CMSA Applauds Committee Hearing on Commercial Real Estate

WASHINGTON, DC - July 9, 2009 - (RealEstateRama) — Commercial Mortgage Securities Association today applauds Chairwoman Carolyn B. Maloney (D-NY) and the leadership of the Joint Economic Committee for holding a hearing to discuss challenges facing commercial real estate.

“CMSA is pleased that the Joint Economic Committee is reviewing and considering important issues related to commercial real estate, including the need to restart the securitized credit markets,” said Patrick C. Sargent, CMSA’s President. “On behalf of the secondary market participants, CMSA continues to strongly support recovery efforts – such as TALF – that are designed to help provide liquidity and facilitate private lending. Today, the securitized credit markets are frozen, and we’re very pleased that the Committee is taking an active role in reviewing these issues to ensure the successful implementation of the Financial Stability Plan,” he said.

In addition to advising financial policymakers on lending and liquidity programs, CMSA has taken a leadership role in regulatory reform efforts. The association soon will be releasing white papers on several issues that caution against reforms that may undermine a recovery in the commercial real estate finance markets; these include retroactive accounting changes, regulatory reforms that are inconsistent with the unique structure of commercial mortgage-backed securities, and REMIC proposals to authorize loan modifications and restructure contracts.

“As a trade association with broad representation across the commercial real estate capital markets, including investors, lenders and servicers, CMSA cautions against some accounting and regulatory reform proposals that would dampen a broader market recovery,” Mr. Sargent continued. “While regulatory reforms are important and warranted, these proposals should not distract from or undermine efforts to get credit flowing, which is the critical mission of the Financial Stability Plan.”

CMSA continues to believe that the revival of the CMBS market is essential to stabilizing commercial real estate, and financial policymakers have an opportunity to adopt workable policies that lead to the road to recovery for commercial real estate. In fact, market statistics indicate that $3.5 trillion of the $6.7 trillion commercial real estate market is financed through debt and, this year, several hundred billion of commercial mortgage loans will come due. The current economic environment, together with insufficient lending capacity to refinance performing loans, may lead to even greater defaults.

“If availability of funding for the commercial real estate market is not restored, the downturn in commercial real estate valuation and losses for the holders of these assets will be greater. This likely leads to further constraint of credit availability,” Mr. Sargent said. “As such, we support policymaker efforts to help restore liquidity in the CMBS market in order to address the hundreds of billions in commercial real estate loans maturing in the next several years.”

Congress’ Joint Economic Committee will convene “Commercial Real Estate: Do Rising Defaults Pose Systemic Threat?” on Thursday, July 9 at 10:00am in Room 2226 of the Rayburn House Office Building, Washington, D.C.

For a complete list of CMSA’s current efforts and downloadable documents related to market recovery efforts, please visit: www.cmsaglobal.org

Tagged as: CMSA, TALF

 

 

 

USGBC - U.S. Green Building Council

HUD - U.S. Department of Housing and Urban Development

NAR - National Association of REALTOR

RealtyTrac

FHFA - Federal Housing Finance Agency

Freddie Mac

MBA - Mortgage Bankers Association