Mortgage market participants have been keeping a close eye on the CMBS market, which has seen spreads gap out drastically in recent months.

While many CMBS industry experts argue that credit concerns are overblown, the current crisis of confidence in the capital markets has made the entire mortgage sector virtually illiquid, driving down valuations. As a result, banks might face significant write-downs in the coming months as they mark-to-market their commercial mortgage assets, which could further pressure their already bruised balance sheets.

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