This year’s CMSA conference was a lot less depressing than I expected. Not because there’s any sense that the market is going to recover in 2009 — everyone is predicting next to zero lending — but because of these three facts:
1) The people who still attend these conferences are survivors at firms that are committed to the space, and few of them think 2009 could be any worse than 2008.
2) Several potential new investors attended. They were “kicking the tires” to find value in the bonds.
3) The parties — at venues like the Shore Club and the Delano — were surprisingly nice.
Not to say it was a big party. Two reminders of the carnage: the attendance numbers were way off, and people were walking around looking for work.
1. Simpler capital structures. 2. Eliminate the concept of restricted data. 3. Clean the form and quality of the data. 4. PSA improvements must be retroactive. 5. Master Servicers are not paid enough. 6. Special Servicers have a huge conflict of interest. 7. Rating Agencies should move away from the Black Box. 8. Structures work better if everyone has skin in the game. 9. Investors are willing to pay for improved data.
A real sense of urgency The hot topic of conversation was the investor forum, which turned out to be a long scolding about the problems the industry has with getting data through the system. The leadership looked at the “the list” and contemplated a formal response. Conversations were started with the servicers, and I heard several creative ideas that could provide solutions for the investors.
But I also had more than one conversation with experienced and smart people who think “it (real reform) is never going to happen.” Maybe they are too jaded from trying for so many years with very little success. Or maybe they are right.
The Year of Change While change is hard, and there’s no guarantee of success, I am optimistic. The challenges are not insurmountable and, for the first time, probably ever, there is a real impetus to make improvements.
After all, this is the Year of Change. Yes we can!
My wife and I are headed to Washington next week for the inauguration — to witness history and get inspired for the year ahead. I was invited by the MBA, so I hope to get good access. I will post updates from history next week.
— — —
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.
The Exposure Draft of IRP 6 (called “IRP X”) has been released.
It contains essentially the same content as IRP 5, but in XML. I applaud both the CMSA and the MBA for getting that done. It is a critical step not only in organizing the basic data, but also in starting the comment period that leads to getting the standard approved.
We will now turn to the battle of getting the rent rolls added to IRP X, but at least the clock is ticking, and it will be in XML.
Master Servicer Issue
The master servicers are most affected by IRP X. To comply with XML should be only marginally painful because the servicing systems used (Strategy and Enterprise) are more than capable of producing XML. The bigger issue will be the rent rolls, because not all master servicers have the data readily available.
Some master servicers, typically banks, already enter rent rolls into their systems. Therefore, they can deliver the XML with rent rolls for about the same cost as just the XML (and at least one stated they would support the standard). Other master servicers enter only the top three tenants and the totals (the current standard) then simply log the document in the file cabinet. Finally, there are servicers who are reluctant to release any data without being paid.
To be fair, these companies bid their servicing contracts based on top three tenants. There is an argument to be made that, if we change the standard, master servicers should be compensated for the additional disclosure. I say fine, let’s find a way to get these companies compensated — it will not cost very much — and get on with it.
The view from the 17th floor of the Shore Club in Miami. Attending these conferences is a tough job, but somebody has to do it.
— — —
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.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2009-01-13 00:11:572020-09-17 00:13:05Notes from the CMSA Investor Conference: IRP X
The much anticipated investor forum was a bit disappointing.
I agreed with almost everything they said, and I liked the fact that it was delivered with a bit of an angry edge. The problem was that the laundry list lasted the entire session, and they left no time for questions, discussion and comments.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2009-01-13 00:09:482020-09-17 00:11:37Notes from the CMSA Investor Conference: Investor Forum
CMSA Investor Conference: Parting thoughts
/0 Comments/in Industry news /by jimflahertyThis year’s CMSA conference was a lot less depressing than I expected. Not because there’s any sense that the market is going to recover in 2009 — everyone is predicting next to zero lending — but because of these three facts:
1) The people who still attend these conferences are survivors at firms that are committed to the space, and few of them think 2009 could be any worse than 2008.
2) Several potential new investors attended. They were “kicking the tires” to find value in the bonds.
3) The parties — at venues like the Shore Club and the Delano — were surprisingly nice.
Not to say it was a big party. Two reminders of the carnage: the attendance numbers were way off, and people were walking around looking for work.
1. Simpler capital structures.
2. Eliminate the concept of restricted data.
3. Clean the form and quality of the data.
4. PSA improvements must be retroactive.
5. Master Servicers are not paid enough.
6. Special Servicers have a huge conflict of interest.
7. Rating Agencies should move away from the Black Box.
8. Structures work better if everyone has skin in the game.
9. Investors are willing to pay for improved data.
A real sense of urgency
The hot topic of conversation was the investor forum, which turned out to be a long scolding about the problems the industry has with getting data through the system. The leadership looked at the “the list” and contemplated a formal response. Conversations were started with the servicers, and I heard several creative ideas that could provide solutions for the investors.
But I also had more than one conversation with experienced and smart people who think “it (real reform) is never going to happen.” Maybe they are too jaded from trying for so many years with very little success. Or maybe they are right.
The Year of Change
While change is hard, and there’s no guarantee of success, I am optimistic. The challenges are not insurmountable and, for the first time, probably ever, there is a real impetus to make improvements.
After all, this is the Year of Change. Yes we can!
My wife and I are headed to Washington next week for the inauguration — to witness history and get inspired for the year ahead. I was invited by the MBA, so I hope to get good access. I will post updates from history next week.
— — —
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
Notes from the CMSA Investor Conference: IRP X
/0 Comments/in Industry standards /by jimflahertyThe Exposure Draft of IRP 6 (called “IRP X”) has been released.
It contains essentially the same content as IRP 5, but in XML. I applaud both the CMSA and the MBA for getting that done. It is a critical step not only in organizing the basic data, but also in starting the comment period that leads to getting the standard approved.
We will now turn to the battle of getting the rent rolls added to IRP X, but at least the clock is ticking, and it will be in XML.
Master Servicer Issue
The master servicers are most affected by IRP X. To comply with XML should be only marginally painful because the servicing systems used (Strategy and Enterprise) are more than capable of producing XML. The bigger issue will be the rent rolls, because not all master servicers have the data readily available.
Some master servicers, typically banks, already enter rent rolls into their systems. Therefore, they can deliver the XML with rent rolls for about the same cost as just the XML (and at least one stated they would support the standard). Other master servicers enter only the top three tenants and the totals (the current standard) then simply log the document in the file cabinet. Finally, there are servicers who are reluctant to release any data without being paid.
To be fair, these companies bid their servicing contracts based on top three tenants. There is an argument to be made that, if we change the standard, master servicers should be compensated for the additional disclosure. I say fine, let’s find a way to get these companies compensated — it will not cost very much — and get on with it.
— — —
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
Notes from the CMSA Investor Conference: Investor Forum
/0 Comments/in Industry news, Industry standards /by jimflahertyThe much anticipated investor forum was a bit disappointing.
I agreed with almost everything they said, and I liked the fact that it was delivered with a bit of an angry edge. The problem was that the laundry list lasted the entire session, and they left no time for questions, discussion and comments.
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