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Forums Update: Servicing Administration and Special Situations

November 26, 2024

Pamela Dent and Adam Fox (Forum Chairs), Alex Killick and Dana Jo Martino (Chair Elects), and Leslie Hayton and Tony Yousif (Past Chairs) form the “Leadership Working Group” of CREFC’s Servicing Administration and Special Situations Forums. This group sets agendas and priorities for the Forum based on members of their Forum and represent the constituency on CREFC’s Policy Committee.

What’s New: Ongoing market challenges continue to drive discussions within the Servicers Forum:

• At the CREFC June conference, servicers focused on performing and non-performing loans in various markets.
• Today, the focus is on non-performing loans, from all perspectives —borrower, lender, and investor.
• There are no easy answers. The general consensus is that every loan and asset must be individually evaluated for the option that yields the best results.
• Recent interest-rate volatility and improved market issuance through 2024 continue to create a dynamic servicing environment.

Key Servicer Focus Areas:

• Upcoming maturities and borrowers’ ability to refinance
• Monitoring and tracking servicing activity
• Transparency
• Complexity of non-recoverable advance decisions and their impact on transaction waterfalls
• Collateral/asset valuation
• Rising delinquencies
• GSE focus on property quality and tenant protections
• Loan covenants
• Increasing costs and complexity associated with maintaining required insurance coverage
• Special Servicer remediation plans

What they’re saying: Today’s discussions focus on:

• Uncertainty surrounding asset valuations and the impact on workouts and advancing
• The pick up in new issuance and the notable increasing complexity of loan covenants
• As of September 2024, there were 200 securitized transactions with transaction-level Holdback accounts, more than half of which had a balance of $50,000 or less
• Exit strategies for loans in special servicing
• Balancing borrower requests for extensions with Special Servicers’ recognition of improving interest rates and modification structures to encourage payoffs.

What's next: Servicers are highly focused on the increase in delinquencies, the volume of loans transferring to special servicing, the timing around exit strategies, and when valuations will stabilize.

Servicing Forum leadership expects forum discussions at the January conference to focus on:

• Uncertainty surrounding valuations and their impact on the master servicer role as liquidity provider,
• Providing timely market commentary on performing and non-performing loans, and
• Identifying loans in real distress and expectations around exit strategies.

Key Policy Issue: National Flood Insurance Program (NFIP) Reauthorization.

• Unless Congress takes action, the NFIP is scheduled to expire after Dec. 20, 2024, along with government funding. Short-term extensions of the NFIP, tied to government funding, have been the status quo since the long-term reauthorization expired in 2017.
• Congress has yet to agree on a long-term NFIP extension due to sharp disagreements on program costs and coverage from Senators in flood-prone states. While the program is not expected to expire, a lapse would prevent the NFIP from issuing new policies and reduce the program’s existing borrowing authority.
• Commercial mortgages with a mandatory flood insurance purchase requirement can satisfy the obligation through the NFIP or private insurance, but CRE policies are limited to $500,000 in coverage through the NFIP.

What’s Next: Forum Leaders look forward to presenting members with an update at CREFC’s Annual January Conference in Miami. As June 2025 approaches, the chairs will seek nominations for the next Chair-Elect to join their leadership slate.

To join the Servicing Administration and/or the Special Situations Forum, please register here.

For any forum related questions, please contact Rohit Narayanan (Rnarayanan@crefc.org).

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2024-2025

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The CRE Finance Council Announces New Chairs for Industry Forums

June 11, 2024

New Chairs and Chair-Elects Introduced at Annual June Conference

NEW YORK, June 11, 2024 – The CRE Finance Council (CREFC) announced today new Chairs for the 2024-2025 industry Forums. The new Forum leadership was introduced at CREFC’s Annual June Conference in New York City.

CREFC’s Forums represent specific market constituencies that drive the U.S. commercial real estate finance industry. Forums include:

• Alternative Lenders and High Yield Investors
• B-Piece Investors
• GSE/Multifamily Lenders
• Investment-Grade Bondholders
• Issuers
• Portfolio Lenders
• Servicers

Each of these Forums interacts and addresses issues critical to their business sector and works to achieve solutions that serve a common purpose. CREFC’s Forums manage disparate and converging market views, advocate a consensus of positions to policymakers and lawmakers, educate members, develop market best practices and standards, and work toward the betterment of the entire commercial real estate finance market.

The Incoming slate of Forum leaders includes:

Alternative Lenders & High Yield Investors. CREFC welcomes Rachel Hunter-Goldman (KKR) as Chair-Elect, Samantha Rotchford (MSD) as Chair, and Samir Tejpaul (Square Mile Capital Investments) as Past Chair.

B-Piece Investors: CREFC welcomes Frank Yin (KKR) as Chair-Elect, Peter Lindner (Rialto) as Chair, and Jason Nick (LNR) as Past Chair. In 2023-2024, Lyndsay Stephenson (Prime Finance Partners) served as Past Chair.

GSE/Multifamily Lenders: CREFC welcomes David Haynes (CBRE) as Chair-Elect, Ahmed Hasan (Capital One) as Chair, and Kate Whalen (BMO) as Past Chair. In 2023-2024, the Past Chair was Emily Schultz (Berkadia Commercial Mortgage). Alonzo White (Fannie Mae) and Jason Griest (Freddie Mac) serve as government-sponsored enterprise representatives.

Investment-Grade Bondholders: CREFC welcomes Adam Smith (DWS) as Chair-Elect, Rajesh Bansal (Quiq Capital) as Chair, and Richard Razza (Webster Bank) as Past Chair. In 2023-2024, Jane Rivers (T. Rowe Price) served as Past Chair.

Issuers: CREFC welcomes Shaishav Agarwal (Deutsche Bank) as Chair-Elect, Brigid Mattingly (Wells Fargo) as Chair, and Jane Lam (Morgan Stanley) as Past Chair. In 2023-2024, David Schell (BMO Capital Markets) served as Past Chair.

Portfolio Lenders – Banks: CREFC welcomes Kristin Khanna (Barclays) as Chair-Elect, Rob Grudzinski (U.S. Bank) as Chair, and Scott Dixon (Truist) as Past Chair. In 2023-2024, Jonathan Salzinger (Bank of America) served as Past Chair.

Portfolio Lenders – Insurance Company: CREFC welcomes Melissa Farrell (PGIM) as Chair-Elect, Kevin Pivnick (Blackstone) as Chair, and Chris Miculis (Nuveen) as Past Chair. In 2023-2024, Stefanie Stewart (Voya Investment Management) served as Past Chair.

Servicers – Servicing Administration: CREFC welcomes Dana Jo Martino (Berkadia) as Chair-Elect, Adam Fox (Fitch Ratings) as Chair, and Leslie Hayton (Wells Fargo) as Past Chair. In 2023-2024, Stacy Ackermann (K&L Gates) served as Past Chair.

Servicers – Special Situations: CREFC welcomes Alex Killick (CWCapital) as Chair-Elect, Pam Dent (Freddie Mac) as Chair, and Tony Yousif (SVN) as Past Chair. In 2023-2024, Andrea Helm (Midland Loan Services) served as Past Chair.

“We want to welcome the new members of our CREFC industry Forums and thank existing and past Forum members for their dedication and excellent work,” said Lisa Pendergast, Executive Director of CREFC.

“For 30 years, CREFC has served as the voice of the now $6 trillion commercial real estate finance industry and CREFC’s industry Forums continue to play a key role in ensuring all industry voices are heard and respected. CREFC’s Forums serve a vital industry function, as they represent key components of the CRE finance markets. A core function of Forum leaders is to work toward consensus among their constituents and then advocate those positions to other market segments and to policy and lawmakers. Forum leaders are also charged with assisting the development of industry best practices and implementing new initiatives critical to their business sectors. I and the entire CREFC community are grateful for our Forum leaders and their contributions and dedication to CRE finance.” 

Contact:

Aleksandrs Rozens

arozens@crefc.org

646-884-7567

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The CRE Finance Council Announces New Chairs for Industry Forums

June 11, 2024

New Chairs and Chair-Elects Introduced at Annual June Conference

The CRE Finance Council (CREFC) announced today new Chairs for the 2024-2025 industry Forums. The new Forum leadership was introduced at CREFC’s Annual June Conference in New York City.

CREFC’s Forums represent specific market constituencies that drive the U.S. commercial real estate finance industry. Forums include:

• Alternative Lenders and High Yield Investors
• B-Piece Investors
• GSE/Multifamily Lenders
• Investment-Grade Bondholders
• Issuers
• Portfolio Lenders
• Servicers

Each of these Forums interacts and addresses issues critical to their business sector and works to achieve solutions that serve a common purpose. CREFC’s Forums manage disparate and converging market views, advocate a consensus of positions to policymakers and lawmakers, educate members, develop market best practices and standards, and work toward the betterment of the entire commercial real estate finance market.

The Incoming slate of Forum leaders includes:

Alternative Lenders & High Yield Investors: CREFC welcomes Rachel Hunter-Goldman (KKR) as Chair-Elect, Samantha Rotchford (MSD) as Chair, and Samir Tejpaul (Square Mile Capital Investments) as Past Chair.

B-Piece Investors: CREFC welcomes Frank Yin (KKR) as Chair-Elect, Peter Lindner (Rialto) as Chair, and Jason Nick (LNR) as Past Chair. In 2023-2024, Lyndsay Stephenson (Prime Finance Partners) served as Past Chair.

GSE/Multifamily Lenders: CREFC welcomes David Haynes (CBRE) as Chair-Elect, Ahmed Hasan (Capital One) as Chair, and Kate Whalen (BMO) as Past Chair. In 2023-2024, the Past Chair was Emily Schultz (Berkadia Commercial Mortgage). Alonzo White (Fannie Mae) and Jason Griest (Freddie Mac) serve as government-sponsored enterprise representatives.

Investment-Grade Bondholders: CREFC welcomes Adam Smith (DWS) as Chair-Elect, Rajesh Bansal (Quiq Capital) as Chair, and Richard Razza (Webster Bank) as Past Chair. In 2023-2024, Jane Rivers (T. Rowe Price) served as Past Chair.

Issuers: CREFC welcomes Shaishav Agarwal (Deutsche Bank) as Chair-Elect, Brigid Mattingly (Wells Fargo) as Chair, and Jane Lam (Morgan Stanley) as Past Chair. In 2023-2024, David Schell (BMO Capital Markets) served as Past Chair.

Portfolio Lenders – Banks: CREFC welcomes Kristin Khanna (Barclays) as Chair-Elect, Rob Grudzinski (U.S. Bank) as Chair, and Scott Dixon (Truist) as Past Chair. In 2023-2024, Jonathan Salzinger (Bank of America) served as Past Chair.

Portfolio Lenders – Insurance Company: CREFC welcomes Melissa Farrell (PGIM) as Chair-Elect, Kevin Pivnick (Blackstone) as Chair, and Chris Miculis (Nuveen) as Past Chair. In 2023-2024, Stefanie Stewart (Voya Investment Management) served as Past Chair.

Servicers – Servicing Administration: CREFC welcomes Dana Jo Martino (Berkadia) as Chair-Elect, Adam Fox (Fitch Ratings) as Chair, and Leslie Hayton (Wells Fargo) as Past Chair. In 2023-2024, Stacy Ackermann (K&L Gates) served as Past Chair.

Servicers – Special Situations: CREFC welcomes Alex Killick (CWCapital) as Chair-Elect, Pam Dent (Freddie Mac) as Chair, and Tony Yousif (SVN) as Past Chair. In 2023-2024, Andrea Helm (Midland Loan Services) served as Past Chair.

“We want to welcome the new members of our CREFC industry Forums and thank existing and past Forum members for their dedication and excellent work,” said Lisa Pendergast, Executive Director of CREFC.

“For 30 years, CREFC has served as the voice of the now $6 trillion commercial real estate finance industry and CREFC’s industry Forums continue to play a key role in ensuring all industry voices are heard and respected. CREFC’s Forums serve a vital industry function, as they represent key components of the CRE finance markets. A core function of Forum leaders is to work toward consensus among their constituents and then advocate those positions to other market segments and to policy and lawmakers. Forum leaders are also charged with assisting the development of industry best practices and implementing new initiatives critical to their business sectors. I and the entire CREFC community are grateful for our Forum leaders and their contributions and dedication to CRE finance.”

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Forum Spotlight: Servicing Administration and Special Situations 

November 6, 2023

Together, Leslie, Adam, Stacy, Tony, Pamela, and Andrea form the “Leadership Working Group” for the Servicing Administration and Special Situations Forums. The group sets agendas and priorities for the Forum, as well as represents the constituency on CREFC’s Policy Committee.

What’s new: The challenges in the market have caused renewed interest in the Servicers Forum.

• In June, the focus was on what servicers were seeing across markets for both performing and non-performing loans.
• Today, the focus is on non-performing loans, from all viewpoints—borrower, lender, and investor.
• There are no easy answers and the general consensus is that every loan and asset needs and will be individually evaluated for the option that yields the best results.

What is clear is that the playbook used in the GFC will not be the first place servicers look to for guidance in the current, very different environment.

Key Servicer Focus Areas

• Monitoring and tracking servicing activity;
• Complexity of non-recoverable advance decisions;
• Collateral/asset valuation;
• Rising delinquencies;
• Upcoming maturities and borrower ability to refinance; and
• Special Servicer remediation plans.

What they’re saying: Discussions focus on the following points:

• The transition from LIBOR to SOFR, which was scheduled to sunset shortly after the June conference and for which servicers were well prepared;
• Uncertainty around asset valuations and pricing of new loans;
• Exit strategies for loans in special servicing; and
• Borrowers looking for extensions and how they need to approach servicers with a clear exit plan and, in many cases, with collateral enhancements.

What's next: Servicers are highly focused on increased delinquencies, the volume of loans transferring to special servicing, the timing around exit strategies, and when valuations will stabilize. Servicing Forum leadership expects forum discussions at the January conference to focus on:

• The uncertainty surrounding valuations and the impact they will have on master and special servicer roles as liquidity providers; and
• What loans are in distress and what expectations are around exit strategies.

Key Policy Issues:

• SEC’s Conflict of Interest in Securitization Proposal: The definitions are broadly written and could engulf numerous CMBS participants, including servicers, and a broad range of “conflicted activities” that go beyond shorting a transaction. CREFC submitted two comment letters on the issue and is engaging with lawmakers on Capitol Hill.
• Basel Endgame Capital Proposal: The federal banking regulators have proposed raising capital on banks with $100 billion assets and above. The complex proposal could have impacts on banks that service CMBS. CREFC is working on a comment letter ahead of the January 2025 deadline.

What’s Next: Forum Leaders look forward to presenting CREFC members with an update on their forum at the Annual January Conference in Miami. Soon after, the chairs will seek nominations for the next Chair Elect to join their leadership slate.

To join the Servicing Administration and/or Special Situations Forums, please register here. For any forum related questions, please contact Kathleen Olin.

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Forum Spotlight: Servicers

March 20, 2023

Together, Stacy Ackermann, Leslie Hayton, Rich Carlson, Carl McLaughlin, Andrea Helms, Tony Yousif and Niral Shah form the “Leadership Working Group” for the Servicers and Special Situations Forum.  The group sets agendas and priorities for the Forum, as well as represents the constituency on CREFC’s Policy Committee.

What’s new:  In January, the forum debuted its new expansion as we combined the servicing administration and special situations forums. The Special Situations component newly incorporates the special servicing/special situations and distressed asset management as part of the forum.  The decision to evolve and formally combine servicing administration and special situations was due to feedback from members regarding current market conditions and related pressing issues that the members want to explore and address. 

The newly recast forum will have two sets of leadership – one representing servicing administration and the other representing special situations. Importantly, both sets of leadership will continue to work together to address all aspects of member interests and concerns.

Key Servicer Focus Areas

• Monitoring and tracking servicing activity 
• Transfers of interest and assumptions
• Distressed asset resolutions for securitized and portfolio assets
• Floating rate - transitioning away from LIBOR
• Collateral Valuation

What they’re saying:  Discussions at the January conference focused on the following points:

• Payoff efficiencies and success during 2022
• Increased defeasance volume – will it continue in 2023?
• Moderate uptick in transfers of interest and assumptions
• Increased requests for rate cap modifications and differences across portfolio vs securitized
• Continued valuation uncertainty  - impact on default resolution/enforcement and servicer advances
• Bespoke distressed asset resolution requests and approaches

Looking ahead, servicers are highly focused on current market conditions and the impact on maturing loans and default resolution and enforcement.  The forum leadership expects our forum discussions at the June conference to focus on the current state of the market and what servicers are seeing as “boots on the ground” with respect to the point of contact with borrowers.

 Key Policy Issues:

• SEC’s Conflicts of Interest in Securitization Proposal. The proposal would limit CMBS and CRE CLO sponsors from certain transactions in the first year after issuance. CREFC is asking for express exclusion for servicers from being treated as a “sponsor” under the regulation.
• LIBOR transition:  US Dollar LIBOR is scheduled to cease being published on a representative basis beyond June 30, 2023. Servicer Forum members and CREFC have published the CREFC LIBOR Legacy Playbook, which is designed to address operational issues related to transitioning floating-rate loans currently indexed to LIBOR to the recommended SOFR index plus the ARRC recommended spread adjustment or another contractually agreed-upon benchmark.

What’s Next:  Forum Leaders are seeking nominations for the next Chair Elect to join their leadership slate and look forward to presenting CREFC members with an update on their forum at the Annual June Conference in New York City.  Please send any nominations to Kathleen Olin.

To join the Servicing Administration and/or Special Situations Forums, please register here.  For any forum related questions, please contact Kathleen Olin.

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Meet CREFC's Servicers and Special Situations Forum Leaders - Stacy, Leslie, Rick, and Carl

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New CREFC Forums

January 9, 2023

In December, CREFC announced changes to its industry sector forums. These forums will debut on Monday, January 9th at the CREFC’s January Conference.

Why it matters:

• A new High Yield Investments/Alternative Lending Forum serves debt funds and others that comprise private lenders and investors in commercial real estate debt (whole loans, mezzanine loans, preferred equity, and sub-performing/non-performing loans).
• An expanded Servicers Forum aligns CREFC members focused on special assets and special situations.

The Alternative Lenders and High Yield Investors Forum will focus on the needs of this growing and important source of market liquidity. Alternative lenders now represent 15% to 20% of annual CRE lending activity.

Membership in this forum will include Alternative lenders and High yield investors in the CRE debt and equity space:*

• Lenders and investors include debt funds, public/private mortgage REITs, money managers, separately managed accounts (SMAs), and other public or private entities.
• Investments include bridge and mezzanine loans, preferred equity, and special/distressed situation opportunities.
• Third-party service providers and business partners who work closely with such lenders and investors.

Updated Servicers Forum

The HYDRA transformation shifts the Distressed Realty Assets (DRA) portion of HYDRA to the Servicers Forum. CREFC realigned the Servicers Forum to include two main focus areas:

• Servicing Administration
• Special Situations/Special Assets

The newly cast Servicers Forum represents market participants with separate leadership teams in the servicing of performing asset and non-performing/distressed assets, and include primary servicers and the GSEs.

The combined and expanded Forum creates a collaborative environment to focus on all servicing and trust administration issues within a single forum, while recognizing the diverse issues associated with servicing performing and non-performing loans.

CREFC Member Action Required: 

• Forum sessions at the January Conference will incorporate the new Alternative Lenders and High Yield Investors Forum, as well as the newly expanded Servicers Forum.
• Conference attendees will be asked at registration to make new forum selections based on their role in the industry and on which forums are of most interest to the member.
• Members not attending the conference can click here to sign up for a forum.

For any forum related questions, please reach out to either Lisa Pendergast or Kathleen Olin.

 * Does not include (is not intended to replace) lenders/investors that are served by the Investment-Grade Bondholders, B-Piece Investors, Portfolio Lenders-Bank, Portfolio Lenders-Insurance Company, or Issuer forums

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CREFC is expanding its Forums to better align industry interests.

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