I spent the day Fishing and Crabbing off of the Marin coast in the “High Tide” -– my 28 foot long, twin engine MasterCraft X-80 that can usually be found pulling us around on a wakeboard. Not today: We took up the carpets, loaded my 4th and 2nd grade kids, and got my buddy who actually knows how to fish to be our guide.
We started the day by dropping a crab pot in 150 feet of water about 7 miles off Bolinas. The trap was loaded with an old fish head and, after the drop, we hit the Man Over Board button on the GPS to mark our spot and then headed in toward the coast.
Andy with his monster from the deep.
We went to a spot called Double Point about half way between Bolinas and Point Reyes and got the poles ready. We were fishing for rock fish with sardine bait. Basically, you put a heavy weight on the line and bounce the weight off of the rocky shore below trying to get a fish to hit.
The closer you are to the rocks, the better, so there is a fair amount of positioning the boat. Needless to say, we crushed it!
My son Andy got the first hit and it turned out to be the best fish of the day — a 27-inch Blue Lingcod. The fish was ugly with big teeth and a gnarly looking face with spikes coming out of it, but lingcod are prized for eating. We went on to get six more fish including a Cabezon and a few Red Rock Fish.
We headed back out to the crab pot to see if we caught any Dungeness Crabs. After pulling up of the crab pot, we were pleased to see a bunch of keepers. We ended up with eight to keep and threw back five or so for being too small.
We powered back enough fish and crab to feed us and my buddy and his family for at least three meals (plus my dogs loved the skin and scraps). Awesome!
It was a big difference for me and the kids fishing in the ocean as we usually only fish for Trout in the Sierra lakes (Lake Kirkwood is our favorite) where a 12 inch fish is the norm.
To pull up a “creature from the deep” that feeds the entire family for a few days was awesome. Plus, to transform the boat from a Wakeboarding machine to fishing platform adds a new way to use the boat, which is always a goal.
Me and the kids: There’s no better way to get crab.
— — —
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.pngjimflaherty2008-11-23 00:27:502020-09-17 00:29:25The Not So Deadliest Catch
On Wednesday morning, my “happy” post-election emotion was replaced with a toxic combination of hangover and jet lag. I hit snooze a bunch of times and finally made it over to the conference for the afternoon sessions.
The takeaway was not all negative. A few buyers felt pretty good about recent trades buying AAA European CMBS for 60 cents on the dollar, driving yields up to 12% or so. But there have been only a few forced sales to date, and volume is very low.
That led to an interesting panel among special / master servicers, senior bond investors, junior bond investors and lawyers about the timing of enforcing non monetary loan defaults, the fiduciary responsibilities of the servicers to maintain a “servicing standard” and the potential liability created when folks in different parts of the cap stack want different strategies.
An example:
If a borrower breached a Loan-to-Value covenant but was still paying on the debt, should the loan be called for default and the special servicer take an enforcement action and foreclose / sell the asset?
Or, since the borrower is still paying, should the servicer waive the LTV default, maybe put in a cash sweep or some other modification, but hold off on foreclosure on the hope things get better in the next year or two.
Well, if you are the senior note holder and you think things are going to get worse over the next few years, you would rather the servicer foreclose on the property immediately and get you paid back. Your thinking is, since you own the top of the capital stack (say 0 – 70% of the debt stack), even at today’s depressed process, you should get most of your money back, and you do not want to risk further deterioration in values.
The problem is the junior bond holder (who owns say 70% – 90% of the capital stack) does not want the servicer to sell now. If the asset was foreclosed and sold today, his position would definitely be wiped out. So he would rather sit tight, keep collecting payments as long as possible, and keep his fingers crossed that values recover and things turn out OK.
Who does the servicer listen to? What happens if the servicer also owns either the senior or junior piece? How is this conflict of interest addressed? They were referencing a “Servicing Standard” to dictate the decisions, but it sounds to me that the only people that win in this scenario are the lawyers. …
While the debate among the servicers and investors was definitely interesting, other main themes included:
The mood was mostly (but not entirely) negative.
The primary CMBS market in Europe is shut down with virtually no new issuance.
The secondary market was also shut down with the exceptions of a few forced sales at around 60 cents on the dollar.
Sellers are only selling if they have to, because they believe government asset purchase programs might pay above market for assets in the not too distant future.
Cap Rates are believed to be rising and commercial real estate values falling, with some predicting stabilization as early as 2009, while others are predicting 2011/2012 and beyond.
Standards and Transparency will be harder to achieve in Europe because of privacy concerns.
I did have meetings with a major bank and rating agency to push the adoption of Backshop as an underwriting standard. I also spoke to the leadership of the CMSA about the importance of standardized underwriting and trying to make that part of any TARP / Bailout program for CMBS.
So, definitely worth the trip. Being oversees for the election was way cool.
— — —
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.pngjimflaherty2008-11-07 00:29:432020-09-17 00:31:37CMSA Europe Conference, Day 2: Not all negative
I’m in London this week for the annual European conference of the Commercial Mortgage Securitization Association (CMSA).
The media have been focused on the presidential race, but, when it looked like Obama was going to win, and we left home in Notting Hill to go join “the masses,” we found the streets mostly empty. Granted it was already 2 a.m. Wednesday morning local time, but I thought we might see more activity.
We headed over to the U.S. embassy in Mayfair because we heard there was a party there. When we got there, it looked “too” official with everyone dressed up and fairly conservative. So we headed to Piccadilly Circus / Leicester Square where the rowdy people were hanging out (it is comparable to Times Square in New York).
Here’s where we found the party.
We went to a bar called Yates that was hosting an all-night election party. We paid the cover, and when we went inside, there were two definite groups in the bar. In the front were about McCain supporters. From the middle to the back of the bar, there were probably 500 people pulling for Obama.
We set up shop in the middle of Obama territory and waited for Pennsylvania and Ohio to come in. I got a call from my wife who was at an election party in San Francisco when they called Ohio. In London, they had not made the call yet so I announced it in the bar. People were skeptical but then as if on cue, the broke the news that Obama was going to carry Ohio and Pennsylvania.
McCain supporters in front, Obama supporters in back …
Case closed: Obama won.
The place erupted — shots, champagne, hugs, tears — the whole thing. Brits were congratulating Americans for our ability to reinvent ourselves. If felt cool to be an American again in Europe. The U.S. backpackers might not have to pretend to be from Canada anymore!
After it was clear Obama won, I limped back to my hotel and watched the acceptance speech from my room (about 5 a.m. now). Inspiring, emotional, historic. When I finally passed out, I was drained but happy.
— — —
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.pngjimflaherty2008-11-06 00:31:562020-09-17 00:32:59Watching the U.S. election in London
The Not So Deadliest Catch
/0 Comments/in What's going on /by jimflahertyI spent the day Fishing and Crabbing off of the Marin coast in the “High Tide” -– my 28 foot long, twin engine MasterCraft X-80 that can usually be found pulling us around on a wakeboard. Not today: We took up the carpets, loaded my 4th and 2nd grade kids, and got my buddy who actually knows how to fish to be our guide.
We started the day by dropping a crab pot in 150 feet of water about 7 miles off Bolinas. The trap was loaded with an old fish head and, after the drop, we hit the Man Over Board button on the GPS to mark our spot and then headed in toward the coast.
Andy with his monster from the deep.
We went to a spot called Double Point about half way between Bolinas and Point Reyes and got the poles ready. We were fishing for rock fish with sardine bait. Basically, you put a heavy weight on the line and bounce the weight off of the rocky shore below trying to get a fish to hit.
The closer you are to the rocks, the better, so there is a fair amount of positioning the boat. Needless to say, we crushed it!
My son Andy got the first hit and it turned out to be the best fish of the day — a 27-inch Blue Lingcod. The fish was ugly with big teeth and a gnarly looking face with spikes coming out of it, but lingcod are prized for eating. We went on to get six more fish including a Cabezon and a few Red Rock Fish.
We headed back out to the crab pot to see if we caught any Dungeness Crabs. After pulling up of the crab pot, we were pleased to see a bunch of keepers. We ended up with eight to keep and threw back five or so for being too small.
We powered back enough fish and crab to feed us and my buddy and his family for at least three meals (plus my dogs loved the skin and scraps). Awesome!
It was a big difference for me and the kids fishing in the ocean as we usually only fish for Trout in the Sierra lakes (Lake Kirkwood is our favorite) where a 12 inch fish is the norm.
To pull up a “creature from the deep” that feeds the entire family for a few days was awesome. Plus, to transform the boat from a Wakeboarding machine to fishing platform adds a new way to use the boat, which is always a goal.
Me and the kids: There’s no better way to get crab.
— — —
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
CMSA Europe Conference, Day 2: Not all negative
/0 Comments/in Industry news, Industry standards /by jimflahertyOn Wednesday morning, my “happy” post-election emotion was replaced with a toxic combination of hangover and jet lag. I hit snooze a bunch of times and finally made it over to the conference for the afternoon sessions.
The takeaway was not all negative. A few buyers felt pretty good about recent trades buying AAA European CMBS for 60 cents on the dollar, driving yields up to 12% or so. But there have been only a few forced sales to date, and volume is very low.
That led to an interesting panel among special / master servicers, senior bond investors, junior bond investors and lawyers about the timing of enforcing non monetary loan defaults, the fiduciary responsibilities of the servicers to maintain a “servicing standard” and the potential liability created when folks in different parts of the cap stack want different strategies.
If a borrower breached a Loan-to-Value covenant but was still paying on the debt, should the loan be called for default and the special servicer take an enforcement action and foreclose / sell the asset?
Or, since the borrower is still paying, should the servicer waive the LTV default, maybe put in a cash sweep or some other modification, but hold off on foreclosure on the hope things get better in the next year or two.
Well, if you are the senior note holder and you think things are going to get worse over the next few years, you would rather the servicer foreclose on the property immediately and get you paid back. Your thinking is, since you own the top of the capital stack (say 0 – 70% of the debt stack), even at today’s depressed process, you should get most of your money back, and you do not want to risk further deterioration in values.
The problem is the junior bond holder (who owns say 70% – 90% of the capital stack) does not want the servicer to sell now. If the asset was foreclosed and sold today, his position would definitely be wiped out. So he would rather sit tight, keep collecting payments as long as possible, and keep his fingers crossed that values recover and things turn out OK.
Who does the servicer listen to? What happens if the servicer also owns either the senior or junior piece? How is this conflict of interest addressed? They were referencing a “Servicing Standard” to dictate the decisions, but it sounds to me that the only people that win in this scenario are the lawyers. …
While the debate among the servicers and investors was definitely interesting, other main themes included:
I did have meetings with a major bank and rating agency to push the adoption of Backshop as an underwriting standard. I also spoke to the leadership of the CMSA about the importance of standardized underwriting and trying to make that part of any TARP / Bailout program for CMBS.
So, definitely worth the trip. Being oversees for the election was way cool.
— — —
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
Watching the U.S. election in London
/0 Comments/in What's going on /by jimflahertyI’m in London this week for the annual European conference of the Commercial Mortgage Securitization Association (CMSA).
The media have been focused on the presidential race, but, when it looked like Obama was going to win, and we left home in Notting Hill to go join “the masses,” we found the streets mostly empty. Granted it was already 2 a.m. Wednesday morning local time, but I thought we might see more activity.
We headed over to the U.S. embassy in Mayfair because we heard there was a party there. When we got there, it looked “too” official with everyone dressed up and fairly conservative. So we headed to Piccadilly Circus / Leicester Square where the rowdy people were hanging out (it is comparable to Times Square in New York).
Here’s where we found the party.
We went to a bar called Yates that was hosting an all-night election party. We paid the cover, and when we went inside, there were two definite groups in the bar. In the front were about McCain supporters. From the middle to the back of the bar, there were probably 500 people pulling for Obama.
We set up shop in the middle of Obama territory and waited for Pennsylvania and Ohio to come in. I got a call from my wife who was at an election party in San Francisco when they called Ohio. In London, they had not made the call yet so I announced it in the bar. People were skeptical but then as if on cue, the broke the news that Obama was going to carry Ohio and Pennsylvania.
McCain supporters in front, Obama supporters in back …
Case closed: Obama won.
The place erupted — shots, champagne, hugs, tears — the whole thing. Brits were congratulating Americans for our ability to reinvent ourselves. If felt cool to be an American again in Europe. The U.S. backpackers might not have to pretend to be from Canada anymore!
After it was clear Obama won, I limped back to my hotel and watched the acceptance speech from my room (about 5 a.m. now). Inspiring, emotional, historic. When I finally passed out, I was drained but happy.
— — —
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