Fitch: More Loans Being Dropped from New U.S. CMBS Pre-Securitization

NEW YORK--(BUSINESS WIRE)-- Loan changes in U.S. CMBS deals are not only taking place after a deal closes, but before it securitizes as well, according to Fitch Ratings in its latest weekly U.S. CMBS newsletter.

While it is not unusual for a pool to change from initial proposal to final pool cut, Fitch notes that the number of iterations have increased materially over the past 12 months. In a sample of 28 Fitch rated deals for the 12-month period ending June 30, 2015, Fitch observed approximately 1,000 loans that were dropped, representing approximately 30% of the final transaction amount. The majority of these 'dropped loans' were under $20 million. Larger loans that drop from pools will have a more significant impact on the overall deal metrics, including credit enhancement.

Fitch is concerned that the numerous loan drops could indicate a lack of lender due diligence prior to sending the initial loan information to rating agencies and/or B-piece buyers. This comes on the heels of the trend of loans changing in new CMBS deals post-closing, which Fitch discussed in its Nov. 23 weekly U.S. CMBS newsletter ('Fitch Seeing Loan Profiles Change Soon after Securitization').

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends', which also contains recent rating actions and an overview of newly released CMBS research, including Fitch presales and Focus reports. The link below enables market participants to sign up to receive future issues of the E-newsletter:'http://pages.fitchemail.fitchratings.com/CMBSMktOptin/'

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings
Stephanie Petosa, +1-212-908-0720
Managing Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
[email protected]

Source: Fitch Ratings

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