JP Conklin

Office 704-887-9880
Cell 980-475-0268
jp.conklin@pensfordfinancial.com
Pensford Financial Saves Borrower Over $180,000
In early October, a west coast real estate firm contacted Pensford Financial to defease its
$23.5mm loan in order to refinance one of their Texas properties. The firm was also considering
one of Pensfords competitors to act as consultant a firm recommended by the Servicer. The
Servicer even offered a $2,500 discount on its fees if the borrower went with its recommendation
for defeasance consultant, citing pre-negotiated documents that allowed for less labor on the
closing. As we would soon learn, however, there were other financial incentives for the Servicer
that led to upfront pricing concession.
Pensfords initial review of the defeasance language revealed ambiguous language that we
believed would allow the borrower to exercise a two-month prepayment window. If our
interpretation was correct, this would result in a savings of more than $180,000 to the client.
Pensfords competitor disagreed with this interpretation; however, their interpretation would have
resulted in the $180,000 going to them instead of the Borrower. Additionally, our competitor was
offering the Servicer a $10,000 referral fee. These factors created a conflict of interest and raised
the question of whether our competitor was really representing the best interests of the client or
the Servicer.
Pensford reached out to the law firm that routinely acts as counsel for this particular Servicer, but
we withheld the property name. After a week of debating the language, we convinced the firm
that our interpretation was correct and notified the Borrower. We were engaged and submitted the
Defeasance Notice the next day, requesting this law firm be used for the defeasance. Since this
was the firm traditionally used by the Servicer anyway, they agreed.
We immediately sent the defeasance language to the law firm and requested the defeasance
premium only be paid through the open window. The firm, having already agreed to this
interpretation, quickly signed off. The rest of the closing proceeded smoothly and our Borrow
saved more than $180,000 at closing.
Despite the blatant conflict of interest, our client was initially inclined to follow the Servicers
recommendation to hire our competitor. In fact, it was only after we proactively reached out to
the likely counsel to negotiate the language that we were hired.
Perhaps Pensford Financials greatest strength is total objectivity - we only represent the
borrower. This independence can save clients substantially more than the upfront concessions
offered by a Servicer to engage their preferred firm.

Generally, this material is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
any financial instrument or as an official confirmation of any transaction. Your receipt of this material does not create a client
relationship with us and we are not acting as fiduciary or advisory capacity to you by providing the information herein. All market
prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. This
material may contain information that is privileged, confidential, legally privileged, and/or exempt from disclosure under applicable
law. Though the information herein may discuss certain legal and tax aspects of financial instruments, Pensford Financial Group,
LLC does not provide legal or tax advice. The contents herein are the copyright material of Pensford Financial Group, LLC and shall
not be copied, reproduced, or redistributed without the express written permission of Pensford Financial Group, LLC.