The Pensford Defeasance Difference

How does Pensford differentiate itself?

There’s no doubt that defeasance can seem like an intimidating process. As your advisor, Pensford will guide you through every step of the process like we’re a part of your team, provide pertinent checks and balances, and do so in the most cost-efficient manner possible.

Servicer’s will typically require the involvement of a defeasance consultant, and given the commoditized nature of the industry, it can be difficult to decide who you’d like by your side. Some of the ways we differ from our competitors include:

• 10+ years of experience
• Avoiding conflicts of interest
• Providing transparency
• Insightful hedging strategies
• Always targeting a smooth and timely closing
• Responsiveness so you're not left waiting days for answers
• Plethora of online resources to up your defeasance knowledge

We are on your side and will do all we can to ensure all is more than fair across the board.

I heard my servicer can be my advisor. Why should I use you?

Some servicers offer incentives such as reduced legal fees in exchange for engaging their defeasance team, under the pretense of efficiencies gained from a documentation or process standpoint. In this instance the servicer would then be acting as the master servicer, your defeasance advisor, and likely even broker dealer.

• This leaves no room for an independent third-party to oversee the process and look out for the borrower’s best interests.

While some Borrowers prefer the optics of reduced legal fees and less outside parties, a few grand of savings could easily be eroded in other areas. For instance, an unchecked trader with inefficient securities could nullify the savings, if not increasing the total cost.

Although we hope to be your chosen advisor, even if you don’t elect to proceed with us, we would suggest engaging another experienced advisor to help your team through the process.

How did you come up with the third-party fee estimates?

All estimates are based on provisions in the loan agreement, fee schedules set forth by the respective parties, and previous experience.

• Some firms will quote artificially low transaction costs, or exclude some fees entirely, just to lock in business.
  • Our estimates include all potential transaction costs to ensure full transparency and avoid surprises down the road.
• Keep in mind, advisors are tied to using the same pool of third parties whose fees are largely preset. Be wary of shady firms that promise huge savings over other advisors.
  • Given the commoditized nature of the business, the net difference in cost should just come down to the advisory fee.
• Aside from their own fees, defeasance consultants do not control third party costs.

Pensford does not receive any fees in connection with the purchase/sale of securities or from any other sources. There shouldn’t be any sort of referral arrangements between third parties and advisors that compromise the borrower’s interest.

The only compensation we receive is the flat fee you pay, so you can be confident that we are on your side with no conflicts to hinder our professional relationship.

Have a question? Reach out to defeasanceteam@pensford.com or 704-887-9880.

For help on all things hedging, reach out to the experts at pensfordteam@pensford.com or (704) 887-9880.