The Mortgage Bankers Association’s recent webinar: Top Commercial Mortgage Servicing Issues in 2023, provided critical updates to the lending industry. Bonnie Hochman Rothell moderated this insightful discussion with speakers representing the Mortgage Bankers Association, CWCapital Asset Management, Berkadia, Walker & Dunlop, and Lincoln Financial Group.
While we are not yet experiencing the extreme conditions we have seen in prior recessions, we continue to face the backlash that comes with economic volatility. The panelists weighed in – here are the top takeaways:
- With fluctuating interest rates, virtual work schedules, and a relatively large portion of portfolios reaching maturity dates, there is increased uncertainty regarding space, equity, and debt. As a result, we seem to find ourselves in a “crisis of anticipation,” one panelist noted. Although we are currently seeing low default levels, it is unclear how long this will last.
- A lot is happening on the insurance side – an increase in premiums and deductibles, as well as new exclusions, exceptions, and provisions being imposed by insurers. Carriers are monitoring whether they are collecting the right amount of premium for the risk. These changes will most likely become the norm moving forward. Servicers need to re-assess escrow requirements as a result.
- There has been a recent uptick in loan term waiver requests such as maturity date extensions, insurance requirement exceptions, and other loan term exemption and modification requests.
- The office sector has been particularly hit hard, with in-office attendance still below pre-pandemic data. The healthcare sector has experienced an even greater impact, particularly skilled nursing.
- Moreso today than ever, it is critical to conduct routine inspections, annual compliance reviews, and regular risk analysis.
- Recruiting, training, and retaining talent is more important than ever. As a result, many panelists have adopted a more formalized intern program, created more opportunities for internal movement, and reinforced the importance of collaboration and mentorship in training programs.
- Communication continues to be critical between servicers and borrowers, and lenders and investors, as well as others across the industry.
The panel is eager to reconvene in the fall to reassess 2023 outcomes and look ahead to 2024. For more information on this panel or questions regarding any commercial mortgage servicing issue, please contact Bonnie Hochman Rothell.