commercial real estate

Interim Final Rule and Interagency Statement for Real Estate-Related Financial Transactions Affected by the Coronavirus

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On April 14, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), and the Federal Deposit Insurance Corporation (FDIC) today announced an interim final rule that allows financial institutions to defer completion of appraisals and evaluations after the closing of certain residential and commercial real estate transactions. The deferrals provide flexibility for completing appraisals and evaluations to help financial institutions meet the immediate liquidity needs of borrowers during the coronavirus emergency. The interim final rule authorizes deferrals of appraisals and evaluations for all residential and commercial real estate transactions, except for transactions involving the acquisition, development, and construction of real estate, allows a bank up to 120 days from the closing of a transaction to obtain the appraisal or evaluation required under the appraisal regulations, and authorizes deferrals until December 31, 2020, when the interim final rule terminates. Bulletin.

Rating Agency Developments

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On February 7, Fitch updated its criteria for asset related risks of commercial real estate loans used as collateral for covered bonds.  Fitch Report.  

On February 6, Moody’s released methodology for U.S. Housing Finance Agency single family programs.  Moody’s Report.  

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Rating Agency Developments

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On June 4, S&P issued two Requests for Comment articles on proposed changes to its CMBS criteria. The purpose of the proposed criteria is to improve and simplify the agency’s approach to rating CMBS offerings and to harmonize S&P’S approach to evaluating commercial real estate. S&P Release.

On June 6, Moody’s updated its rating methodology for RMBS in Europe, the Middle East and Africa. Moody’s Report.

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Rating Agency Updates

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On October 15, Fitch updated its global rating methodology for CDOs backed by structured finance assets. Fitch Release.

On October 15, DBRS released its commercial real estate non-performing loan liquidating trust methodology. DBRS Release.

On October 18, Moody’s revised its framework for reviewing hedges in connection with highly-rated structured finance cashflow transactions. Moody’s Report.

On October 18, Moody’s revised its approach for evaluating jointly supported letter of credit-backed transactions and introduced its global Joint Default Analysis methodology. Moody’s Report.

On October 15, Fitch revised its Ratings Definitions to modify the linkage between long- and short-term ratings and the definition of Expected Ratings. Fitch Release.

On October 20, Moody’s listed important factors in its analyses of Japanese ABS which incorporate declarations of trust. Moody’s Release.

On October 20, DBRS released its methodology for rating Canadian trade receivables securitization transactions. DBRS Release.

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TARP Panel CRE Report

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On February 10, the TARP Congressional Oversight Panel warned in a report that commercial real estate loan losses over the next four years could jeopardize the stability of many banks, particularly community banks. Approximately $1.4 trillion in commercial real estate loans made over the past decade will require refinancing between 2011 and 2014, and currently, almost half are underwater.  Panel Report.