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CRE Finance World, Summer 2012

Securitization is a Good Thing……Really! Note: Delinquency rates shown are NOT comparable between investor groups. These rates show how performance of loans for each investor group has varied over time, but cannot be used to compare one investor group to another. I know delinquency rates don’t tell the whole picture and origination volume, losses and recoveries matter but for our purposes today we are using the delinquency rates as indicators. What should we in the commercial real estate finance business make of all this and what will help the performance in the future? First, the life companies and Fannie and Freddie seemed to maintain standards for their on-book lending to a level that is acceptable from an investors’ standpoint. In some part it is due to the fact that they stayed with the higher quality assets and left everything else to the banks/thrifts and CMBS. As importantly, the life companies never forgot the pain from the ’80s and were determined to maintain quality for their risk portfolio on-book. Some life companies and even GE would securitize lesser quality assets and I am sure some of that is reflected in the CMBS numbers but it was a way to off-load risk. CRE Finance World Summer 2012 20


CRE Finance World, Summer 2012
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