The increasing speed and magnitude of defaults along with rising special servicing volume is placing considerable pressure on the resources of CMBS special and master servicers, a
Fitch Ratings report said.
The report said that CMBS special servicing volume has risen five times since the end of
2007, with $23.7 billion as of March 31 compared to $4.6 billion at Dec. 31, 2007.
The pace of special servicing transfers will continue to increase this year, according to Managing Director Stephanie Petosa.
"The sharp rise in special servicing raises the question of servicer preparedness," said Petosa. "Fitch is concerned that the rapid rise in specially serviced loans will affect special and master servicers ability to address loan level issues with the quality CMBS market participants have come to expect."
According to Fitch, the quality of preparedness is an important focus for Fitchs servicer reviews
this year, specifically because of the pressure servicers will be experiencing for the rest of this year and into 2010.
With Fitch estimating loan defaults to eclipse 4%, "additional loan defaults and the expectation of further rises in specially serviced loans will continue to stress the resources of CMBS servicers," Petosa said.