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CRE Finance World, Autumn 2013

A publication of Autumn issue 2013 sponsored by CRE Finance World Autumn 2013 7 For our response to the regulators, the Forum Chairs and vicechairs have concluded the forum deliberations, and they will soon deliberate those recommendations in the Policy Committee which, under the leadership of Committee Chairman Bob Foley and CREFC Immediate Past Chairman Paul Vanderslice, will synthesize and harmonize the views of the CREFC membership constituencies to the greatest extent possible. The Policy Committee is charged with overseeing the drafting of CREFC’s comment letter and the Executive Committee must approve that letter before it can be filed with the regulators. The deadline for comment submission is October 30th. During the initial Forum discussions, it became clear that there is broad agreement that some of the revised portions of the re-proposed rule — including the flexibility the rule allows in allocating the retention obligation between issuer and B-piece buyer — are very positive developments. The significant issues that were discussed that many believe could be most impactful to CMBS and that may warrant comment included: Operating Advisors, B-piece pari passu requirements, qualified commercial mortgages, and high quality, single borrower/single asset transactions subject to retention. We expect the rules to be finalized sometime around year-end or early first quarter. CMBS issuers will have two years from that date to be in compliance with the new rules. TRIA Reauthorization Hearings Begin, More to Come Capitol Hill appears ready to take up the issue of reauthorizing the essential insurance program that expires next year. The Terrorism Risk Insurance Act (or “TRIA”) has been hotly debated recently in Congress, with many supporters pitted against a vocal minority (who oppose federal intervention in any form in the insurance markets). As we go to press, both the House Financial Services Committee and the Senate Banking Committees have announced or commenced hearings on the subject. Regular CREFC Friday bulletin readers will recall that Representative Michael Grimm (R-NY), introduced his reauthorization legislation to extend TRIA by 5 years. His bill now boasts nearly 80 co-sponsors in a thoughtful, bipartisan fashion. Because of the proliferation of co-sponsors, we believe the issue will begin to garner more attention at the committee level. Readers will also recall that the panel’s Chairman Jeb Hensarling (R-TX) is opposed to a reauthorization of the bill in current form and is soliciting input on potential changes. While we expect a reauthorization bill to eventually be reported out of the House Committee, we cannot at this time foresee what modifications Hensarling or Insurance Subcommittee Chair Neugebauer (R-TX) will be able to command. Further hearings from both sides of Congress are being scheduled at the subcommittee level for later this congressional session. An Ongoing Effort: CREFC is an original steering committee member in an industry coalition called CIAT (the Coalition to Insure Against Terrorism) and, in this role, we remain in active engagement with members of Congress and the Administration to lobby for a smooth and swift reauthorization to minimize market disruption. We estimate that over 60% of the Congress has no experience with the issue and helping to fill this education gap should facilitate greater Congressional involvement and support for the issue. Member Involvement As always, this is a member-driven organization. We strive to be on the cutting edge of industry trends and data. We encourage input from our members and rely heavily upon those exchanges that have proven so valuable in policy circles. Please call your government affairs team for more granularity on any policy or political issue facing the industry. We would welcome the opportunity and would be happy to brief you by telephone or in person if logistically feasible. Please contact Christina Zausner or Marty Schuh. Economic Recovery Faces Q4 Political Headwinds; Robust Policy Agenda Ahead


CRE Finance World, Autumn 2013
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