financing and its variants are expected to remain significant. [1] This environment will likely require transactions, as homeowners are forced to sell or refinance under emergency conditions. Pension funds and other buyers will try to take advantage of this environment. [2] Banks are expected to further reduce their loan portfolios and apply very conservative insurance standards, with credit-to-value ratios perhaps much lower than usual, and continue to oppose second-class mortgages and the insistence on remote bankruptcy structures. This creates an opportunity for non-bank credit institutions to fill the gap in the capital structure when acquiring or refinancing real estate and other assets. Finally, the borrower, a surety or other guaranteed party or a security holder may at any time replace the collateral security before the strict liability, assignment or any other assignment provided for in Article 9 of the UCC. The mezzanine lender will also want to obtain the right to acquire the right to pledge from the mortgage lender. This fee is usually triggered as soon as the mortgage has been accelerated. The right to pledge must be acquired in full and not in part with the price of the balance of capital, plus accrued interest and other amounts owed under the mortgage credit documents. This allows the mezzanine lender to protect the underlying real estate security if a mortgage lender has initiated or initiated a enforcement proceeding. The mezzanine lender will have to decide whether the acquisition of the pledge fee is worth the additional expenses of the funds or whether it throws good money after the bad. As a general rule, the mezzanine lender also has the right to remedy the borrower`s defaults in the mortgage.

The mezzanine loan agreement contains many identical provisions contained in a sophisticated loan agreement. These include provisions for advances, cash management, cash allowance and reserves, provisions for accident, insurance and conviction products, as well as provisions relating to the agreement between funds and compliance with the mortgage credit contract. Alliances generally limit all or part of the transfers of the mezzanine borrower, the owner of the building, the guarantors or their related companies, in order to keep the bankruptcy away.