The Commercial Mortgage Securities Association (CMSA) will testify today before the U.S. Senate Banking Committee where it will share its perspectives on issues facing the $3.5 billion commercial real estate finance market.
The Senate hearing is scheduled to be held before the Subcommittee on Securities, Insurance, and Investment and convened by Sen. Jack Reed (D-RI) and Ranking Member Jim Bunning (R-KY).
Christopher Hoeffel, immediate past president of CMSA and a current member of its executive committee, will testify on behalf of the association. He will discuss securitization issues regarding commercial real estate finance, the specific and current challenges facing this market, and the critical importance of tailoring any new regulatory requirements to ensure any new requirements do not inadvertently hinder our nation’s economic recovery.
CMSA believes two aspects of the current securitization reform proposal are of utmost concern: A plan to require bond issuers or underwriters to retain at least 5% of the credit risk in any securitized asset they sell and, second, an associated restriction on the ability of issuers to hedge the 5% retained risk.
“We suggest that any new reform proposals reflect key differences in the various securitized markets, and particularly the unique nature of CMBS,” said Hoeffel. “As such, some aspects of the government’s securitization reform proposal could have the opposite and unintended result of stalling recovery efforts by making lenders less willing or able to extend loans and investors less willing or able to buy CMBS bonds – two critical components that aid in the flow of credit to the commercial real estate market.”