CMBS Industry has to Contend with Massive Amounts of New Regulations Under Financial Reform Laws

New York--New financial reform regulations may have the effect of limiting the number of players in the CMBS industry.

By Keat Foong, Executive Editor

New York–New financial reform regulations may have the effect of limiting the number of players in the CMBS industry.

Speakers at a recent educational breakfast seminar sponsored by Mortgage Bankers Association (MBA) of New York Inc. wrestled with this and other potential ramifications of recently passed regulations on the CMBS market.

Kevin Blauch, Esq., partner at Latham & Watkins noted that there will be hundreds of new regulations that will need to be passed by government agencies in the wake of the Dodd-Frank financial reform bill’s passage. Every week, there will be new regulations being passed down that the CMBS market will be required to adapt to, he says.

As a result, the pace of securitization may be slowed as CMBS market participants figure out how to comply with the continuous and huge onslaught of new regulations, suggests Blauch.

David Rodgers, principal of Park Bridge Financial, suggests that CMBS issuers and other players in the industry may have to maintain larger compliance departments to make sure the companies adhere to all the new rules and regulations.

Ultimately, however, this may drive up the cost of debt for CMBS borrowers, and increase the barriers-to-entry into the marketplace for new players to enter the industry. “[Companies] will need large balance sheets and compliance structure in the organization to make sure they do not run afoul of rules,” says Rodgers.