Is there any circumstance in which the B-note holder no longer has consultation and consent rights?
Yes, in the event of a Control Appraisal Event, the B-note holder typically loses its consultation and consent rights under the co-lender agreement. A Control Appraisal Event is typically defined as a reduction in the principal balance of the B-note by appraisal deductions or realized losses to below a certain level (typically 25%; although we have seen percentage levels as high as 50%) of its original principal balance. In this event, the consultation and consent rights are transferred to the A-note holder under a typical co-lender agreement. Under the co-lender agreement, may the B-note holder replace the master servicer? Absent a breach by the master servicer under the co-lender agreement, the B-note holder has no right to replace the master servicer. Under the co-lender agreement, may the B-note holder replace the special servicer? The B-note holder may replace the special servicer without cause at any time, subject to certain conditions being met with respect to the replacement sp
