The Commercial Mortgage Securities Association (CMSA) issued a white paper today on the White House’s overall regulatory reform proposals with five issues of concern for the CMBS market.
These five issues are: the 5% retention by originators and sponsors; the elimination of the immediate recognition of ‘gain on sale’ by originators for a securitization; the differentiation in ratings; the disclosure by ABS issuers of loan-level data; and the prohibition to hedge the retained risk portion.
The association said these issues may complicate the efforts to restart the securitized credit markets, which is the very centerpiece of the Obama administrations’ recovery efforts through the Term ABS Loan Facility (TALF).
In the white paper, the CMSA outlined several structural and collateral and consumer distinctions between CMBS and other ABS markets, and encouraged the administration to consider these distinctions in reform proposals.
CMSA President Patrick Sargent said that the association hopes that financial reform efforts do not distract from getting credit flowing again for the broader market economy.
The association said that although it supports policymaker efforts to restore liquidity in the CMBS market, it urges the government’s financial recovery and reform efforts to maintain a consistent view toward challenges facing the $3.5 trillion commercial mortgage market.