3217_harborCMA_apr2013.qxd:Layout 1 4/22/13 12:11 PM Page 1 I N S U R A N C E R E V I E W & A N A L Y S I S Trusted by the world’s leading lenders A publication of Winter issue 2014 sponsored by CRE Finance World Winter 2014 11 Ultimately, the majority of IG Investors voted in favor of certain QCRE relaxations (IO with 50% LTV, 30-year amortization and shorterterm loans) to encourage vibrant markets. The data suggested that maintaining the QCRE requirements as re-proposed would result in negative selection in future pools, accelerating deterioration in the CMBS market. If the QCRE definition were to incorporate CRE Finance Council recommendations, the proportion of qualifying loans would remain modestly-sized. When including these additional loan types in the analysis, QCRE-qualifying loans accounted for 15.6% of loans originated between 1997 and 3Q13, up from 3.6%, as per the re-proposal. This brings us to early 2016, when the CMBS industry will be facing a wall of maturities. It goes without saying that regulatory change of any kind is difficult to absorb. In this case, the pace of rolling loans makes the market all the more susceptible to shocks. In an ideal world, the final rule will allow flexibility in meeting the core requirements, so that bank and non-bank participants can distribute the risks and rewards of the CMBS market optimally and so that the industry can best navigate the normal course of the financial cycle. Risk Retention Redux Illustrates Importance of Fact-Based Policy-Making I N S U R A N C E C O N S U L T A N T S WITH OFFICES IN NEW YORK AND MIAMI Telephone: (212)336-0816 Lfields@harbor-insurance.com Harbor Group is the premier insurance consulting firm to investment banks, capital market lenders, and commercial banks. For over 20 years, from comprehensive insurance review to advisory services, our seasoned expertise provides prudent, time-sensitive counsel.
CRE Finance World, Winter 2014
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