SPECIAL FOCUS: CAPITAL MARKETS OUTLOOK 2008
APARTMENT FINANCE TODAY • JANUARY 2008
Mortgage Bankers Debate Lending Outlook
CREF conference to explore ‘ripple effect’
from home mortgage defaults.
By Andre Shashaty
Orlando, Fla.–When
America’s commercial
mortgage
bankers gather here Feb. 3-
6, they will grapple with the
latest issues facing the
industry: much slower
growth in mortgage originations
and increased capital
markets volatility.
Many of the sessions
at the
Mortgage Bankers
Association’s
(MBA’s) Commercial
Real Estate Finance
(CREF)/Multifamily
Housing Convention
& Expo will try to
make sense of the new world facing
lenders after an increase in defaults on
adjustable-rate and subprime mortgages
in the last half of 2007.
MBA is chaired this year by a veteran
of commercial and multifamily lending
instead of a single-family lending
executive. Kieran Quinn is chairman of
Column Financial/Credit Suisse’s mortgage
lending subsidiary for multifamily
and commercial properties.
Quinn predicted that the CREF
conference would be a very important
way for capital sources and originators
to get in sync about how to
underwrite specific transactions in a
time of uncertainty.
“Underwriting issues are very
important again,” he said. “It’s not a
race to see who can get the most money
and easiest terms; it’s how comfortable
they are and are they going to get to the
closing table,” Quinn continued.
Quinn is calling on lenders and borrowers
to get back to basics, saying, “It’s a
time for more patience, a little more equity,
and a little longer holding period.”
As the CREF program points out, it
was expected that the capital markets
would eventually encounter a shock
that would cause investors to reconsider
their pricing of risk. But many lenders
and borrowers were surprised by the
speed and breadth of the impact of the
nation’s home mortgage woes on financing
for income-producing properties.
Here is a partial list of the sessions
planned for the CREF conference.
For more information, go to
www.mortgagebankers.org.
The Music Stopped:
Who Has a Chair?
This session will look at these questions:
How have the meltdown in the
subprime market, the widening of
spreads, and the credit crunch affected
multifamily lending?
Has the shock only affected financing,
or have multifamily fundamentals
also changed?
Who is still lending and on what
terms?
What else could happen in 2008?
Case Studies in Financing
Workforce Housing
This session will look at what role
lenders can play in addressing the
shortage of housing affordable to working
people. It will address the need and
the opportunities through the presentation
of case studies of successful developments.
The CREF program states
that attendees will “learn innovative
techniques to reduce development,
financing, and operating costs to make
rents affordable to working families,
especially in high-cost markets.” Green Buildings: Today’s Fad
or Tomorrow’s Necessity?
A panel of experts will discuss the
future of green buildings in light of the
current regulatory environment, tenant
demand, and construction and
operating costs. Finance considerations
for green buildings will also be
discussed, including the potential for
green commercial mortgage-backed
securities.
Underwriting is King
With investor jitters over the underwriting
practices of the recent past,
investors, rating agencies, and lenders
are taking a more conservative stance
toward underwriting practices. This
panel will discuss the impact of changing
underwriting requirements for such
items as loan amortization, loan-tovalue
ratios, projected rents, tenant
turnover, vacancy, operating expenses,
and capital reserves.
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