The servicers' role in U.S. CRE CDOs is still evolving and far from standardized, according to Fitch Ratings in a report released today.
In the report, the rating agency noted that commercial real estate mortgages have been securitized in the U.S. beginning in the early 1990s. However, despite a modest beginning, the size and number of CRE-backed transactions have increased signficantly, and exhibit little signs of slowing. Fitch further said that CDOs have joined CMBS deals as vehicles to finance CREs.
The report discusses the two main types of CRE CDOs. The first is backed primarily by rated collateral or CUSIP products such as CMBS. The other is backed by commercial real estate loan (CREL) CDOs. The study discusses what type of servicing is associated with each of these types. Additionally, it also highlights the similarities and differences between CMBS and CREL CDO servicing.
According to Fitch, some deals actually consist of a mix of both CUSIP and CREL collateral. Analysts noted that CMBS and CRE CDOs, in varying degrees, rely on rated commercial mortgage servicers for the administration of the mortgage loans.