The lease says in this situation the tenant owes the total balance of the remaining term.

Either people need to start earning more money (we can debate this since it looks like we are already in a recession here), interest rates need to decline (looks like the Fed is about to start doing this) or prices need to decline which has already started to happen.My vote is on lower interest rates and price declines until the market finds its balance and you see transactions start to increase.

I wanted to post this as I see many people do all the DD in the world and sometimes too much DD (I love it when the BPO comes back at $140k not $180k but loan balance is $50k and they want to fade/walk away) - but they miss the most important component which is this loan sale agreement.

While the DSCR calculation as noted above is a bit "aggressive" and looser by not taking into account many expenses, its somewhat balanced in that these are 30-year typically fixed rate loans where the rents should increase much more over the term than expenses (and largest typical cost - debt service - is locked in). 

The important language in your reply is "on their behalf" -- redirecting the principal's funds is not acting on their behalf.Seems to me the smartest/easiest way to deal with lender escrow accounts is to have that feature eliminated from the loan ASAP in the subto process... preferably immediately after an annual tax disbursement reduces the account balance to a low point.But yes, when the principal dies so does the power.

By carefully balancing the collateral and ensuring rigorous underwriting standards, it is possible to mitigate potential downsides while capturing the upside potential, providing a compelling investment proposition in a competitive market.Uses of Mezzanine Debt CapitalMezzanine debt can be deployed effectively in several ways, including:- Liquidity Provision: Providing liquidity to set aside interest reserves for first lien lenders and tax and insurance escrows required by the first lender.- Property Improvements: Funding additional property improvements such as renovations, HVAC work etc.- Operating Shortfall Coverage: Addressing operational shortfalls during challenging periods.Objectives of Mezzanine DebtThe primary objectives when using mezzanine debt include:- Project Stabilization: Completing renovations, construction, or improvements and then stabilizing the property with 90%+ occupancy.- Interest Rate Management: Buying time until interest rates normalize or decline.

And this means that we are earning interest at ~ 4.5% to 5% or so on the balance we are holding back.

This will result in paying the least amount of interest over time.Alternatively, people will suggest to pay off the mortgage with the lowest balance. 

The drawback would be if you only make minimum payments, the balance will never decrease.

The markets are generally pretty in balance.