Which statement about CMBS loans is correct?

• A. CMBS loans are kept on lender balance sheet
• B. CMBS loans are securitized
• C. CMBS loans have government guarantees
• D. CMBS loans are the same as SBA loans in structure

Answer: (B)

CMBS loans are securitized. In this structure a lender pools commercial mortgages into a special purpose vehicle (a conduit or trust) and issues bonds to investors that are backed by the cash flows from those loans. The lender typically moves the loan off its own balance sheet by selling it into the conduit, freeing capital and transferring the credit risk to investors. Borrowers still make payments, but those payments flow through a master servicer to the bondholders, with a separate special servicer handling workouts if needed. There is no government guarantee on CMBS loans—they’re not backed by the U.S. government. And they’re not the same as SBA loans, which involve government guarantees and a different financing and underwriting framework.