Download Summary of CMSA Forums

Summary of CMSA Forums
Held on January 29, 2010 in Washington, D.C.
Overall Theme
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More disclosure and transparency.
A task force of the CMSA Investor Reporting Package (IRP) Committee has been
working on an “Introductory Guide to the IRP” that should be available in about a month.
It provides the history of the package; defines terms; provides links to the actual sections
of the IRP where information is located; etc. This should be worth reviewing by anyone
in the marketplace and new entrants should find it especially helpful in understanding the
current version of the IRP. The next step will be to enhance the IRP. And this is
something that we will look to the Servicer Forum, Investor Forum and Lender Form for
participation. This should help our market be a stronger market going forward.
Everyone is encouraged to provide their input as to how to make the reporting process
even better.
Investment Grade Bondholders Forum
This Forum focuses on the senior bondholders; primarily the triple-A space. Themes
discussed in this Forum were:
 How do we make the new iteration of CMBS that comes to the marketplace better
in terms of the practice and the structure of the deal?
 How can we discuss workouts and how can the diligence performed be reported?
 The PSAs are somewhat inconsistent, and is there a way that we can standardize
some of the documentation?
 Seller financing issues – can we come to a meeting of the minds to figure out
what the parameters can be in order to provide more liquidity to the marketplace?
See slides that were presented at this Forum.
Investors Forum
This is a broader Forum that would include all investors, from triple-A on down through
b-piece investors, as well as mezzanine loan investors and whole loan investors. One of
the items that this Forum will focus on will be Intercreditor Agreements.
A survey of the investors was held during this Forum. An interesting result of this survey
was that while most investors believe that the fundamentals are going to continue to
deteriorate in commercial real estate, they also see bond prices doing better throughout
the course of 2010 in the triple-A space.
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45% of the investors surveyed believe that spreads were going to tighten to 100150bp.
Investors do see losses rising throughout the 2005-2008 vintages; but they also
view that the losses on credit-enhanced fields will not reach up to the 30% super
senior class in most cases.
67% believe that commercial real estate values will fall further into 2011.
87% said that “new issue” TALF does not need to be expanded in 2010.
74% said that “legacy” TALF does not need to be expanded.
Servicers Forum
The Servicers discussed the business aspect of servicing loans, the lack of new issuance
and the deteriorating fundamentals. This has forced Servicers to provide a lot more
service on each individual loan, but with even less revenues.
On the overall theme of transparency, the Servicers can work towards helping us
understand the deficiencies of our current documentation (i.e., the PSAs), so that this can
be improved in new deals going forward.
Other issues include difficulties in determining asset values, which hamper the Servicer
when an advance of money is required on an asset.
Portfolio Lenders Forum
Everyone’s focus in this Forum was on the regulatory/legislative environment and how
that is going to impact lending and pricing. Everyone agrees that risk retention is
necessary, but are somewhat agnostic as to who holds that retention (i.e., the b-piece
investor could continue to be the player in our space who retains the first loss position,
although it may require that the b-piece investor not “sell off” its position in any form).
See CMSA’s Government Relations page on our website to see how CMSA is working to
ensure there are no unintended consequences as a result of the regulatory/legislative
reforms that are currently being discussed in Washington, D.C.
Multifamily Lenders Forum
This Forum focused on GSE reform and how it will affect multifamily lending going
forward. In particular, how the activity with regard to single-family reforms affects the
commercial side, both historically and going forward.