In this issue…
Commercial Mortgage Market Update
Dean C. Hurley, Senior Vice President, Capital Markets Group
We have seen the media and the news is out—developed countries such as the United States are providing engines for the world economy for the first time in five years as opposed to emerging markets. The question now is how soon will the U.S. make a full recovery to housing levels pre-debacle. Progressing into a slower winter buying season won’t help housing prices, and neither will the rapidly increasing mortgage rates. Moving forward into Q1 of 2014, although the Federal Reserve’s QE tapering begins January 2014, MIAC expects the strong momentum that has built up during the past year to continue propelling home prices at a modest pace.
Commercial Servicing Market Update
Daniel Thomas, Managing Director, Client Solutions Group
Overall, the commercial real estate market continues to work through a significant amount of underperforming assets in most of the major property types. Delinquency rate levels in the CMBS sector have stabilized over the past several quarters and there has been steady improvement in both the GSE and Bank and Thrift sectors. Market demand continues to remain strong among the top commercial servicers, especially for CMBS and Freddie Mac CME loans.
QRM – What to Expect
Joseph Furlong, Senior Vice President, Capital Markets Group
As lenders begin to implement the new Qualified Residential Mortgage (QRM) rules, the full affect on the residential mortgage market is yet to be seen. Monitoring the final rulings and implementation is critical for all residential lenders until the uncertainty is resolved. Time will tell if the affects of Dodd-Frank and the Qualified Residential Mortgage regulations will provide the solution the market requires. One thing is clear: the QRM rule will have a dramatic impact on the mortgage market for the foreseeable future.
Residential MSR Market Update
Michael Carnes, Senior Vice President, Capital Markets Group
Mortgage Servicing Rights values remain low relative to historical peaks. Most agree that stricter regulation will continue to result in higher servicing expenses; however, few would disagree about the pristine nature of most product being originated today. Depending on the type of collateral being transacted, some buyers are showing a willingness to lower their margins for the right to own servicing they perceive as carrying little risk compared to product originated just six years prior.
Secondary Risk Management Best Practices
Tina Freeman, CFA, Managing Director, Secondary Solutions Group
For several years, now the mortgage industry has grappled with a series of internal and systemic shocks that have created temporary disruptions and inefficiencies in the origination, financing and sale of loans. The future is no more certain: business volumes are expected to begin exhibiting year-over-year declines while regulatory uncertainty continues. Throughout this period of upheaval and changing market dynamics, the most successful secondary marketing operations have thrived by embracing change and implementing flexible and dynamic hedging strategies.
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