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Introducing Spotlight on Servicing: Understanding CMBS Appraisal Reductions

May 8, 2026

CREFC is pleased to share the release of Understanding CMBS Appraisal Reductions, the first report in a new Spotlight on Servicing educational series focused on the servicing business. 
 
Appraisal reductions play a critical role in CMBS servicing, influencing cash flow, bond performance, and investor control. This report explains how they work, including key trigger events, a typical Appraisal Reduction Amount (ARA) calculation, and the impact on bondholder payments and ratings. The report provides a clear introduction to how appraisal reductions function in CMBS. 

Download

The next edition in the series will look at hot topics in servicing, including a preview of servicing topics to be covered at CREFC’s Annual Conference in June. Spotlight on Servicing reports can be found in the CREFC Resource Center or Member Alert archives.

For questions or additional information:

Rich Carlson
Senior Director, Servicing Liaison
CRE Finance Council
rcarlson@crefc.org

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CFPB Finalizes 1071 Rulemaking

May 5, 2026

Last week, the Consumer Financial Protection Bureau (CFPB) released the final 1071 rule that significantly improves lender requirements by:

1. Lowering the revenue threshold for a covered small business from $5 million to $1 million;
2. Raising the loan-volume threshold for reporting from 100 to 1,000 covered loans; and
3. Narrowing the data points and lending products subject to collection requirements.

• The compliance date is January 1, 2028.

1071 History

Dodd-Frank Section 1071 requires regulators to collect data from banks and credit unions on lending to small businesses, women-owned businesses, and minority-owned businesses. 

A 2023 Biden-era “final” rule raised the threshold for what constituted a small business from $1 million in revenue to $5 million and added several required data points, including demographic data. 

• It largely exempted multifamily loans, which are reported separately under the Home Mortgage Disclosure Act (HMDA).
• However, it did not exempt loans secured by commercial real estate made to small businesses.

The Trump administration issued a re-proposal in 2025, which proposed the above helpful changes for lenders, yet still fell short of exempting commercial mortgages from data collection. 

In December, CREFC submitted a response to the re-proposal and signed onto a joint trade letter. 

We explained that, as reflected in both the federal regulatory framework and industry practice, CRE finance is fundamentally different from small-business lending. 

• Credit secured by non-owner-occupied commercial real estate should be exempt from 1071. Loans are underwritten based on the property’s cash flow and collateral value rather than the operating revenues of a business.

The Final 1071 Rule

The rule maintains the proposed changes in revenue threshold and number of loans made as described above. Although the rule does not exempt CRE finance, the regulators stated that a “categorical exclusion is unnecessary” given the new thresholds and role of affiliates:

CREFC will work with members to understand any concerns or issues that arise during rule implementation and follow up with the CFPB accordingly. 

Please contact Sairah Burki (sburki@crefc.org) with questions.

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CREFC Balance-Sheet Lending Leaders Convene for Strategic Roundtable Dinner

May 5, 2026

Last week, CREFC President & CEO Lisa Pendergast hosted an exclusive roundtable dinner, bringing together key members of the Portfolio Lenders Forum (Bank and Insurance) and the Alternative Lenders & High Yield Investors Forum. The evening featured special guest Leland F. Bunch, CREFC Chair and Managing Director at Bank of America, alongside a distinguished group of leaders from the balance sheet lending community.

Participating firms included senior representatives from BGO, Blackstone, Bridge Debt Strategies, Derby Lane Partners, KKR, PGIM, Regions Bank, and US Bank. The intimate setting provided a unique venue for these industry leaders to engage in a candid dialogue regarding current market developments and to offer strategic suggestions on how CREFC can further support the sector.

Key Discussion Highlights:

• The Divergence of Private Credit Performance: The group examined the growing performance gap between unsecured Private Credit, which has faced increasing headwinds, and secured real estate debt funds. Participants noted that real estate debt funds have emerged as beneficiaries of this market divergence, providing strong value propositions in the current environment.
• Benchmarking and Data Development: A critical point of discussion centered on the need for improved transparency and data in the private secured debt space. Executives explored the potential for developing a dedicated index to provide accurate performance benchmarking for the sector.
• Market Trends, Competition, and Credit: Leaders shared observations on trends in the market: while overall deal volumes are down, competition among balance-sheet lenders remains fierce. Members reported that while spreads have tightened to secure quality transactions, they have successfully maintained rigorous credit standards, prioritizing portfolio resilience over volume.

Engage with CREFC Forums

CREFC’s Forums offer a dedicated space for members to share insights, develop industry best practices, and influence policy. We encourage all members to engage actively with their relevant forums to help shape CREFC’s policy and capital markets initiatives.

• Join a Forum: Visit the Forums Engagement Page
• Questions? For more information regarding CREFC Forums, please contact Rohit Narayanan at rnarayanan@crefc.org.

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Supreme Court Decision Could Spur More House Map Changes

May 5, 2026

The U.S. Supreme Court issued its opinion in Louisiana v. Callais last week and held that Louisiana’s congressional district map created an “unconstitutional racial gerrymander.” 

Why it matters: The decision calls into question a number of congressional districts that had been designed to comply with Section 2 of the federal Voting Rights Act of 1965. The provision has been interpreted to support racial minority-majority congressional districts as a practice to guard against vote dilution through gerrymanders, often in southern states. 

Go deeper: The decision has set off a flurry of redistricting talk in states with minority-majority districts. While state law and political dynamics may prevent redistricting this cycle, legislatures might act before 2028. 

• Louisiana: The state has suspended its May 16 House primary and will attempt to flip one of the two Democratic held seats. 
• Alabama: The Governor called a special session to eliminate one of the two Democratic seats. 
• Tennessee: Although state law prohibits midcycle redistricting, the Governor called a special session to try and eliminate the single Democratic seat. 
• South Carolina: The Governor has not yet called for action to eliminate the lone Democratic seat. 

Yes, but: Some Democrats have started to threaten revision in deep blue states, including California and Illinois, to break up minority-majority districts and eliminate most, if not all, GOP-held seats. 

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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CRE/CLO Update

May 5, 2026

Progress on CREFC’s Collateral Manager Data Report (CMDR) and Upcoming June Meeting

CREFC continues to spearhead efforts to enhance transparency and standardization across the CRE CLO landscape. As we approach the mid-year mark, significant strides have been made in the adoption of the Collateral Manager Data Report (CMDR), alongside new opportunities for industry-wide collaboration.

Save the Date: CRE CLO / IRP Joint Meeting

The upcoming CREFC Annual Conference will feature a dedicated in-person joint lunch meeting of the CRE CLO Working Group and the Investor Reporting Package (IRP) Committee. This session is geared for participants to provide comments and suggestions on CRE CLO and IRP reporting.

• When: Monday, June 8, 2026 | 12:30 PM – 1:30 PM
• Registration: Register Here
• Note: Registration for the full CREFC Annual Conference is not required to participate in this specific meeting.

Collateral Manager Data Report (CMDR) Implementation

Adoption of the CMDR is gaining significant momentum. This quarter marks a turning point as several additional firms have begun active reporting. The integration into major data platforms is also moving forward rapidly:

• Intex: Active reporting is underway.
• Trepp: Scheduled to begin reporting by the end of May.
• Bloomberg: Now reviewing requirements to facilitate this reporting in the future.

Furthermore, CREFC is actively developing CMDR v2. Our goal is to circulate this updated version for review by the working group prior to the June Annual meeting, ensuring that the latest feedback from market participants is incorporated into the draft.

What's Next: Advancing CRE CLO Financials Reporting

Streamlining the reporting of financials remains the next top priority for the working group. Recent discussions with a diverse group of Issuers, Investors, and Servicers revealed a variety of perspectives on the most efficient path forward.

Given the importance of achieving a consensus that serves all market participants, we will be hosting a live discussion during the June 8th meeting at the Conference. This will be an essential opportunity to weigh different viewpoints and determine the best strategy for streamlining these critical data sets.

Get Involved 

Your feedback is vital to the success of these initiatives. For any questions or comments regarding these updates, please reach out to Rohit Narayanan at rnarayanan@CREFC.org.

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Senators Introduce TRIA Legislation

May 5, 2026

A bipartisan group of senators introduced a clean, seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA), a program that provides a federal backstop to losses from certain terrorist attacks. 

• Senator Dave McCormick (R-PA) and Sen. Tina Smith (D-MN) led a bipartisan group of 24 senators on the bill. 

Why it matters: After the 9-11 attacks, the TRIA backstop has been essential in providing affordable terrorism risk insurance to commercial real estate owners/borrowers and other policyholders. Without action, the program will expire after December 31, 2027. 

• CREFC and the Coalition to Insure Against Terrorism (CIAT) have been meeting with lawmakers and urging them to reauthorize TRIA in 2026. 
• The original senate co-sponsors include nearly all of the Senate Banking Committee and Senate Minority Leader Chuck Schumer. 

Go deeper: The House began its push for reauthorization with a January markup of the TRIA Program Reauthorization Act of 2026 (H.R. 7128), which advanced out of committee 51-2. The House bill was largely a clean reauthorization for seven-years with two tweaks: 

• The bill raises the program trigger threshold from $5 million in losses to $10 million by 2029, which tracks with an inflation adjustment from the original 2002 law. 
• Treasury would have a 90-day window in which to certify a terrorist attack. Certification is necessary to trigger the backstop payments to insurers under the program. 

What’s next: The Senate will likely attach any TRIA reauthorization bill to a larger ‘must-pass’ package to advance it. The House may consider its own bill through an expedited process requiring a two-thirds majority vote, but leadership has not indicated a firm timeline. 

The bottom line: The strong, bipartisan support in both chambers makes TRIA reauthorization a strong possibility, but lawmakers must navigate the procedural hurdles to get a bill to the President’s desk. 

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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