Are Loan Servicers The Hero Lenders Need With Trillions Coming Due By 2026

Commercial real estate markets are facing a massive multi-trillion dollar wave of maturities by the end of 2026. In 2025 alone, an estimated $570 billion in CRE debt comes due, followed by $460 billion in 2026. This is on top of the highest interest period in years with declining property values. Needless to say - the stress on borrowers is going to be significant.

Refinancing Challenges and Market Strain

A substantial portion of maturing loans may struggle to refinance. Analysts estimate that up to 15% of these loans face serious hurdles, while JLL projects that about 25% of $1.5 trillion in maturing debt will encounter refinancing difficulties. As a result, loan mods, extensions, and workouts are increasingly being used to manage these challenges.

Lenders across sectors are feeling the strain:

• Private Credit Lenders: With high leverage issues, many are negotiating extensions or restructures to avoid forced sales.

• Insurance Companies: Though generally conservative, the issue of declining property values are pushing LTVs to concerning levels.

• Commercial Banks: With $659 billion in CRE loans maturing in 2025, many banks are opting to push maturities back while building out options within their servicing systems to handle the distressed assets.

Loan Servicing To The Rescue

Servicers play a crucial role in managing maturing debt, handling loan extensions, modifications, and, if necessary, foreclosures. As default risks rise, servicers must navigate complex loan structures, multiple investors, and intricate performance covenants.

Key strategies used:

• Loan Term Extensions: The most common approach, pushing due dates out by 1-3 years to allow borrowers time to stabilize properties. A good servicer should be able to manage the business need first and not be limited technically.

• Interest Rate and Payment Modifications: Adjusting terms to help borrowers survive, often in exchange for fresh equity injections. Deferring interest and creating payment plans based on various performance factors are just a few of the methods being used.

• Restructuring and Workouts: Splitting loans into senior and junior tranches or converting portions of debt to equity to avoid foreclosures.

• Foreclosure and REO Management: With foreclosures jumping up in 2024, servicers are increasingly managing REO properties.

Your Servicing System Must Be Robust And Flexible

Lenders with in-house servicing platforms are better positioned to manage the maturity wave. A strong servicing system ensures:

• Proactive Loan Monitoring: Early identification of at-risk loans allows for timely intervention.

• Retained Fee Income: Internal servicing keeps modification and workout fees in-house, boosting profitability.

• Operational Efficiency: Automating servicing tasks reduces costs and enhances accuracy.

• Better Risk Management: Compliance tracking and reporting prevent regulatory issues and support credit quality.

Handling Pretty Much Any Loan Scenario

While many institutions rely on expensive third-party servicers to prioritize short term over the long term, Benedict Group offers a scalable, customizable alternative for lenders seeking to manage their own portfolios. Their platform supports diverse loan types, allowing lenders to control servicing strategies, optimize fee income, and maintain agility in an evolving market (Benedict Group).

As trillions mature, lenders equipped with robust servicing systems will have a decisive advantage in mitigating risks, preserving asset value, and navigating one of the most challenging refinancing environments in decades.