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Commercial Department: Q&A: Jan Sternin, Mortgage Bankers Association: February 2008

 

Q&A: Jan Sternin, Mortgage Bankers Association

Jan Sternin, Senior Vice President of Commercial, Multifamily, Mortgage Bankers Association

Thousands of visitors to MBA's Commercial Real Estate Finance (CREF)/Multifamily Housing Convention and Expo this month will likely seek answers about if and when the market will improve. Jan Sternin, MBA’s senior vice president of commercial and multifamily, shares her thoughts.

What is the MBA’s biggest priority right now for the commercial market? What keeps us awake at night is bringing back liquidity to the market. As we saw at our recent [MBA Commercial/Multifamily] Capital Markets Conference, though, there is no consistent opinion among investors, originators and rating agencies about when the liquidity will open up. What people do agree upon is that we must bring back investor confidence and bring back our borrowers. 

How can the mortgage industry restore investor and borrower confidence? By getting the word out to the investment community that the new assets and newer loans coming out are based on a return to real, strong fundamentals. There has also been a move to tighten credit and underwriting standards.

Also, we need to shore up confidence in the rating agencies — to let people know that the agencies have adjusted ratings on older deals to mirror the focus on newer, more-conservative underwriting criteria. 

Collateralized debt obligations (CDOs) were the buzz term at 2007’s CREF convention. Things have changed. What do you foresee happening with CDOs now? The CDO market is taking a nap right now. So the big question is: Will it emerge? There is hope that it will, with a focus on the fundamentals. When it comes back, it will likely have more static than active pools. In other words, when notes go into the pool, they’ll basically stay there until they’re paid for. 

Amid people’s concerns about delinquencies in the residential sector, how are delinquencies in commercial loans faring? On the commercial side overall, delinquencies remain at an all-time low. In fact, we haven’t seen them above .5 percent for at least a few years. So even if there’s a little escalation in delinquencies in one sector, the rate across the board is still significantly below the 1-percent and higher mark we used to see. 

What do you anticipate for the multifamily market and the market overall this year? We’re looking to Freddie [Mac], Fannie [Mae], [the Federal Housing Administration] and [the U.S. Department of Housing and Urban Development] to lend as much as possible during this transitional phase. With the shrinking liquidity, we hope they’ll step up and fill the gaps in the multifamily market.

A number of market sectors are quiet right now, and people are taking a breath. But there is hope that at some point this year, the markets will start to come back. Overall, we assume people will eventually come out of hiding and there will be more lending and investment in ’08. We’re just not sure exactly when. 


 

Melinda Young was an associate editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail articles@scotsmanguide.com.

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