MERS: Better Than a Faster Horse

MERSCORP, Inc. (“MERS”) has been under fire for years. We wrote about it a while back when residential mortgage borrowers challenged the ability of MERS to foreclose on mortgages it held on the theory that MERS, as a mere nominee to the lender, was not a real party in interest.  More recently, local recording offices have filed class action suits against MERS arguing that the MERS system prevented them from collecting fees supposedly required under state law.  Now there’s a sympathetic plaintiff!  In the past month, the Third Circuit and Fifth Circuit both rejected these arguments.

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Risk Retention Realized – Potential Solutions for CLO Market Participants

93850823-1In anticipation of the effective date of the Final Rule on December 24, 2016 (early Christmas gift?), CLO market participants have been constructing solutions that allow collateral managers to raise the capital necessary to support investments required by the Final Rule.

We have seen an increased use of a hybrid structure that has been referred to as the capitalized majority-owned affiliate (C-MOA) which may be structured to comply with EU and U.S. risk retention requirements.

What is a C-MOA?

The C-MOA hybrid draws from the CMV and MOA options, yet solves some of the perceived challenges presented in both structures. Attorneys at Dechert have devised two C-MOA structures – one where the C-MOA both originates loans to be sold to the CLO and manages the CLO and a second  where the C-MOA originates loans to be sold to the CLO but the CLO is managed by the existing collateral manager.

For more information regarding these C-MOA structures, please click here to read a recently published Dechert OnPoint. To receive future publications, please click here to add your name to the list.

More from Dechert

Capital Manager Vehicles Demystified

EBA and BOE Weigh in on EU Risk Retention

U.S. Risk Retention Final Rule: Capitalized Manager Vehicles, Majority Owned Affiliates and Other FAQs

Final Credit Risk Retention Rules Adopted for Asset Backed Securities and Residential Mortgage Backed Securities

U.S. Risk Retention Final Rule: Playing it Forward for CLOs

Risk Retention – How I Learned to Love Risk Retention and Live with it. (Apologies to Stanley Kubrick)

CRE Securitization: Rehabilitation Still In Progress

Photo credit: Chance Agrella / Hemera / Thinkstock

Volcker Rule – Five Years On

After years of delays, changes and significant debate, the Volcker Rule is now, largely, in full effect. Sold to a sometimes intellectually incurious Congress and the electorate as a central piece of legislation to limit systemic risks to the financial system, the Volcker Rule, among other things, prohibits “banking entities” from engaging in proprietary trading activities and acquiring or retaining “ownership interests” in (or acting as sponsors of) certain “covered funds.” Continue Reading

Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets

93850823-1More than 100 senior executives participated in Dechert’s Risk and Rewards of CRE-CLO and CLO Securitizations: Navigating the Capital Markets seminar.  The half day event, supported by  CRE Finance Council (CREFC) and the Loan Syndications and Trading Association (LSTA), focused on themes important to the CLO market and the CRE securitization market.  Panelists addressed market issues, structure and structural issues as well as regulatory and tax considerations.

Very senior and knowledgeable panelists from institutions including  Wells Fargo Securities, Crescent Capital, Guggenheim Partners, KPMG, Latitude Real Estate Investors, TCW, Western Asset Management Co. as well as government relations experts from both CREFC and LSTA discussed issues ranging from structural innovation, dealing with the new risk retention rules and market considerations relevant to sponsoring, issuing and investing in real estate and non-real estate CLOs.

To access a recording of the sessions, please click here.

Related Articles

Risk Retention – How I Learned to Love Risk Retention and Live with it. (Apologies to Stanley Kubrick)

CRE Securitization: Rehabilitation Still In Progress

Photo credit: Chance Agrella / Hemera / Thinkstock

Grexit Deferred: The End of the Beginning for Greece?

euroFor want of a baker, a job was lost.  For want of a job, the economy was lost.  For want of an economy, the banking system collapsed.  For want of a banking system – well, ultimately Grexit.

Grexit, Grexit, Grexit, Grexit, Grexit, Grexit, (China), Grexit, Grexit. The Greeks will be fine, right?  There is no such thing as contagion, right?  Your lips to God’s ear, please. As I write this, the Greek Parliament has approved the bailout and it looks like an immediate Grexit is off the table, (although the Germans are none too pleased)!  Wonderful. Continue Reading

Current Marketplace Trends in Real Estate Crowdfunding

iStock_000009267719_DoubleToday, there appears to be an ever-expanding number of sponsors and markets for crowdfunding.  Commercial real estate is no exception. At the recent IMN US Real Estate Opportunity & Private Fund Investing Forum, Elizabeth Braman, Chief Production Officer of Realty Mogul, presented at a session focused on crowdfunding for real estate.  It was very well attended.  Dechert and CRE Financial Council (CREFC) recently hosted an equally well attended seminar in San Francisco featuring leaders in the field to discuss the current state of crowdfunding debt and equity real estate investments and that discussion, in our thinking, was illuminating about this fascinating, and perhaps fraught, new business. Continue Reading

US Real Estate Opportunity & Private Funds Investing Forum Recap

nyseThe 16th Annual U.S. Real Estate Opportunity & Private Funds Investing Forum was held in New York City on June 15 and 16, bringing together private real estate fund sponsors, limited partners, and other industry participants. Over two packed days of panels, networking, and “shark tank”-style panel demonstrations, industry participants shared their views on the current state of the commercial real estate market, fund raising and predictions (from a fund investor’s perspective) for the near future. Continue Reading

The EB-5 Visa Program: the Rebirth of the Immigration Investor Program

capital

This is a good news story for once.  But, of course, since the father of this soupcon of good news is our government, it’s almost unintended.

From the ashes of the economic recession of 2008 came the rebirth of the Immigration Investor Program, more commonly known as “EB-5 Visa Program.”  This bit of social engineering has been around since the program was first introduced back in 1990 but got a second wind when everything else went to Hell.  The purpose behind the program was to benefit the United States economy by attracting investments from qualified foreign nationals. Continue Reading

Risk Retention – “How I Learned to Love Risk Retention and Live With It.” (Apologies to Stanley Kubrick)

93850823-1As time goes by we start to get close to the first of two risk retention effective dates; December 24, 2015 for residential product and everything else looming December 24, 2016 (does anyone really think a Christmas Eve Effective Date was unintentional?  Bah, Humbug!).  More and more attention is now beginning to focus on the Risk Retention.  We are grappling with the Rule right now in our resi market, in the CLO space where reissuance is a common deal feature (bringing forward 2017 concerns to today’s deals) and in the Single Family Rental (SFR) space which, much like the coupling of a donkey and a horse, is an oddly structured mule of a deal where no one is certain when risk retention will apply. Continue Reading

CREFC New York City (June 2015) Conference Recap

rooftopFor all of us in the commercial real estate industry, June has become synonymous with summer CREFC, a mid-year industry check-in and opportunity to mingle with industry participants.  Like past conferences, this year’s conference, which was held earlier this week, was once again filled with informative industry updates and lively panel discussions.

On Monday, much of the morning and early afternoon was devoted to various industry forums.  The day culminated with a panel titled “What Industry Titans Think of the Markets,” moderated by Citigroup’s Thomas M. Flexner, and panelist Richard LeFrak of the LeFrak Organization, Stephen M. Ross of Related Companies, and Robert S. Taubman of Taubman Centers, Inc.  Monday evening was filled with receptions hosted by a number of industry players, including Dechert’s own reception at the Refinery Hotel Rooftop. Continue Reading

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