Mid Atlantic Real Estate Journal — November 9 - 22, 2012 — 21A



By Bruce Coin, Bruce Coin Consulting, Inc. The current commercial mortgage market


n the March 16-29th issue I confirmed that the Federal Housing Finance Agency

Fed left unchanged its state- ment that highly accommoda- tive monetary policy will be appropriate “for considerable time after the economic recov- ery strengthens” and repeated that (short term) interest rates are likely to stay near zero at least through mid-2015. While things appear to be somewhat on hold in Congress awaiting the outcome of the November election their con- tinued inaction has raised the specter of a “fiscal cliff” arising early next year unless they take appropriate measures.

Approximately $607 billion of tax increases and spending cuts are set to occur that require their action. Economists are predicting that if the “fiscal cliff” is not avoided economic output would shrink by 0.5 per- cent next year and joblessness would again increase to about 9 percent. Calling your congress- man may appropriate. At the Talmage 2012 Credit Conference, the Blackstone Group, LNR Property Co. and Morgan Stanley predicted that CMBS volume for 2012 would total about $ 46 billion but

that next year’s volume is an- ticipated to climb by more than 40 percent to about $65 billion next year. While those amounts pale in comparison with the peak MBS years, and while there are continued default and “disruptive shock” concerns for holders of existing CMBS, if their prediction is accurate it indicates another step in the right direction affirming that more commercial mortgage money will be available. They went on to say that with CMBS rates currently available in the

3.5 to 4.0 percent range firms can quote rates low enough to compete with the insurance companies that had been un- dercutting Wall Street firms for top quality loans. As we head toward this month’s American Holiday, it appears as if the news is good so that all participants in the commercial mortgage market should have a Happy Thanks- giving. Bruce J. Coin is director of Bruce Coin Consulting, Inc. ■

(FHFA) sent a p l a n t o Congress to move in the direction of finding a way t o r e d u c e FannieMae’s and Freddie Mac’s share

Bruce Coin

of the market. Their ultimate game plan is to try to find a way to extricate the U.S. Government from its current “conservator” role with Fannie and Freddie and replace it with private sources while main- taining the highly desirable, and essentially so necessary, mortgage backed securities market. On October 4th the FHFA took another major step in that direction. They issued a “white paper” calling for public input on a proposed framework for a com- mon securitization platform and model Pooling and Servic- ing Agreement. These are two integral steps that call for the standardization that would be necessary to aid in facilitating the FHFA’s plan of “Enterprise Conservatorships” of Fannie and Freddie, i.e., private en- terprises replacing the U.S. Government’s role. The white paper “seeks to identify the core components of mortgage securi- tization that will be needed in the housing (and multifamily) finance system going forward”. Acting FHFAdirector DeMar- co stated: “The release of this white paper is an important step laying the groundwork for the future structure of the hous- ing (and multifamily) finance system. Given that the secu- ritization infrastructure could serve as a utility that would outlast FannieMae and Freddie Mac as we know them”. The outcome of the FOMC’s October 23rd and 24th meeting was basically “no change”. The Federal Reserve said that the economy is still growing mod- estly and that unemployment remains elevated as it main- tains $40 billion in monthly purchases of mortgage-backed securities aimed at spurring a three year economic expansion. It will also continue swapping about $45 billion each month of short-term debt with longer- term debt, at least through De- cember, to lengthen the average maturity of its holdings. The

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