CDOs, MBSs, CMBS, CMOs

Moody's: U.S. CMBS Loan Delinquencies Slip to 9.18%

Posted on Thursday, June 30, 2011

The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) transactions fell four basis points in May to 9.18 percent, according to Moody’s Investors Service’s Delinquency Tracker (DQT), which tracks all loans in U.S. conduit and fusion deals with a current balance greate...

Delinquencies Decline for CRE Collateralized Debt Obligations

Posted on Thursday, June 30, 2011

Delinquencies on U.S. commercial real estate loan collateralized debt obligations (CREL CDOs) decreased last month, reversing the previous month’s increase, according to the latest index results from Fitch Ratings. From March to April, the delinquency rate rose from 14.1 percent to 14.8 percent. B...

Commercial Mortgage Delinquencies Mixed with CMBS Faring Worst

Posted on Thursday, June 30, 2011

Delinquency rates among different commercial and multifamily mortgage investor groups were mixed in the first quarter of 2011, according to a study released Wednesday by the Mortgage Bankers Association (MBA). The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) reach...

The State of CMBS

Posted on Tuesday, June 28, 2011

JP Morgan and Wells Fargo have set up conduits for their commercial-backed mortgage securities to get them off the balance sheets. Is this dangerously close to what happened ahead of the crisis with residential backed mortgages? Here are a few summarized thoughts; SOME SIMILARITIES. BUT IMPORTA...

Moody's Finds Credit Quality of Post-Recession CMBS to Be Strong

Posted on Thursday, May 05, 2011

After two years of no issuance, the credit quality of commercial-mortgage backed securities (CMBS) issued post recession has been strong, according to a new report from Moody’s Investors Service. As the credit cycle continues, however, the New York-based ratings agency expects the leverage of the ...

Regulators to Set Rules on Mortgage Securities

Posted on Monday, April 04, 2011

Banks will be forced to retain some risk when they securitize all but the most conservative mortgages under rules that regulators are expected to vote on Tuesday. But the banks are likely to be given wide leeway in determining what risks to keep. Major banks, hoping to revive the mortgage securiti...

Repackaging Mortgages Would Require Large Down Payment Under New Rules

Posted on Monday, April 04, 2011

U.S. lenders would have to offer mortgages with at least a 20 percent down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books, according to a proposal U.S. bank regulators endorsed on Tuesday. The Federal Deposit Insurance Corp boar...

F.D.I.C. Proposes Rule to Tie Banks to Mortgage Risk

Posted on Monday, April 04, 2011

Federal regulators, seeking to outlaw a leading cause of the financial crisis, voted on Tuesday to propose new rules that would prohibit Wall Street banks from selling packages of risky mortgages to investors without holding onto a stake in the loans. The proposed rule would require banks to retain...

Treasury to Test Mortgage Market;

Posted on Monday, April 04, 2011

The Treasury Department will lead the way testing the $4.6 trillion mortgage-backed securities market. Timothy F. Geithner, who leads the agency, said on Monday that the Treasury would begin offloading $142 billion of mortgage bonds accumulated during the financial crisis. The gradual sale of the po...

Industry Reports Point to Renewal in Commercial Real Estate Financing

Posted on Monday, February 14, 2011

Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010 – an increase of 36 percent from 2009, according to preliminary estimates released by the Mortgage Bankers Association Monday. The bulk of that increase came in the fourth quarter of last year. Life insur...

Trepp: CMBS Delinquency Rate Hits Highest Level in History

Posted on Monday, February 07, 2011

The delinquency rate on loans held in U.S. commercial mortgage-backed securities (CMBS) rose again in January to hit its highest reading in history, despite new issuance and falling spreads, according to Trepp, LLC. The New York-based firm closely tracks the CMBS and commercial mortgage market, and...

Trepp Reports a Jump in CMBS Delinquencies as Rate Nears 9% Again

Posted on Wednesday, December 08, 2010

The recent optimism surrounding delinquencies on commercial real estate loans bundled into investment bonds has been hit with a blast of cold water. The rate of past due loans suddenly jumped in November after seeing a big decline the month before. According to data from the New York-based rese...

Incntives to Lure Investors

Posted on Wednesday, September 15, 2010

The secondary market for new commercial mortgage-backed securities (CMBS) went dark after the real estate downturn sent property values plummeting and defaults soaring. Investor losses have piled up from old CMBS deals and there’s still more to come. Two different ratings agencies both reported ...

PPIP Update March 2010

Posted on Sunday, April 25, 2010

In the recent second quarterly summary, a reported $10 billion in real estate assets gone bad have reportedly been purchased so far using the federal governments Legacy Securities Public-Private Investment Program (PPIP) unveiled last year to remove toxic mortgages from the system. That’s triple co...

Default Stats Update March 2010

Posted on Sunday, April 25, 2010

New CMBS defaults are up more than five times last year (1464 $1.75 billion), 34$ took place during 4th quarter. Large loans defaults also increased. 56 loans over $50 million verses only 5 in 2008, most from 2006 to 2008 vintages. 207 deals are 35.6% based on principal balance due to aggressive...

At a recent conference...

Posted on Tuesday, February 02, 2010

Prudential representatives were heard explaining the company had $4 billion to deply this year, mostly with loan over $10 billion in primary areas. Everyone seems to be going after that sa,e type of assets; stable properite,s not construction loans so popular during the boom years. Most agree...

REMIC Revisions...Good News

Posted on Sunday, October 11, 2009

In an effort to save the commercial real estate market from pending doom, the IRS has made some much anticipated changes to the REMIC trust rules. REMICs are governed by sections 860A and 860G of the IRC. For an entity to qualify as a REMIC, all interests in the entity have to consist of one or m...

A Quick Overview of the State of Commercial R.E.

Posted on Sunday, June 07, 2009

Global sales are down to about $50 billion compared to the most recent high of almost $400 billion. Global defaults and failures exceeded $55 billion during the first quarter of 2009 bringing the total value of all defaults and failures to $153 billion, a 56% increase from fourth quarter 2008. T...

Seeking Commercial Default "Think Tank"

Posted on Saturday, May 30, 2009

With $2 trillion in commercial mortgage financing coming due between now and 2012, limited refinance funds (in spite of TALF), and PSA and REMIC rules restricting modification options, the calls from concerned commercial property owners and manager clients, many of whom like so many resideitial prop...

Thoughts on REMICs

Posted on Monday, April 27, 2009

Prepare for longer time and more complex circumstances Factor in will be distressed Assume won’t be able to refi at maturity Permit change to interest, flexibility, cash flow changes Allow mod without limiting type or magnitude – similar to w...

Commercial Real Estate Status

Posted on Monday, April 27, 2009

US Commercial real estate $6.5 trillion industry • 4 billion SF office • 13 billion SF industrial • 9.5 billion SF shopping • 4.4 million hotel rooms • 33 million SF rental apts Shopping centers are $2.25 trillion in sales and $125 billion in state sales tax 40% of local government taxes come...

Borrower as Third Party Beneficiary to PSA

Posted on Wednesday, April 22, 2009

Cases have been popping up where borrower make this claim in the residential context. Wondering if any may successfully argue it in the CMBS situation....

"Experts" Are Finally Talking About Upcoming Troubles in teh Commercial Market

Posted on Tuesday, April 21, 2009

$6 to $8 billion in CMBS money is coming due in the not to distant future mostly on hotel CMBS funds. Unless something chnages there is (a) no money out there to refinance these loans and (b) not enough flexiblity under most CMBS structures including REMICS trusts to modifify them in any meaningful ...

CMBS and REMIC Trust Modifications

Posted on Tuesday, April 14, 2009

We knew all along there wuold be surprises as these vehicles played out their natural and unnatural lives. But even the surprises are surprising some commercial real estate borrowers who ha dno idea what they were egtting themselves into. Most securitized commercial mortgages are owned by a trust...

PSAs and REMIC Trusts

Posted on Tuesday, April 14, 2009

Among the primary documents involved in REMIC Trusts is of course the PSA (Pooling and Servicing Agreement) The parties to the PSA are the depositor (the entity that sells the mortgage loans to the trust), the master servicer, the special servicer and the trustee. The PSA will include a "servicing ...

PSAs, REMICs and Rating Agencies

Posted on Tuesday, April 14, 2009

The PSA may require approval from others such as ratings agencies who play an important role in assumptions and modifications that may impact the flow of payments from the udnerlying real estate. Master servicers may therefore be required by the PSa to consult with the RA and even require that they...

Lender View

Posted on Tuesday, April 14, 2009

Some of the factors invovled in analyzing a CMBS default from the lender view include: Cause of default, property business aspects, fincial operating statements, management capabilitites, other factors that could be impacting the property. Rights under loan documents, right to replace manageme...

workouts, servicers and their fees

Posted on Tuesday, April 14, 2009

The CMBS servicer often has a big impact on workouts. Withint the master servicing organziations there is often a division of servicing functions such as monitoring of payments, escrow analysis, financial statement review, reserve advancement, etc. Once in default the loan is sent to a special s...

Bankruptcy

Posted on Tuesday, April 14, 2009

CMBS borrowers are almost always bankruptcy remote. They are entities set up for the sole purpose of owning and operating a certian piece of real estate. They have restrictions in their organizational documents precluding them from engageing in any other kind of business or incurring any other debt...

Possible Issues

Posted on Tuesday, April 14, 2009

Lenders are running into some of the following issues, much to borrower benefit: The loan assignment documents are impropermeanign the loan was not correctly assigned to the trust. The loan file itself may be incomplete. There may be a conflict of itnerest between the servicer and the trust. A...

Relevant Bankruptcy Code Provisons

Posted on Tuesday, April 14, 2009

101 (51B) Single asset real estate encumbered by secured debt not exceeding $4 million. 362 Automatically stays actions against debtor until court grants relief. 362 (d)(3) secured lender with claim against single asset real estate entitled to relief from stay within 90 days of bankruptcy petition...

REMICS and PSA Authority to Modify

Posted on

The PSA normally grants a special servicer more authority to modify than a master servicer. This authority might include: forgiving principal, accrued interest or prepayment premiums, reduing monthly payments (perhpas by reducing interest), forbearing from enforcing rights, accepting principal pa...

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