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5ChristopherB.PriceisapartnerintheNewYorkoceofGoodwinProcterandcanbereachedat212813-8951orcbpricegoodwinprocter.com.MarkJ.LochiattoisanassociateintheBostonoceofGoodwinProcterandcanbereachedat617570-8159ormlochiattogoodwinprocter.com.thequestionabouthowthemarketwillrespondandhoweectivetheotherfeaturesofCMBS2.0willbetocontroltheexcessesofCMBS1.0.RecourseObligationsandLoanCovenantsInadditiontofacingmorestringentunderwritingsponsorsofborrowersofCMBS2.0debtwillfaceexpandedrecourseobligationsundernon-recoursecarveoutguaran-ties.Thelistofso-calledbadactsthatcouldtriggerliabilityundernon-recoursecarveoutguarantieshasbeenexpandedfromwhatwasseeninCMBS1.0.Forexampleinreactiontothesignicantcostsanddelaysincurredbylendersinthemarketmeltdownasaresultofborrowersinterferingwithlenderspursuitofremediesoriginatorsareaddingsuchborrowerinterferencefollowinganeventofdefaulttothelistofbadactstriggeringfullrecourse.OtherexamplesofactionssometimesaddedtothelistofbadactstriggeringrecourseunderCMBS2.0includefailuretodelivertolenderinformationonthepropertyorprovidelenderaccesstotheproperty.InadditiontoexpandingthelistofbadactsCMBS2.0alsoaectstheconsequencesofsomebadacts.ForexampleintheeventofavoluntarybankruptcylingbyaborrowerunderCMBS1.0recoursemightthroughnegotiationbelimitedtotheactuallossesincurredbylenderbutunderCMBS2.0fullrecoursewouldmostlikelybetriggeredfortheentireamountdueundertheloan.BorrowersofCMBS2.0debtwillencounteradditionalloanandborrowerorganizationaldocumentationrequire-mentsthatwerepresentbutoftenwaivedinCMBS1.0.Originatorswillrequiredetailedreportingcovenantsoftheborroweranditssponsoraswellasnetworthandliquiditycovenants.DriveninlargepartbytheGeneralGrowthPropertiesbankruptcycasein2009borrowerswillalmostalwaysberequiredtoenterintoacashmanagementarrangementthatrequiresallcashfromthepropertytoowtoanaccountinwhichthelenderhasaperfectedsecurityinterest.ThestructuremaybeeitherahardlockboxmeaningthatthelendercontrolstheaccountREsourceSummer2013andtheapplicationofcashproceedsinaccordancewiththewaterfallintheloandocumentsoraspringinglockboxwhichcreatesahardlockboxuponcertaintriggeringeventstypicallyaneventofdefaultorfailuretomeetaDSCRtest.Fundingcashreservesupfrontatloanoriginationaswellasduringthetermoftheloanmayalsoberequiredforcapitalrequirementstenantimprovementcostsandleasingcommissions.Alsowithrespecttoindependentdirectorswhosear-mativevoteisnecessarytotakecertainmaterialactionslikeavoluntarybankruptcylingborrowersinCMBS2.0arebeingrequiredtouseindependentdirectorsfromnationally-recognizedcompaniesandtoobtainlenderapprovalpriortotheirremovalandreplacement.EvolvingStructureCMBSloanvolumewasvirtuallynon-existentin2008and2009inthewakeofthedownturnbutwiththere-emergenceoftheCMBSmarketandtheimplementa-tionofCMBS2.0volumehasincreasedmodestlysince2009reachingmorethan45billionin2012andmorethan13billioninthersttwomonthsof2013.Itisprojectedtoexceed65billionfor2013.ThemarketwillcontinuetotestCMBS2.0asunderwritingstandardsvarysecuritizationstructuringevolvesandregulatoryreformsareimplemented.ForCMBS2.0togrowasasourceofmortgagenancingaproperbalancebetweenadditionalcostsandrestrictionstoavoidpreviousexcessesmustbestruck.nHoweverdespitethestricturesofearlyunderwritingwithincreasedCMBSmarketvolumeandcompetitionamonglendersCMBSunderwritingstandardshavebeenlooseninginrecentyearssincetheCMBSmarketresumedinthewakeofthemeltdown.