2A — December 26, 2014 - January 15, 2015 — M id A tlantic
Real Estate Journal
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MAREJ A dvertisers D irectory Arrow Steel. ......................................................................2B BELFOR............................................................................9B Bennett Williams..............................................................5A Bergman Real Estate Group............................................1C BL Companies....................................................... 7A & 15C Capitol Aerials................................................................14B Commercial Mortgage Capital.........................................5C Cooper-Horowitz, Inc......................................................23C Crude Royalties. .......................................................... BC-A Crystal Window & Door Systems. ...................................7B Cushman & Wakefield...................................................IC-C Earth Engineering................................................ 8A & 27C Elias B. Cohen & Associates............................................8B Elliott-Lewis....................................................................17B Entech Digital Controls..................................................14B Exchange Solutions........................................................14C Fowler..............................................................................19B Gebroe-Hammer. ............................................................20C Gerber Somma....................................................... 15A, 12C Greater Reading Economic Partnership. ............. 15A, 10C GWS Contractors..............................................................2B Harvey, Hanna & Associates, Inc..................................17C Heidenberg Properties Group..........................................2C Heller Industrial Park......................................................9C IBS.....................................................................................4B Investors Real Estate Agency........................................15A Landmark Science & Engineering.................................18C Legends Properties...........................................................6C LEW Corporation............................................................14B LMS Commercial Real Estate..........................................4A Manko | Gold | Katcher | Fox LLP................................6A Marcus & Millichap..............................................15A,BC-C Meridian Capital Group.................................................16C Metro Commercial Real Estate, Inc.. ..............................1C NAI Emory Hill.................................................................7C NAI Summit....................................................................15A Orndee Omnimedia Inc....................................................8C P. Cooper Roofing......................................................... BC-B PCS..................................................................................15B PennCap Properties ................................................... IBC-C Poskanzer Skott Architects..............................................6B Progress Capital. ............................................................21C PWC...................................................................................4B RD Mgmt....................................................................10-11A Rhino Realty. ....................................................................4C Rittenhouse Realty Advisors............................................3C ROCK Commercial...........................................................7A SABLE Commercial Realty............................................15A SEBCO Laundry Systems..............................................12B Specialty Building Systems............................................ICB SUBWAY...........................................................................6A Target Building Construction........................................31C The Kislak Co..................................................................11C Unison Realty Partners....................................................8A USGBC NJ .....................................................................18B Value Companies............................................................11B Weiss Realty......................................................................9A Welco Realty. ....................................................................4A
M id A tlantic Real Estate Journal
Mid Atlantic R eal E state J ournal Publisher .............................................................................. Linda Christman Publisher ................................................................................. Joe Christman Section Publisher ...................................................................... Steve Kelley Senior Editor/Graphic Artist ...................................................Karen Vachon Production Assistant . ....................................................................Julie King Associate Publisher ...............................................................Alissa Aronson Office Manager ...................................................................... Joanne Gavaza Guest Columnists .............................................................. Mark Scott, CMC Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockand, MA 02370 USPS #22-358 | Vol. 26 Issue 24 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com
Brokers speak the truth Mark Scott
B
anke r s Bewar e : When the broker says he has a better deal
than the one you quoted, is- sued an application or even committed on, take heed. The market is moving very fast as competition intensifies. The loan caveat, accommoda- tion or extra dollars another lender may have said no to last week, can now become at- tainable. Borrowers are walk- ing from deals they agreed to just weeks before when they thought they had the “best quote possible,” and “squeezed the last bit of accommodation out of a lender.” Two, three weeks later, another lender will be bettering the deal you just agreed to. It’s crazy, and will become even more com- petitive in the New Year as lenders seek to fill their 2015 allocations. Today is a bor- rowers market. The market has quickly shifted as CMBS 2.0 has expanded greatly in 2014. CMBS volumes are on par with 2013 levels, with over $77 billion in production through October. The differ- ence, however, is that the economy is somewhat better, but the real driver is that there are now over 40 CMBC conduits versus less than 25 last year. More investment bankers are fighting for a similar level of product, which equals a borrowers market. As we move into the latter part of the year, we’ve seen a very competitive market- place with a great deal of bidding. In recent months, loan spreads have widened but new, lower Treasury lev- els have brought down rates. While certain lenders have hit their budget, a number have yet to do so. Govern- ment Sponsored Enterprises Fannie Mae and Freddie Mac have not hit their targets and are aggressively putting out money, in addition to some life companies. As a result of the heated markets, lenders should listen to a seasoned mortgage professional in or-
The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
der to get the best execution. In the distance however in 2016 0 2017, A impediment on this torrid CMBS growth is on the horizon. The FDIC’s risk retention rules, which may slow the continued recovery in the CMBS market, and may slow or reduce risk and com- petitive lending by conduits. This when CMBS 1.0 product is mushrooming in maturities. In late October, six federal agencies approved a final rule requiring sponsors of securiti- zation transactions to retain risk in those transactions. The final rule implements the risk retention requirements in the Dodd-Frank Wall Street Re- form and Consumer Protection Act (Dodd-Frank Act). The final rule is being issued jointly by the Board of Gover- nors of the Federal Reserve System, the Department of Housing and Urban Develop- ment, the Federal Deposit In- surance Corporation, the Fed- eral Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securi- ties and Exchange Commis- sion. As provided under the Dodd-Frank Act, the Secretary of the Treasury, as Chairper- son of the Financial Stability Oversight Council, played a coordinating role in the joint agency rulemaking. The final rule largely retains the risk retention framework contained in the proposal issued by the agencies in August 2013 and generally requires sponsors of asset- backed securities (ABS) to re- tain not less than five percent of the credit risk of the assets collateralizing the ABS issu-
ance. The rule also sets forth prohibitions on transferring or hedging the credit risk that the sponsor is required to retain. As required by the Dodd- Frank Act, the final rule defines a "qualified residen- tial mortgage" (QRM) and exempts securitizations of QRMs from the risk reten- tion requirement. The final rule aligns the QRM defini- tion with that of a qualified mortgage as defined by the Consumer Financial Protec- tion Bureau and also requires the agencies to review the definition of QRM no later than four years after the ef- fective date of the rule with respect to the securitization of residential mortgages and every five years thereafter, and allows each agency to request a review of the defini- tion at any time. In addition, the rule does not require any retention for securitizations of commercial loans, commer- cial mortgages, or automobile loans if they meet specific standards for high quality underwriting. The final rule will be effec- tive one year after publication in the Federal Register for residential mortgage-backed securitizations and two years after publication for all other securitization. It is still a Borrowers mar- ket. Lock in those loans. Mark Scott is principal of Commercial Mortgage Capital, based in Livings- ton, NJ. He can be reached at mscott@newcommer- cialmortgage.com or 973- 716-0006. n
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