This is exactly how a CDO vehicle works. The customer says they...

This is exactly how a CDO vehicle works. The customer says they won't extend or pay interest. This triggers the "special servicer clauses" in the CDO vehicle (In this case a Titan vehicle) which means all future interest and principal payments go from top to bottom tranches. You can find the exact Titan structuring docs on the net but they're long and pretty dull. Upshot is that REU is a bottom tranche so unlikely to get any more principal or interest.