CREFW-Summer2015

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CRE Finance World Summer 2015
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recognized statistical rating organizations (“NRSROs”) and, by
extension, additional disclosure requirements on issuers, sponsors,
and underwriters (collectively, “arrangers”) of structured finance
products. The stated purpose of the Rule is to encourage more
ratings of structured finance deals by non-hired NRSROs, thereby
mitigating the effects of any conflict of interest that may be associated
with a rating obtained under the arranger-paid framework, and
discouraging “ratings shopping.”
Last fall CREFC formed a 17g-5 working group to address ongoing
implementation issues relating to the flow of information through
17g-5 websites between Servicers, Rating Agencies, and IP
Providers. Issues include timing of web posts, push confirmations,
and technological issues, and inconsistent PSA language.
Current Status
Best practices are expected to be finalized and adopted in 2Q 2015.
Operating Statements, Rent Rolls and OSARs (OSAR) Best
Practices — (Complete)
Chair Grace Holst, Strategic Asset Services
The OSARs working group was created to establish best practices
for the delivery and information flow of Operating Statements, Rent
Rolls and OSARs.
The working group produced a best practices document that was
released on December 29th, 2014 and is effective immediately.
Special Servicer Transfers Best Practices — (Complete)
Co-Chair Tom Nealon, LNR Partners
Co-Chair Chris Nuxoll, U.S. Bank
Co-Chair Lindsey Wright, C-III Asset Management
Co-Chair Kenda Tomes, Stinson Leonard Street LLP
The Special Servicer Transfers working group was formed to address
challenges that arise when dealing with the transfer of the named
Special Servicer on a CMBS trust, including the flow of information
and documents between Servicers, RACs, logistical and timing
issues, appraisals, and reporting/communication issues.
The SS Transfers working group produced a best practices
document that was released on December 29th, 2014 and is
effective immediately.
Best Practices for Reporting on Excess Liquidation
Proceeds — (Complete)
Chair Craig Zedalis, Wells Fargo
The working group addressed reporting issues under circumstances
when there is an REO loan that subsequently is sold and results
in excess proceeds. The group produced a best practices
document that was released on December 29th, 2014 and is
effective immediately.
Guidance for Writing-off B-notes and Realized Loss
Reporting — (Complete)
Chair Bob Brice, Midland Loan Services
The working group developed guidance on reporting subsequent
losses on B-notes in a modified loan situation. The group produced
a guidance document that was released on December 29th, 2014
that is effective immediately.
New and Revised Watchlist Criteria — (Complete)
Co-Chair Michael Brunner, JP Morgan
Co-Chair Tricia Hall, AIG
Co-Chair Leslie Hayton, Wells Fargo
Last fall CREFC launched an initiative to perform a comprehensive
review of the current Watchlist criteria and reporting practices with
the objective of making recommendations to enhance the value
of the Watchlist to market participants, especially investors. The
Watchlist serves as an early warning system that identifies loans
with a high potential for default.
The Watchlist Subcommittee includes representatives from all
CMBS market participants including Master Servicers, Investors,
Issuers, Data Providers and Rating Agencies.
As a result of several months of working group meetings along
with input from the Servicers Forum and IG Bondholders Forum,
the IRP Committee and Watchlist Subcommittee have approved
proposed changes to the CREFC Watchlist, Portfolio Review
Guidelines, and newly created Implementation Guideline. The
Implementation Guideline, designed to assist Servicers and
Investors, contains best practices for commentary and provides
further clarification for triggers.
2015 Servicers Forum Overview