in News > Mortgage Servicing
print the content item


The steep reduction in the balance of U.S. commercial mortgage-backed securities (CMBS) loans in special servicing is encouraging, but this trend may intensify some of the conflicts of interest that impact special servicers, according to new research released by Fitch Ratings.

Fitch Ratings' data has determined that CMBS loans in special servicing dropped by almost $6 billion to $74.8 billion at the end of the third quarter. This balance peaked in 2010 at $91.7 billion. Over the past year, the average number of assets per asset manager has declined from 20 to 12.

However, Fitch Ratings warns that these trends may create more problems than solutions for the special servicers assigned to CMBS loans.

"The relative scarcity of specially serviced loans is increasing competition between servicers and may make the conflicts of interest that they must manage more important," says Fitch Ratings. "Investors are concerned that the special servicer agrees to resolution terms that are in their own best interest - or that of a related entity or brokerage - rather than protecting the interests of all bondholders. Increased competition for troubled assets, either for fee generation or ultimate control of the real estate, will further intensify investor concern as special servicers compete for controlling classholder rights.

"In our view," Fitch Ratings adds, "the trend toward a smaller specially serviced loan pool may be difficult to maintain over the longer run. The large volume of maturities that will begin in 2015 and run through late 2017 are difficult to predict amid uncertain interest rate trends and the current delicate recovery in the business cycle."




Latest Top Stories

Virginia Sues 13 Banks For $1.15B Over Faulty RMBS

Virginia is suing 13 banks, including Citigroup, Bank of America and Goldman Sachs, for $1.15 billion over claims the institutions misled the state's retirement system about the sale of faulty RMBS.


Freddie Mac: Great Year So Far For Apartment Construction

Construction of condominium complexes is "scant," at least in comparison to 2006, and single-family construction is just "chugging along," Freddie Mac reports.


'Access To Affordable Mortgages Act' Introduced In The House

Rep. Blaine Luetkemeyer, R-Mo., recently introduced the Access to Affordable Mortgages Act, which aims to exempt certain higher-risk loans from property appraisal requirements under the Truth in Lending Act.


Black Knight: HELOC Reset Storm Approaching

A report from Black Knight Financial Services shows that at least 2.5 million HELOCs will face resets over the next several years, resulting in an average increase of $250 per borrower monthly payment.


CFPB Selects Vendors And Lenders For Its Mortgage E-Closing Pilot

Five technology firms and seven lenders will participate in the CFPB's e-closing pilot, which will explore the viability of developing a standard process for closing mortgages using technology.

Urban Lending_id1351
Hse SandyHook
Industry Resource
Play for Pink
SWBC_id1313
Safeguard_id1322
FedHomeLoan_id1341