I helped draft letters from CREFC, MBA and MISMO to the SEC commenting on the proposed Regulation AB changes. The letters were filed Aug. 2. While all of them supported the concept of transparency, none of them proposed a data list to actually achieve transparency.
With great fanfare today, President Obama signed the financial reform bill into law. Many times over the past several months, I thought this legislation would die, but this is a big, important deal. And now the law is clear: Transparency is required for securitized products.
The big question is whether the SEC enacts rules and regulations to actually bring about transparency.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2010-07-22 19:56:202020-09-16 19:59:20CMBS transparency now required by law!
I attended the Commercial Real Estate Finance Council’s Future of Commercial Real Estate Finance conference in New York City June 14-16. This year’s conference, formerly held by CMSA, was different in that its forum structure provided sessions for six different groups: securities and loan investors, issuers, servicers, portfolio lenders, investment-grade bondholders and multifamily lenders.
The result was much greater discussion of the controversial issues.
The two most controversial issues, loan level disclosures and alignment of interest, were discussed in most sessions but really got active in the Investment Grade Bond Holders Forum.
The forum was chaired by Bill Moretti of Met Life and Tricia Hall of Paulson & Co., who both did a great job of pushing the discussion into controversial topics. When the topic of 5 percent risk retention for shelf eligibility came up, most participants at the conference were in favor of allowing third party B-piece investors to satisfy the requirement. When Bill Moretti stated that full disclosure of rent rolls is important for investors, there was push back from both the issuers and the servicers.
However, Bill made it clear he thought risk retention by the issuing shelf and by a third party B-piece buyer was the best idea. He also stated categorically that full rent rolls should be reported for all tenants on all properties. He reminded the audience that the expected loss of 25 percent on CMBS bonds issued in 2006 and 2007 is awful and represents proof that our methods must improve. The panel really made their point when they put up a slide of that crazy picture of Albert Einstein with his tongue sticking out with a quote under the picture saying: “Insanity is doing the same thing over and over again and expecting a different result.”
They also distributed a “Best Practices for CMBS Restart” document at the conference. This eight-page document is broken out into two general categories: transparency and alignment of interest. Download Best Practices for CMBS Restart.
The proposals sure makes sense to me, and they got good press coverage. Download this excellent article by CRE Direct.
Backshop/CMBS Cocktail Party
Our Tuesday night cocktail party was well attended and lots of fun. Thanks to everyone who came. We got a suite on top of the W New York hotel across the street from the Waldorf. The deck was awesome and the night was perfect. We enjoyed the New York skyline and watched Game 6 of Lakers/Celtics. We went into the wee hours and wound up at a diner for some late night grease.
View from the deck.
That awesome deck.
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
Regulation AB responses submitted
/0 Comments/in Industry news, Industry standards /by jimflahertyI helped draft letters from CREFC, MBA and MISMO to the SEC commenting on the proposed Regulation AB changes. The letters were filed Aug. 2. While all of them supported the concept of transparency, none of them proposed a data list to actually achieve transparency.
So I also wrote my own letter.
Read more
CMBS transparency now required by law!
/0 Comments/in Industry news, Industry standards /by jimflahertyWith great fanfare today, President Obama signed the financial reform bill into law. Many times over the past several months, I thought this legislation would die, but this is a big, important deal. And now the law is clear: Transparency is required for securitized products.
The big question is whether the SEC enacts rules and regulations to actually bring about transparency.
Read more
CREFC Conference
/0 Comments/in Industry news /by jimflahertyI attended the Commercial Real Estate Finance Council’s Future of Commercial Real Estate Finance conference in New York City June 14-16. This year’s conference, formerly held by CMSA, was different in that its forum structure provided sessions for six different groups: securities and loan investors, issuers, servicers, portfolio lenders, investment-grade bondholders and multifamily lenders.
The result was much greater discussion of the controversial issues.
The two most controversial issues, loan level disclosures and alignment of interest, were discussed in most sessions but really got active in the Investment Grade Bond Holders Forum.
The forum was chaired by Bill Moretti of Met Life and Tricia Hall of Paulson & Co., who both did a great job of pushing the discussion into controversial topics. When the topic of 5 percent risk retention for shelf eligibility came up, most participants at the conference were in favor of allowing third party B-piece investors to satisfy the requirement. When Bill Moretti stated that full disclosure of rent rolls is important for investors, there was push back from both the issuers and the servicers.
However, Bill made it clear he thought risk retention by the issuing shelf and by a third party B-piece buyer was the best idea. He also stated categorically that full rent rolls should be reported for all tenants on all properties. He reminded the audience that the expected loss of 25 percent on CMBS bonds issued in 2006 and 2007 is awful and represents proof that our methods must improve. The panel really made their point when they put up a slide of that crazy picture of Albert Einstein with his tongue sticking out with a quote under the picture saying: “Insanity is doing the same thing over and over again and expecting a different result.”
They also distributed a “Best Practices for CMBS Restart” document at the conference. This eight-page document is broken out into two general categories: transparency and alignment of interest. Download Best Practices for CMBS Restart.
The proposals sure makes sense to me, and they got good press coverage. Download this excellent article by CRE Direct.
Backshop/CMBS Cocktail Party
Our Tuesday night cocktail party was well attended and lots of fun. Thanks to everyone who came. We got a suite on top of the W New York hotel across the street from the Waldorf. The deck was awesome and the night was perfect. We enjoyed the New York skyline and watched Game 6 of Lakers/Celtics. We went into the wee hours and wound up at a diner for some late night grease.
View from the deck.
That awesome deck.
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
www.cmbs.com
www.backshop.com