Sponsored by:

“We have no more certainty today about a terrorist attack than we did two years ago. We believe that the government will have to continue to play a role in helping the financial industry deal with this all too real risk.” --Kurt Pfotenhauer, MBA’s senior vice president of government and legislative affairs.

MetLife Acquires Travelers Life & Annuity from Citigroup

European Retail Forecast Comes Down to Fundamentals

Philippines Seeks U.S. Investment

Sierra Capital Closes on $75M in Oregon and California

MBA Addresses Reforms to Protect Property

Five Universities Leverage MBA Grant for CRE Degrees
Reception Follows CMB Graduation at CREF
CMF NewsLink Afternoon Special Editions at CREF

U.S. CMBS Should Hit Record, Moody's Says

CREF Convention Gears Up

Industry Can Manage Larger Loans on Better Information, Schiavo Says

MetLife Real Estate Investments includes a portfolio of nearly $30 billion invested in real estate products including equities and commercial mortgages. MetLife Real Estate Investments has offices in the U.S. and Toronto, as well as affiliates with offices in London and Mexico.

"Travelers has been more active in the below investment grade area while Met Life has been more active in the real estate lending area," said Susan Merrick, managing director of CMBS, at Fitch Ratings, New York. "The combination of the two will not have much impact on CMBS, unless it is to harvest some seasoned loans where there is overlap or concentrations to some borrower, property type or geographic region.

Citigroup and MetLife also entered into 10-year agreements under which MetLife will expand its distribution by making products available through certain Citigroup distribution channels, including Smith Barney, Citibank branches and Primerica in the U.S. and a number of international businesses.

Met Life said it expects its international operations to grow in revenue and earnings and product types. International operations would include wholly owned insurance companies in the United Kingdom, Belgium, Australia, Brazil, Argentina, and Poland; joint ventures in Japan and Hong Kong; and offices in China. The transaction does not include Citigroup’s life business in Mexico. “The distribution agreements will provide us with the broadest distribution network in the industry," said Robert Benmosche, chairman and CEO of MetLife.

MetLife acquired businesses that generated total revenues of $5.2 billion and net income of $901 million in 2004 with total assets of $96 billion. In the first nine months of 2004, MetLife had total revenues of $29 billion, operating income of $2 billion and net income of $2.2 billion in the first nine months of last year. MetLife's assets under management as of September 30, 2004 were $373.5 billion. Benmosche said MetLife incorporated the loss in Citigroup’s real estate portfolio into its accretion guide.

The transaction, expected to close this summer was approved by the Boards of Directors of both companies. It is subject to certain domestic and international regulatory approvals, as well as other customary conditions. Banc of America Securities LLC, San Francisco, and Goldman Sachs, New York, advised MetLife on the transaction, and Citigroup Global Markets advised Citgroup.
(Back To Top)

Moody’s Investor Service , New York, projects retail space to grow by 3.3 percent in 12 European retail markets this year, compared to 3 percent in 2004, with the strongest growth markets likely Amsterdam, Madrid and Berlin. In its report, "CMBS: European Red-Yellow-Green, An Assessment of Retail Property Markets, Year-End 2004," Moody’s said overall supply growth outpaced demand growth in eight out of 12 analyzed markets, and the ratings agency projected demand growth in consumer spending to move up to 2.4 percent growth in 2005 in all 12 analyzed markets, compared with 2.3 percent growth in 2004.

The 2005 Global Property Report from U.S.-based Grubb & Ellis, Northbrook, Ill., U.K.-based Knight Frank, London, and Canada’s Avison Young, Alberta, said retail supply will grow this year by 3.3 percent from three percent. The report also said retail property in Europe was a popular choice in the past few years for investors and developers and it appears that demand growth projections in retail will show an improvement in the majority of European markets for 2005.

Knight Frank assessed investment prospects for the next one to two years in European retail, taking into account 20 separate weighted economic, demographic and property variables. “Despite a slight weakening in consumer spending in the U.K. in mid-2004 in response to interest rate rises, the general strength of the economy has remained robust, keeping the majority of British cities in the upper reaches of the investment ranking table,” said Hans Vrensen , a vice president and senior credit officer at Moody’s and co-author of the Red-Yellow-Green report.

"Overall, retail markets respond quicker to market changes than office or industrial markets due to their larger lot size when new space becomes available,” Vrenson said. “This is especially true for more traditional retail cities such as Munich or Frankfurt, where retail has been mainly concentrated in the city center, and new developments of shopping center projects outside of the city center have a major impact on the additional available retail space."

Frankfurt, Milan and Munich retail markets will show significant improvement in 2005, based on major shopping center completions in 2004 and reduction in projected supply for 2005, Moody’s said.
 
Dublin remains at the top of Knight Frank’s forecast. “Although the Dublin market has lost some of its intensity over the last year it remains at the top of the table, aided by strong national economic performance,” the report said. Cardiff, Leeds, Manchester, Prague, Bristol, Warsaw, London, Birmingham and Sheffield are in the report’s top ten for strongest retail market places in Europe for 2005. “Birmingham’s infrastructure and the emergence of the 'Bull Ring' as a major high quality retail/leisure attraction has elevated the city’s position,” the report said.

Moody’s said supply growth outpaced demand growth in eight markets, by an average of minus 0.9 percent. Amsterdam (minus 4.9 percent), Berlin (minus 3.7 percent) and Madrid (minus 2.9 percent) will have the most over-supply in 2005, and Moody’s estimated that in 2005, new retail space supply will increase at a higher rate than consumer spending in eight of 12 markets. Moody’s said Amsterdam, Madrid and Berlin represent the likelihood for strongest growth in 2005.

Moody’s expects four markets, Madrid, Barcelona, London and Manchester to experience above-average growth in consumer spending, ranging between 2.6 percent to 3.3 percent. The ratings agency said the poorest markets in consumer spending for 2004 were Amsterdam, Barcelona and Paris.

Out of the 12 selected European markets in seven different countries, five markets are in the red zone, four are in the yellow zone and three are in the green zone in Moody’s report.

“In six markets, supply growth is expected to be stronger than in 2004, which has led to an overall decline in the aggregate score from 40 to 37,” said Nicole Lux, Moody’s analyst and co-author of the Red-Yellow-Green report. “This means that the aggregate European retail market score is still in the yellow zone and will need to be monitored carefully over the next six months."

The 2005 Global Property Report said aggressive expansion of international retailers into Eastern Europe, infrastructure improvements, accession to the EU (European Union) and a currently limited supply of high quality stock highlighted the potential of markets such as Prague and Warsaw, pushing both cities into high-ranking positions. The report said the above average GDP growth of the accession markets also enhances their standing. “Germany’s weak performance is a reflection of the struggling national economy,“ the report said.

ResearchWorldwide.com, a commercial real estate information Web site, said the strong demand for retail space in good locations by retailers and investors will strengthen as national and international retailers continue to expand and “vie for market share, brand loyalty and consumer expenditure” within industrialized nations around the globe.

“Multinational retail expansions into Central and Eastern Europe have opened new markets and opportunities,” ResearchWorldwide.com said. “Both multinational and discount retailers are enjoying favorable market conditions in this region. Corporate retailers continue to search out new markets for expansion. Retail rents are stable across most of the key European cities with demand for prime space remaining steady. Very low vacancy has assisted with the maintenance of rental stability. Retail rents are forecast to improve in most European markets in 2005, albeit modestly.”

For information on property markets in the U.S. and Canada, click on any region of 2005 Commercial/Multifamily PropertyLink.
(Back To Top)

“Our attractive areas of investment encompass regional hubs, healthcare/wellness and retirement sectors, power, mining, and the global outsourcing sector,” del Rosario said. The Philippines is also interested in expanding foreign tourism. Tours of the former  Clark Air Base and Subic Bay Naval Base, both strategic ports for the U.S. military’s operations in the Pacific Theater during World War II, are among the attractions.

Ambassador Del Rosario characterized the Philippines as a favorable location for global facilities, citing a quality workforce with a 95 percent literacy rate and 75 percent proficiency in the English language. The Philippines offers international connectivity consisting of satellite and fiber facilities and low-cost bandwidth, in addition to competitive labor costs, Del Rosario said.

The new development plan appears to be bearing fruit for the Filipino economy.  “GDP growth for 2004 is 6 percent, with exports growing 20 percent,” del Rosario said.

The key challenge for Philippines President Gloria Arroyo and her government is internal security, including concerns about the terrorist group Abu Sayyef . Abu Sayyef has been significantly degraded with the help of the United States, and del Rosario stressed that internal security is improving significantly, with terrorism significant only in a remote and limited area of the Philippines.

Economic advances outnumber difficulties, according to del Rosario. The Arroyo government is promoting more trade with the U.S. and is pursuing debt reduction possibilities with the U.S. Government. Philippines officials are also seeking more economic support from multilateral and bilateral institutions, including World Bank, Overseas Private Investment Corp. (OPIC), and the Export-Import Bank.

Del Rosario said working directly with the private sector on a cross-border basis delivered concrete results. “In a short time span, over 60 call centers, more than 25 business processing facilities and over 200 software development companies have been established,” del Rosario noted. AIG, New York, and Citibank, New York, both members of the Mortgage Bankers Association, are among the international companies that have built facilities in the Philippines.

The embassy's economic attache welcomes inquiries from businesses and trade associations about establishing economic opportunities in the Philippines. For further information, contact the economic section of the Embassy of the Philippines at (202) 467-9393 and (202) 467-9317.
(Back To Top)

Sierra closed a $34.375 million deal for Oswego Pointe Apartments, a 422-unit apartment complex in Oswego, Ore. The refinance loan terms are a 10-year adjustable-rate mortgage (ARM) loan with a 1-year lockout and a 2-year interest-only period followed by eight years of amortized payments, based on a 30-year amortization. The loan includes an embedded cap below 6.8 percent.

Oswego Pointe is located on the border of Beaverton, Ore., and Hillsboro, Ore., known as the Sunset Corridor, considered to be a high technology region for employment, including high-profile corporations such as Intel and others. The property is also located 15 minutes from downtown Portland. Unit amenities include fireplace, deck or patio with some river views and washer and dryer. Common amenities include clubhouses with fireplaces and fitness equipment or meeting room with kitchen, racquetball, basketball, indoor and outdoor pool, spa, sauna, tanning bed and trails.

A loan for $13.625 million was closed for The Lakes Apartments, a 288-unit apartment complex in Beaverton, Ore. The refinance loan terms are for a 10-year ARM loan with a 1-year lockout and a 2-year interest only period followed by 8 years of amortized payments, based on a 30-year amortization. The loan includes an embedded cap at 6.62 percent.

The Lakes was built in four phases from 1987 through 1990 and comprises 49 residential buildings with 270,868 square feet of net rentable area. Most units feature river views and all units have a full-size washer and dryer, fireplace and deck or patio. Common amenities include clubhouse with lounge, billiards, fireplace, fitness room, business center, theatre, indoor pool and saunas, kitchenette and barbecue patio area.

Sierra closed $8 million in financing for Don Miguel Apartments, a 200-unit apartment complex in Alta Loma, Calif. The refinance loan features a fixed-to-float, 10-plus 1-year term, with 10-years yield maintenance and a 30-year amortization structure.

Don Miguel comprises 25 residential buildings, constructed in 1984 on 9.07 acres of land. The property is located near Interstates 210 and 15, accessing Riverside and San Bernardino counties, as well as Los Angeles and Orange counties. Common amenities include pool, clubhouse, spa, laundry facilities and security patrol.

A refinance loan was closed for $21 million for Brookside II Apartments, a 264-unit apartment complex in La Palma, Calif. The loan features a 15 plus 1-year fixed-to-float term with a 30-year amortization structure.

Brookside II is the second phase of a two-phase property built in 1971through 1972. Both phases operate as one property with one leasing office. The property offers three different floor plans for one- and two-bedroom units. Common amenities include pool, spa, billiard room, laundry facilities, barbecue areas, recreation room, sand volleyball court and gazebo.
(Back To Top)

Treasury Secretary John Snow said yesterday that the Administration will need to determine the financial capacity of the insurance industry, as well as pricing and take-up of terrorism risk insurance. Snow said the agency will study the potential for re-insurers to return to the market and the most efficient mechanism to produce insurance for the risk. “The issue of reauthorization of TRIA is one that will involve a detailed analysis and more data than we have at this time,” Snow said. The act requires that Treasury study its effectiveness and report to Congress by June 30.

Congress, Pfotenhauer noted, is "skeptical at this point but willing to be convinced.” 

MBA’s 2005 legislative slate includes working with Congress in its efforts to modernize real estate mortgage investment conduit (REMIC) tax rules. The tax rules, created 20 years ago, hinder property owners from upgrading collateral underlying commercial mortgage backed securities (CMBS) loans, MBA said.

“We’ve proposed changes that will help commercial real estate property owners upgrade their properties and perform customary activities more easily,” Pfotenhauer said. “We expect to make significant progress on this issue in 2005.”

MBA Chairman Michael Petrie, CMB, said FHA, a program which “has served America for 70 years and at no cost to the American taxpayer,” provides affordable rental housing, especially in urban areas. However, MBA said FHA modernization will be a major factor to create minority homeownership and homeownership in general. MBA plans to work with FHA to increase the agency’s technology and resources toward “a more innovative product design.” MBA supports a three-year FHA pilot program to develop a zero downpayment product.

MBA will work closely with Congress and the Federal Housing Administration to make FHA a “stronger and more effective partner in serving underserved communities,” Pfotenhauer said.

Petrie also said the multifamily market will become “more distorted” as GSEs purchase multifamily loans to subsidize its single family affordable housing goals. MBA wants to create legislation for an affordable housing fund to support low-income homeownership and “very low income rental housing,” Petrie said. The legislation would calculate a fund amount based on GSE contributions and GSE outstanding debt. MBA also supports an advisory board that would advise the regulator and GSEs on affordable housing goals and administrate the affordable housing fund.

In multifamily, Petrie said the large amount of condo conversions around the country strengthens single family housing and multifamily markets because the conversions act as “a form of substitute housing on the affordable end” to purchase in areas with a lower supply of single family housing. Petrie said the conversions help to tighten too much supply in multifamily and a 35-year historical high in apartment vacancies.

“It strengthens both markets and it’s actually a healthy sign of the economy,” Petrie said.

Doug Duncan, chief economist and senior vice president of research and economics at MBA, said condominium conversions could produce some price volatility into the market, but it should not cause problems as far as a “condo bubble” around the country because the turnover still remains a small component of the entire housing market.

“A very important subissue of this ‘condo conversion craze’ is how many of the people buying the condos are investors and not intending to live in them,” said MBA president and CEO Jonathan Kempner.
(Back To Top)

"By leveraging the grant monies, the universities and their program directors have made great strides in promoting commercial real estate finance and multifamily education," said Dan Thoms, vice president of MBA Education and Business Development. "MBA is very proud of their achievements in implementing the goals of this important initiative."

Cumulatively, these institutions have revised and added courses in their curriculum, increased their student enrollments, developed new degree programs, facilitated new relationships, and secured additional funding to support endowed chairs.

"Backed with the support of MBA's grant, Colorado State University was able to seek additional funds for the Center for Real Estate to revise the curriculum, and the first endowed chair was established in the College of Business," said Michael Rosser, CMB, AMP, MBA University Task Force member and vice president-National Accounts, United Guaranty Corporation in Englewood, Colorado. "Glenn Mueller, the Loveland Commercial Endowed Chair of Real Estate and Director of Center for Real Estate, is a welcome and exciting addition to the university."

As a result of the grant, Texas A&M University revised many of their real estate courses and created a greater Real Estate program presence in its community.

"Not only did the grant serve as a catalyst for the University of Nebraska to secure an additional funding for an endowed chair in Real Estate, it generated a significant increase in commercial real estate course offerings and in the number of students enrolling in the real estate degree program," said Rodrigo Lopez, CMB, MBA University Task Force member and president and chief executive officer, AmeriSphere Multifamily Finance, L.L.C., in Omaha, Nebraska.

The funds distributed to the University of Wisconsin-Madison were used to implement a two-year program focused entirely on commercial real estate finance when the university recognized the need for a capital markets program. 

The University of San Diego (USD) secured a $5 million endowment to create and name the Burnham-Moores Center for Real Estate, one of only a handful of substantially endowed real estate centers in the United States.

 "The Burnham-Moores Center also then launched a new Master of Science in Real Estate degree program to continue its climb toward world-class recognition," said Daniel Phelan, CMB, CRI, MBA University Task Force Chairman and president and CEO, Pacific Southwest Realty Services in San Diego. "This 11-month, full-time program is fully complemented and the first class consists of 24 students. MBA's $100,000 grant in 2000 served as a catalyst for accelerating the growth of the USD real estate program."

As this five-year funding initiative comes to an end, the Commercial University Task Force will meet at MBA's Commercial Real Estate Finance/Multifamily Housing Convention & Expo  in San Diego next week. The Task Force will discuss the progress made by these five universities, as well as future initiatives such as an internship program for students enrolled in these institutional programs.

For more information about this initiative, contact Thoms at (202) 557-2915.
(Back To Top)

Reception Follows CMB Graduation at CREF
MBA (2/3/2005) Sabol, Krista

Attending MBA’s Commercial Real Estate Finance/Multifamily Housing Convention in San Diego? Mark your conference schedule for the Certified Mortgage Banker (CMB) Graduation Ceremony, Reception, and Open House on Monday, February 7.

At these events, CMB designees the opportunity to meet with one another as well as meet with other convention attendees who want to learn more about the CMB designation.

For 2005 CMB graduates, this is a very big day. The new designees will receive their plaques, pins, and ribbons at this event. Come to the CMB Reception to mingle with the 2005 designee class, meet other CMBs, and celebrate their hard work.

CampusMBA staff will be on hand Monday at Redfield’s, Ground Level, in the Manchester Grand Hyatt in San Diego, from 4:30 p.m. to 6:00 p.m., to answer your questions about the designation.

If you have been in the industry for more than ten years, chances are you are well on your way, if not ready to advance to the testing phase for the CMB designation.

Get started today and graduate at MBA’s 2006 Commercial Real Estate Finance (CREF)/Multifamily Housing Convention. Contact Jennifer Ridings at (202) 557-2763 or jridings@mortgagebankers.org, or Alicia Willey at (202) 557-2766 or awilley@mortgagebankers.org, today to get started on your CMB.
(Back To Top)

CMF NewsLink Afternoon Special Editions at CREF
MBA (2/3/2005) MBA Staff

MBA Commercial/Multifamily NewsLink will send out special editions next week during the Commercial Real Estate Finance/Multifamily Housing Covention and Expo in San Diego. The afternoon special editions, February 7 and 8, will feature stories and announcements from the convention.

MBA CMF NewsLink will not publish next Thursday, February 10.
(Back To Top)

"U.S. issuance will be boosted by several new issuers and by hotel backed transactions returning to favor helping top off an already robust pipeline,” said Tad Philipp, managing director for CMBS at Moody’s and author of the report. “In addition we expect to see the introduction of new collateral types such as condo conversion loans, as well as further development of synthetics.”

Moody’s also said loans made during the peak origination years of the late 1990s will mature and become eligible for refinancing.

"Given that property prices have appreciated and interest rates have fallen since then many loans from late 1990's vintages will likely refinance with higher proceeds than the last time around," Philipp said.

Fixed rate transactions are shifting toward larger deals, a trend that started in 2004 as several large deals had successful executions.

"Larger deals introduce efficiencies on several levels, helping drive their growing popularity,” Philipp said. “From the investor perspective, the larger class sizes of bigger deals offer greater liquidity. From an issuer perspective transaction costs can be reduced by coming to market somewhat less often but with larger deals.”

Moody's expects an increase in issuance of traditional conduits after several years in which fusion deals made up the vast majority of fixed-rate issuance, (smaller loans with high leverage blended with larger loans with low leverage).

“Some of the larger deals may provide greater diversity and less ratings volatility,” Philipp said. “Loans that would otherwise cause concentration issues appear smaller in the context of the larger deals."

Moody’s expects the performance of floating rate investment grade CMBS to generally remain stable, but with somewhat more potential for upgrades because of “the rapid build up of credit support that can occur in investment grade classes when larger loans with shorter lives begin to pay off,” the ratings agency said.

During the fourth quarter of 2004, Moody's said it took rating actions on 28 CMBS transactions with 191 CMBS classes, including 82 affirmations and confirmations, 69 upgrades and 40 downgrades. Upgrades in investment grade rated classes exceeded downgrades by a margin of 63 to ten while downgrades in below investment grade rated classes, outpaced upgrades 30 to six. The majority of the downgrades (29 of 40 classes) pertain to the below investment grade classes of conduit and floating rate transactions.

Moody’s said the average loan to value (LTV) ratio and the share of loans with LTV's in excess of 100 percent set new highs in the fourth quarter of 2004 with average conduit loan LTV during the fourth quarter at 95 percent, up from 94 percent the prior two quarters.

“Approximately 29 percent of conduit loans exceeded 100 percent Moody's LTV, up from 22 percent during the third quarter," Philipp said.

Also in 2004, commercial real estate collateralized debt obligations (CDO) continued to grow as a means for subordinate CMBS buyers to finance operations and manage balance sheets last year. Moody's reviewed 15 commercial real estate CDO transactions last year with a total issuance amount of more than $7 billion.
(Back To Top)

The Manchester Grand Hyatt will host CREF; in previous years, CREF took place at the San Diego Convention Center. Paul Green, MBA’s senior vice president of corporate relations, said MBA chose a location that would provide closer interaction among attendees. “We’ll have everything in one place. We think our members will appreciate that.”

“It will also provide more networking opportunities in one location,” said Elaine Howard, MBA’s vice president for meetings.

The Manchester Grand Hyatt features 125,000 square feet of function space and 25,000 square feet of pre-function space feature, two of the largest hotel ballrooms in San Diego, as well as 25,000 and 30,000 square feet of space open the same floor. The 34,000-square-foot exhibit hall is sold out for this year’s conference featuring 119 exhibitors.

The CREF Convention is known for its wheeling-and-dealings. “It’s an intensely business-oriented meeting, with a great number of deals being transacted in the hallways,” said Gail Davis Cardwell, MBA’s senior vice president of commercial/multifamily.

Gearing up for the start of Bank of America’s Official MBA Super Bowl Party, Dwight Clark, former Pro Bowl wide receiver for the San Francisco 49ers best known for “The Catch” in the 1982 NFC Championship game, will kickoff MBA’s Tailgate Party on Sunday, February 6, in the Douglas Pavilion, Exhibit Hall, from noon to 3:00 p.m. PDT. The Super Bowl Party coincides with the game from 3:00 - 7:00 p.m. PDT.

Additionally, attendees can get golfing tips from CBS Sports golf analyst Bobby Clampett, a regular on the PGA tour from 1980 to 1995. Meet Clampett on Tuesday., February 8, in the Douglas Pavilion, Exhibit Hall, from 1:00 – 4:00 p.m. PDT.

For more information on the Commercial Real Estate Finance/Multifamily Housing Convention & Expo, visit http://events.mortgagebankers.org/cref2005/default.html.
(Back To Top)

MBA’s Commercial/Multifamily NewsLink

CMFNL: In your view, have loans become too large and complex in their structuring? Is there more of a concern in the industry about loan default than in the past?

Schiavo: The industry can manage larger loans with more complex structures, but we need to make structural and collateral information more timely, more accessible and easier to digest. We need to do a better job educating the marketplace about pari passu loans, A-B notes and mezzanine financing. Similarly, document delivery needs to keep up with transaction flow so that all parties are aware of restructured loans and transfers that impact our service providers, particularly servicers, trustees and cash management banks.

CMFNL: Have issues surrounding the collateral – terrorism protection measures, seismic, environmental contamination, mold, asbestos and lead paint – led to increased liabilities and costs for the lender? How?

Schiavo: Our upfront costs are clearly higher since we are spending more time and money underwriting these issues, especially in response to changing regulatory requirements such as All-Appropriate Inquiry. But having better information and performing more due diligence is a double-edged sword. We should be able to make better decisions when assessing risks, but it also exposes lenders to greater potential liabilities. And no matter how much diligence a lender performs, what happens when a third party borrower does not comply with the lender’s requirements? As recent experience has shown, we’re at the mercy of the courts.

CMFNL: What top two industry-wide issues are currently keeping you awake at night?

Schiavo: Extension of TRIA [Terrorism Risk Insurance Act of 2002] and the limited availability of environmental insurance. After 9-11, lenders spent tremendous amounts of time structuring loan documents to deal with availability and cost issues related to terrorism insurance. TRIA allowed us to get back to the business of making loans. I’m concerned that if TRIA expires on December 31, 2005, it will have a significant impact on our business, particularly our ability to finance larger loans in metropolitan areas. Similarly, the withdrawal from the market of a major provider of secured creditor impaired property insurance has forced lenders to work harder and be more creative to box environmental issues.

CMFNL: What would you say is the current climate of the relationship between lenders and servicers?

Schiavo: Notwithstanding the frustration of dealing with complex and time consuming approval processes we’ve built into loan documents and PSAs, cooperation and communication between lenders and third-party servicers is improving. There is a growing recognition that we’re all in this together to address borrower satisfaction issues and ensure that borrowers have a reason to refinance with us.

CMFNL: What key elements or strategies within the industry will enable member companies to continue to be profitable?

Schiavo: We’re in a highly competitive lending market that has benefited from improvements in subordination levels and CMBS spread tightening, but we can’t rely on those trends to continue. Improved operational efficiencies can be gained in areas ranging from selective outsourcing to fully electronic third-party reports and UCC filings and elimination of document assignments through [Commercial] MERS [Mortgage Electronic Registry System]. Further, continued industry standardization, such as the ACORD 28 insurance certificate spearheaded by the Mortgage Bankers Association and the CMSA European Investor Reporting Package, will be key to improving efficiencies and profitability.

The Loan Origination Committee will meet at CREF 2005 on Sunday, February 6, 11:30 am to 12:30 p.m. PDT, Maggie Room, Third Level, Manchester Grand Hyatt Hotel, San Diego. For more information on the Loan Origination Committee as well as the rest of the COMBOG standing committees, please visit the CREF Committee Web site or go to http://www.mortgagebankers.org/cref/commit/collateral/main.html.
(Back To Top)