Retail Mortgage Securitization

Abstract

This chapter analyzes the evolution of the commercial mortgage backed securities market and the ongoing need to provide a secondary market to maintain liquidity in the commercial mortgage market. The continuation of the CMBS trend offers opportunities for traditional lenders to maximize liquidity and shift the risk of loss from holding whole commmercial loans to holding investment grade securities. The existence of a viable secondary market provides market efficiency and expanded opportunities for borrowers to access capital through direct and indirect securitization. Even for borrowers obtaining traditional loans, many lenders are changing their lending programs, documents, and criteria to preserve their ability to securitize these loans and subsequently sell them in the secondary market to maintain an exit strategy. Rating agency criteria for maximizing ratings on retail properties also are discussed.