What the special servicer earns on your loan
Three fees, set in the pooling and servicing agreement: a monthly special servicing fee while it holds the loan, a workout fee if the loan recovers, and a liquidation fee if it is paid off at a discount, sold or foreclosed. The rates below are BANK5 2025-5YR14's. Knowing them tells you what each outcome is worth to the person across the table.
Worked example
An $18,000,000 loan at 4.5% spends nine months with the special servicer. The monthly fee is the greater of 0.25% ÷ 12 × $18,000,000 = $3,750 and $3,500, so $3,750, and $33,750 over nine months. Then three outcomes:
| Outcome | Workout fee | Liquidation fee | Total to the special servicer |
|---|---|---|---|
| Recovers, then pays off 30 months later | $200,250 | $0 | $234,000 |
| Refinanced within 120 days of a missed maturity | $0 | $0 | $33,750 |
| Discounted payoff or liquidation at $18,000,000 | $0 | $180,000 | $213,750 |
The workout fee on a recovered loan includes 1% of the balloon, because the balloon is a collection of principal. That is why a refinance inside the 120-day window is the cheapest exit in this agreement: it is the only path where the special servicer takes neither the workout nor the liquidation fee.
Who pays
These fees are paid from the trust's collections on your loan, so in the first instance they come out of what bondholders receive. Whether your loan documents require you to reimburse them is a question for your loan agreement. Unpaid special servicing fees do count against you in one place: the appraisal reduction formula subtracts them from the value side. See how that works.
Want the cheapest exit?
A refinance inside the window ends the file. The Janover Capital desk can look at whether one is possible on your loan.