A look at the stories on HousingWire’s weekend desk… with more coverage to come on bigger issues. Fitch Ratings tightened its criteria on rating US commercial mortgage-backed securities (CMBS) servicers in light of changed market circumstances. Fitch managing director Stephanie Petosa said the market has grown “increasingly vulnerable” and the changes will lead to both upgrades and downgrades among various servicers. The changes:
The first change to the criteria addresses the servicer’s financial rating. While a CMBS servicer rating is primarily a skills rating, financial condition of the servicing entity is important, especially during challenging economic times. Therefore, Fitch plans to increase its financial weightings for both master and special servicer ratings to better reflect its significance. The second criteria change is related to employee experience. The maturity of the CMBS market has caused Fitch to revisit its assessment of employee experience levels, particularly as it relates to senior and middle management. Fitch views favorably servicers whose management teams have experienced full real estate cycles and plans to increase its scoring hurdles in management experience to reflect this view. Finally, due to the increased complexity of recent vintage CMBS servicing, Fitch plans to emphasize the servicer’s participation in the CMBS market over the past few years. Several Fitch-rated servicers have not participated in the recent CMBS servicing market. Other servicers have been challenged to address loan level issues with the quality CMBS market participants have come to expect. These factors will be more formally accounted for in Fitch’s future CMBS servicer ratings.
The Illinois Department of Financial and Professional Regulation shut down Illinois-based Bank of Lincolnwood with its $214m in total assets and $202m of deposits on the line for sale or disposition. Republic Bank of Chicago purchased all deposits and $162m of assets. The Federal Deposit Insurance Corp. assumes all remaining deposits and estimates an $83m loss to the deposit insurance fund. Discussion around the administration’s possible marriage of the Securities and Exchange Commission (SEC) to the Commodity Future Trading Commission (CFTC) and effectual creation of a single derivatives regulator might soon come to a screeching halt. A report filed at Market Watch indicates sources within the administration are altering the president’s proposal for regulatory reform to do away with the merger, which poses complications for Capitol Hill. From the report:
Instead of pushing for a CFTC-SEC combo, Treasury and the White House is expected to try to gain traction with lawmakers for their proposals to create a systemic risk regulator to oversee the financial system, while imbuing the Federal Deposit Insurance Corp. with the authority to unwind problematic mega-financial institutions. A major component of that endeavor would be to subsume the Office of Thrift Supervision into the Office of the Comptroller of the Currency, a proposal that is opposed by the community bank lobby. People familiar with the government plan said Treasury Secretary Timothy Geithner will announce it on June 17, and will then be scheduled to testify before the House Financial Services Committee on the plan the following day.
The Canadian government touted headway in its own housing stimulus plan designed to encourage home owners to invest in energy-saving home renovations. The plan aims to create jobs and improve the economy by making significant tax credits available to home owners that make some sort of home renovation effort. Since April, for example, an average 21,000 homeowners ordered energy evaluations each month, a 75% increase over April 2008. Write to Diana Golobay.
