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.
I am just returning from New York City where I attended MBA’s Commercial/Multifamily Servicing and Technology Conference 2010. Most of the major master, special and primary servicers attended. The proposed SEC changes to Regulation AB were discussed at almost every panel.
XML acceptance
A well-attended special session focused on the proposed new regulations and the MBA response.
After a fair amount of discussion on what the changes entailed, the moderator took a survey of which firms were in favor, opposed or indifferent to reporting in XML. For the first time, not one servicer stated they were opposed to reporting in XML (a few were in favor and most voted indifferent).
It seemed that either the fear of a negative reaction from the SEC or just plain acceptance of the inevitability of the rule changes eliminated at least public disagreement with converting to XML. To be sure, there will be great debate on which data elements should be included in the XML, and if the IRP itself will change, or if there will be a new XML report solely for SEC compliance. But public resistance from the servicers, which has always killed the discussion in the past, was absent.
MISMO: What a difference a year makes
There were two dedicated MISMO panels and a MISMO meeting. I attended all three sessions and spoke on the last panel titled “Making MISMO Work for You.” Download the Powerpoint slide show. The Dilbert comic on slide 2 is classic.
While I would not say attendance was bursting at the seams, all three sessions generated fairly good crowds. People actually asked questions and showed interest in learning more about standards and XML.
Last year at this conference in New Orleans, there was virtually no discussion about MISMO and XML standards. Everyone was focused on servicing issues as opposed to reporting/transparency issues. This year, the focus and sense of urgency provided a much-needed boost of energy to all the folks who have been working on data standards.
Next steps
The MBA, CREFC and MISMO are all working on their responses to the SEC proposals. The comment period ends August 2, so all responses must be finished by mid July.
I am participating in all the conference calls and was elected to be co-head of the MISMO response committee. MISMO will make sure the XML schema for the final list of data elements is workable and consistent with the MISMO data model, and ideally with the CREFC IRP 6. The next several weeks will be very interesting as the responses get finalized.
— — —
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.
In addition to the rating agency rules that go into effect on June 2, the SEC has asked for public comment on extensive changes to SEC securitization rules, known as Regulation AB.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2010-05-18 20:04:372020-09-16 20:05:57Regulation AB Reform
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
MBA servicing and technology conference
/0 Comments/in Industry news, Industry standards /by jimflahertyI am just returning from New York City where I attended MBA’s Commercial/Multifamily Servicing and Technology Conference 2010. Most of the major master, special and primary servicers attended. The proposed SEC changes to Regulation AB were discussed at almost every panel.
XML acceptance
A well-attended special session focused on the proposed new regulations and the MBA response.
After a fair amount of discussion on what the changes entailed, the moderator took a survey of which firms were in favor, opposed or indifferent to reporting in XML. For the first time, not one servicer stated they were opposed to reporting in XML (a few were in favor and most voted indifferent).
It seemed that either the fear of a negative reaction from the SEC or just plain acceptance of the inevitability of the rule changes eliminated at least public disagreement with converting to XML. To be sure, there will be great debate on which data elements should be included in the XML, and if the IRP itself will change, or if there will be a new XML report solely for SEC compliance. But public resistance from the servicers, which has always killed the discussion in the past, was absent.
MISMO: What a difference a year makes
There were two dedicated MISMO panels and a MISMO meeting. I attended all three sessions and spoke on the last panel titled “Making MISMO Work for You.” Download the Powerpoint slide show. The Dilbert comic on slide 2 is classic.
While I would not say attendance was bursting at the seams, all three sessions generated fairly good crowds. People actually asked questions and showed interest in learning more about standards and XML.
Last year at this conference in New Orleans, there was virtually no discussion about MISMO and XML standards. Everyone was focused on servicing issues as opposed to reporting/transparency issues. This year, the focus and sense of urgency provided a much-needed boost of energy to all the folks who have been working on data standards.
Next steps
The MBA, CREFC and MISMO are all working on their responses to the SEC proposals. The comment period ends August 2, so all responses must be finished by mid July.
I am participating in all the conference calls and was elected to be co-head of the MISMO response committee. MISMO will make sure the XML schema for the final list of data elements is workable and consistent with the MISMO data model, and ideally with the CREFC IRP 6. The next several weeks will be very interesting as the responses get finalized.
— — —
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
Regulation AB Reform
/0 Comments/in Industry news, Industry standards /by jimflahertyIn addition to the rating agency rules that go into effect on June 2, the SEC has asked for public comment on extensive changes to SEC securitization rules, known as Regulation AB.
Read more