I wrote about the disconnect between our CRE CLO technology and the task at hand (finding acceptable lever in an expanding leverage desert) in my last commentary. While the CRE CLO remains the best form of match-term, non-marked-to-market finance for portfolio lenders and represents the best alignment of interests between sponsor and investor across the … Continue Reading
CRE CLO technology is languishing in the toolbox. A combination of high interest rates, a mispriced legacy book, an anxious investor base and no real need to refresh capital until borrowers start borrowing again is largely responsible. When a tool just doesn’t work anymore, you don’t throw it away, you fix it. I like this … Continue Reading
I wrote a week or two back about my expectation that significant economic dislocation awaits us. I still think that. The morning after I published, hordes (ok, maybe not hordes) of PhD Villeins were outside my house with pitchforks and burning torches, loudly asserting that I had wildly overstated the likelihood of material distress in … Continue Reading
Last week, over 4,200 of our closest friends met virtually for the annual January conference by the Commercial Real Estate Finance Council, which is usually held in Miami. While we have all learned to go without in the last year, going without seeing the “smart resort wear” of our colleagues was almost too much to … Continue Reading
We’re happy to share some exciting news as Crunched Credit’s very own Rick Jones has been named as a newly elected member of the Mortgage Bankers Association’s Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG). COMBOG drives Mortgage Bankers Association’s commercial and multifamily policies and recommends industry standards. After a tumultuous year and with some … Continue Reading
I am trying to figure out how much I care, as a businessman (as opposed to an actual living, breathing human being), about the chaos swirling around us. Every day’s news seems more the stuff of a dramatic conceit of someone’s next thriller than reality. Throw in a car chase and some sex, and we’ve … Continue Reading
Folks, last week I made the point that it’s extremely important to confront negative narratives about our industry before they take hold, creep into the interstices between things that are true and then somehow ossified into received wisdom. So, taking on board my own advice, which shockingly I find compelling, I want to sound the … Continue Reading
The closing deadline is quickly approaching! Which of the following two processes would you choose? Would you: (a) create a pdf of signature pages and request that parties provide a digital signature and return via email, or (b) print out multiple sets of paper copies of each signature page for each transaction document in triplicate, … Continue Reading
One of the pleasures of life is re-encountering old friends, catching up on what’s happened while your lives have gone their separate ways, reminiscing about the good old days and reconnecting. It comes back so fast, it’s like you never were apart. Me and the Liquidating Trust had just such an experience the other day.… Continue Reading
Last Friday, Law360 published its interview with Crunched Credit’s own Rick Jones as part of its Coronavirus Q&A series. In his interview, Rick discusses the effects COVID-19 has had on the commercial mortgage-backed securities market, reflects on how the current financial climate compares to that of the Great Recession, and contemplates the future of capital … Continue Reading
I’ve been offline for a bit. An amalgam of writer’s block caused by the enormity of the Coronavirus mess – what can be said that’s useful – and the consequence of being wildly busy as everyone across financial markets tries to pivot to the new reality. Unburdened by any knowledge of science, medicine or epidemiology, … Continue Reading
Here is something helpful that has surfaced amidst the fallout, pain and confusion of the global COVID-19 crisis. The implementation date for the all-too-simple in theory but not-simple-at-all in practice CECL accounting standard has been pushed back by the passage of the CARES Act for banks until the COVID-19 national emergency declared by the president … Continue Reading
The spread of COVID-19 has created a new reality for the hospitality industry. As of March 25, the CDC reported 54,453 confirmed cases in the U.S., and the number is expected to grow exponentially. In the hopes of slashing infection rates, governments have implemented international travel bans, shelter-in-place orders and other restrictive measures. The second-most … Continue Reading
The Federal Reserve, OCC and FDIC have (finally) issued the Final HVCRE Rule (for background, our analysis of the 2018 Notice of Proposed Rulemaking and 2019 Notice of Proposed Rulemaking are here and here), regarding High Volatility Commercial Real Estate (HVCRE) regulations that affect acquisition, development or construction (ADC) loans made by banking organizations that are … Continue Reading
One of the good things about the 24/7 news cycle, perhaps one of its few positive externalities, is that it’s a boon for the pontification business. It enables all sorts of otherwise serious people to make fools of themselves day in and day out predicting generally gloomy stuff, as sunshine doesn’t sell. As a card-carrying … Continue Reading
‘Tis the season and I think it’s way overdue to put in a good word for sunny optimism. It’s been a while since the Golden Turkeys, and I apologize for being offline. This having to work for a living gets in the way of serious bloviating. Here is what is bothering me. The overall tone … Continue Reading
As is our tradition here at Crunched Credit, each year, about this time, we award our Golden Turkey Awards. Once again, I must say that we are utterly blessed with so many worthy candidates. The truly deserving have once again wrangled with vision and astounding persistence to earn a spot on our acclaimed list. To … Continue Reading
Back in the febrile, hyperventilated times that birthed the Dodd-Frank Wall Street Reform and Consumer Protection Act (blessedly known simply as Dodd-Frank), one of the issues that energized the activists’ intent on “fixing” what was wrong was the notion that the ratings agencies were complicit in the overpricing of financial assets. In a “want for … Continue Reading
The US economy is about to pay the butcher’s bill for a massive disruption of worldwide financial markets resulting from the elimination of the London Interbank Offered Rate, or LIBOR. And, we are doing this on purpose. It seems the denizens of the heights of our international financial fabric felt they had to do this … Continue Reading
Just a few short months ago we took on the breathtakingly ill-conceived Current Expected Credit Loss (CECL) standard that the Financial Accounting Standards Board (FASB) proposed to implement starting in 2020. CECL will require major shifts in the way lenders model, forecast and reserve for future losses. It would materially drive up capital requirements, impair … Continue Reading
In an effort to advance the conversation around climate change within the CRE finance community, Jason S. Rozes and Nitya Kumar Goyal recently published Climate Change Impact on Commercial Real Estate Finance — What the Industry Needs to Know Today, which provides a great foundation for understanding how climate change affects our industry and identifies recent developments … Continue Reading
Contagion, at least of the buggy sort, can make for a terrific, spooky movie. Remember Gwyneth Paltrow and Matt Damon in Contagion? (Spoiler alert – she dies early on.) Got to admit, I love The Stand and Captain Trips; we all love a good scare… in the movies. In reality, however, contagion means bad things … Continue Reading
I’m a great admirer of Jack Cohen and his periodic market commentary. I answered his last one and then after the two of us talked, we decided we’d publish them together as a duet. So here you go.… Continue Reading
Beany & Cecil was a cartoon. The Current Expected Credit Loss accounting rules, better known as CECL, which the FASB is insisting will go into effect at the beginning of next year for publicly traded banks and lenders and a year later for all other GAAP reporting entities is not. Now, heaven forfend that I … Continue Reading
