Tough Times for Lenders : Financial Services Lawyer & Attorney : Winstead Law Firm : Finance, Banking, Bankruptcy

Over the last several weeks, I’ve shared and commented upon numerous summaries of the Dodd-Frank Wall Street Reform & Consumer Protection Act.

Last week I discovered two pieces that artfully make sense of the 2,319-page Act, and even offer up some implications. They are very helpful and interesting.

• If you really need to understand the Act, at some point, you’ll need to read the real thing.

But if you’re somewhere between a casual observer and a hard-core regulatory fiend (or simply looking for a few hours of reading), then these two resources need to be on your reading list.

• If you’re looking for ways that the Act will touch your world, then the Deutsch Bank piece will interest you (more than the Harvard Law School links).
• If you’re looking for a detailed summary, then the Harvard Law School links will interest you (it is light on articulating implications of the Act).

Deutsch Bank: The Implications of Landmark U.S. Reg Reform (July 2010)

This 84 page piece reviews the Act from 4 perspectives:

1.  Government\Regulators
2. Banks\Corporates
3. Investors
4. Consumers

It then outlines the timing of implementing the Act, and then lists potential implications for the following sectors:

•  Banks
• Non-bank Financial Service Companies
• Credit Markets
• Ability to Hedge Risk (Derivatives)

This is a very thoughtful piece.  The suggested "implications" are very interesting.

Harvard Law School: Forum on Corporate Governance and Financial Regulation blog 

The blog contains a good collection of materials and commentary on a wide variety of subjects covered by the Act (but excluding Title XIV of the Act, which covers mortgage reform and anti-predatory lending).

Importantly, the blog contains links to a 130-page summary (in bullet format) prepared by the Davis Polk law firm. The table of contents in the summary contains an outline to the Act, with each topic formatted with a hyperlink – so that by clicking on it, you go directly to the topic summary in the 130-page summary. (Note that the summary does not cover Title XIV of the Act, which covers mortgage reform and anti-predatory lending.)

This summary is so long, I’m not going to restate the table of contents here.

In addition and importantly, the blog contains Davis Polk‘s 28-page outline covering the regulatory implementation time-line of the Act. 

If you’re looking for meaningful implications in these materials, look for the “key point” text boxes in the 28-page outline.

From my perspective, this 28-page outline is outstanding and the “key point” boxes are very interesting.

And, the blog also contains other postings covering specific aspects of the Act (such as executive compensation and securities litigation).  So, click around on this very good blog.

One final comment: the title to the Dodd-Frank Act pointedly makes one very important – the Act is intended to address “Wall Street Reform” and NOT Main Street economics.

Chuck Jaffe at the Wall Street Journal’s Market Watch comments that it "took Congress about 2,400 pages to document its plan for reforming America's financial system, but the appropriate reaction for the nation's consumers can be summed up in just three words: Thanks for nothing.”

The Dodd-Frank Act is many things with a long list of implications, but it is NOT a Main Street economic life raft.

As I have noted before, addressing Main Street economic issues seems to be low on the political agenda.   Yes, Congress should address needed reforms in our regulatory platform. However, the electorate has more immediate needs - which literally are points of pain. We’ll see how the pain plays out in the ballot box this November.

If you know of other helpful evaluations of the Dodd-Frank Act, have other resources to add to these two resources, or simply have a different perspective, please post a comment below. 

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This should be the final summary from me on the Dodd-Frank Wall Street Reform and Consumer Protection Act.

My last posting on this topic covered the summary furnished by the MBA, together with links to other resources, summaries, commentaries, etc.

Like the MBA, the Commercial Real Estate Finance Council focuses on the commercial real estate; and it also has a keen interest in the bill.

Here's an outline of the summary commissioned by the CREF-C and circulated to its members (so that you can determine if it interests you):

I.      Securitization Reform
II.    Credit Rating Agency Reform
III.   "Volcker Rule" Limits on Proprietary Trading & Other Activities
IV    Other Reform Provisions:

• Systemic Risk: Financial Services Oversight Council
• Resolution Authority
• Bureau of Consumer Financial Protection
• Federal Insurance Office
• New Investor Protection Provisions
• Executive Compensation
• Corporate Governance; and

V.   The "Pay For" - The Financial Crisis Assessment and Fund

Again, if your interest focuses on commercial real estate, then this excellent summary (prepared by a DC law firm for the CREF-C) will interest you.

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Following up on my collection of summaries and up-dates from Congress, industry organizations, Google sources (via news\blogs\twitter) and one DC law firm, here is the summary prepared by the MBA.

I know that this blog entry is short.

However, if this blog is all about the content, then on the topic of "where can I read summaries of the Dodd-Frank regulatory reform bill" -

Enough said.

But if you have other sources, please tell us about them below.

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If you've been following (here at TTFL) the Dodd-Frank Wall Street Reform and Consumer Protection Act, then you have these resources (and my 2 cent commentary):

• the summary furnished by the House Financial Services Committee, and to a copy of the entire bill [link to all of this]
• tips on using Google Reader to monitor this bill in the news, on blogs and on twitter; and a short summary of 3 commentators on the bill (each with a different perspective [link to all of this]
• a summary prepared by a DC law firm (the number of these summaries are growing like summer maize) (having just returned from the College World Series [a 10.5 hour trek across Oklahoma, Kansas and Nebraska from Dallas], images of this stuff is burned into my retina display)

Next up in the information flow: summaries by key industry organizations.

1. The Long Syndication and Trading Association (LSTA) has circulated a summary prepared by it (attached), which focuses on these three important topics for the syndicated loan markets:

• Risk Retention: these provisions could effect the syndicated loan or CLO market.  Although the CLO market is NOT explicitly targeted in the Dodd-Frank bill, some of the provisions are broad enough to sweep CLOs into the fold.
• Volcker Rules: additionally, these provisions could impact the loan syndication process surrounding CLOs, and importantly, they also could impact swaps on loans known as "total return swaps" (TRS) and "loan only" CDS or CDX (LCD/X - all of which are implicated in a number of provisions).
• 150 & 350: remarkably, the LSTA gives this very unofficial statistic - the bill calls for @ 150 studies or reports AND for @ 350 new regulations; all of which must be completed within 270 days following final passage of the bill.  The Regulators (the Federal Reserve, OCC, FDIC and SEC) will be beyond busy.  Can picture this?
  
  As noted in the attached, the LSTA intends to be very, very involved and busy with the Regulators; as will every other industry organization, lobbyist, etc.

2.  Attached is the July 1 letter from the Commercial Real Estate Finance Council (CREF-C) to the FDIC, which covers the following:

• the FDIC's proposed "safe harbor" rule: this proposed rule addresses the treatment of assets during the potential insolvency of an FDIC-backed institution.   The FDIC offers up this proposed rule in response to new accounting rules (FASB 166 and 167), in order to ensure that assets transferred by an "insured depository institution" into a CMBS pool are protected from any insolvency proceedings of that institution.  The letter notes that the FDIC's approach is NOT consistent with the Dodd-Frank bill.  My guess here is that the FDIC's work on the safe harbor rule will come to a screeching stop - as it joins the other Regulators in the work described above.   This topic becomes part of the 150/350 mix referred to by the LSTA above.

If you have other summaries prepared by industry organizations, please post a comment (below) with instructions on "how" we could obtain a copy.

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On the 4th of July.  I suggested that you celebrate it by becoming more "involved" in understanding what is being called the greatest "reform" or restructure of our national economic platform since the Great Depression (remember: we're only in a "recession").

If you're following this important financial reform bill (the Dodd-Frank Wall Street Reform and Consumer Protection Act), you know that it passed the House on Wednesday, June 30 by a vote of 237-192.  You also know that three Republicans broke party ranks and voted for the bill: Joseph Cao (LA), Mike Castle (DE) and Walter Jones (NC).

How do I know this? How am I following this very, very important bill?

I'm using Google Reader to track all appearances of the phrase "Dodd-Frank" in these three information sources:

• in news accounts on the Internet (using the Google News search engine)
• in blogs on the Internet (using the Google Bog search engine)
• in twitter entries on the Internet (again, using the Google Twitter search engine)

OK, I agree: this sounds way, way "techie" and a real pain - just too many clicks and steps.

Google, however, makes it very, very easy: Google Reader automatically does all of this for me.

Consequently, it is very, very easy to track the bill's progress through Congress, and to read commentary about it.

For example, Google Reader collects these different perspectives and commentators on the bill:

• Open Left, which is a "website dedicated toward building a progressive governing majority in America"
• Deal Book on the New York Times' website, which is starting a "tour" of the sixteen titles of the Dodd-Frank bill
• Commentators such as Tyler Cowen, who give his unique assessment of various aspects of the bill (Wikipedia describes Cowen as a "libertarian bargainer")

Come on - don't you want to watch and read this great debate on this important bill?

It is so, so easy to do using Google Reader.

For step-by-step instructions (6 total steps) on "how" to do this, go to my earlier posting on using Google Reader for your lease surveillance projects.  The six steps are at the end of the blog post.

The instructions are easy.

The benefit to you will be great.

The Internet is the new knowledge bank.  Use it.

And happy 4th of July to  you!

If you have other "hot" topics that you're following, please post them below.

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Earlier this week, I posted a short summary of the Financial Services Reform Bill.   Since then, the House Financial Services Committee posted the text of the overhaul agreed by the House-Senate Conference Committee late last week:

• Now called the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill is both long (2,193 pages), and being pushed for a vote in the House before the 4th of July.

(Hip, hip, hurrah for the 4th!)  (Question: could you do this in a week - digest 2,193 pages, then think about it, complete the proper due diligence and investigation, and then vote on it - in one week?  Bonus question: could you do this after that week - tell your constituents that your really understood those 2,193 pages?) (Looking for those cliff notes . . . ?)

• So, to assist everyone (maybe even a few Senators and Representatives - or at least those with a busy extra-curricular schedule), the House Financial Services Committee also posted a 10 page summary [PDF] of the 2,193 pages..

We now have our summary.

If you have one work-related item to read this month, this is it. (Since you won't be voting on it, just read the summary . . . not the 2,193 pages.)

At this juncture,  we all start the hard work of figuring out "how" all of this will change the financial services industry; and how each of us will make a living, buy a house, etc.

One quick observation:

• some very important topics are pushed to the regulators (for their decision on important regulatory topics), which means we'll need to build in further delay and uncertainty in our business models pending those decisions

(First we blame and bleed the regulators in hearings staged for the 24/7 media coverage; and now we empower the same regulators or create MORE regulators. Is this political two-step simply an admission that we don't want to be responsible for the hard decisions? Or perhaps this simply is one political black hole in our representative government - the need to pass a bill and then climb the re-election podium?)

Happy 4th.

If you have some early predictions on the "how" flowing from these changes, please post them below.

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For the next couple of days, I'll be giving you summaries from the MBA's Servicing and Technology Conference.  As you might suspect, the sessions focus on the 'hot' topics.

Here are the sessions that have my attention:

• Federal legislation, regulatory reform, and the political climate, including REMIC reform, banking reform, risk-based capital requirements, the "new" CMBS 2.0, the rating agencies, and accounting changes
• the current economic market, including maturing loans, property markets, originations (or lack thereof) and unemployment
• increased loan surveillance
• using technology to improve the servicing process (I'm on the panel covering this topic)
• using social networking tools with a business focus
• using technology tools for mitigating risk
• challenges facing the "new" CMBS 2.0
• loan defaults and workouts
• lessons learned (what works and what could be better)

This is my tenth time to attend this conference.  As you see from these topics, this conference always is relevant and very practical.  I'll be back later today with my first summary.

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Rating Agencies continue to be under a microscope. Here are two recent events, and two points that should be of interest:

1. Moody’s Receives a Wells Letter
2. Information Sharing Under New SEC Rule 17g-5 Addresses Conflicts of Interest
3. Needed: Post-Employment Limitations On Rating Agency Employees Deserve Consideration; and
4. Needed: Rating Agency Focus On Loan Level Fundamentals (Using Databases)

Five year ago, would you have foreseen the following?

1.  SEC Sends Moody's A Wells Letter; Cease & Desist Coming Next? ZeroHedge reports  on the disclosure by Moody’s, in its 10-Q, that it received a “Wells Letter” on  March 18, 2010.  The 10-Q states:

“MIS [Moody's] received a ‘Wells Notice’ from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization under the Credit Rating Agency Reform Act of 2006.” 

ZeroHedge notes that this could be the “end for the rating agency.”

Separately, Market Pipeline quotes other portions of the 10-Q, which read like a bad dream for Moody’s.

Wow.

The European Union already is extremely upset with the US rating agencies.  This will only add to their anger.

2.  Conflict of Interest Addressed By New SEC Information Sharing Rule (new SEC Rule 17g-5): Jim Flaherty reports on the Commercial Real Estate Finance Council's "After-Work Seminar - SEC Disclosure Requirements" covering the new SEC Rule 17g-5.  This rule is designed to address the conflict of interest that rating agencies have as a result of issuers paying for ratings. It goes into effect on June 2. Here is Jim’s summary:

“The rule requires issuers and hired rating agencies to maintain password-protected websites to share rating information with non-hired rating agencies.

Here are the rule’s objectives (as summarized by Jim):

• Increase the number of ratings for structured finance products,
• Promote issuance of unsolicited ratings and
• Reduce the ability of issuers to obtain better than warranted ratings by exerting influence over hired rating agencies.”

Jim gives a good summary of the seminar, including a summary of the presentation on Rule 17g-5 and a copy of the presentation – read his blog.

This is a great break through for those of us supporting, and working on, data standards in support of B2B information sharing in the commercial real estate industry.   It also is another example of the transparency movement.  (See my earlier posting on CMBS loan level information disclosure.)

3. Needed - Post-Employment Limitations: I suggest that this additional step be taken - just as with the restrictions placed on Federal employees, rating agency employees should face limitations on taking a job at an investment bank or any other company arranging or involved in the issuance of securities.

Is this idea under consideration?

4.  Needed - Rating Agency Focus On Loan Level Fundamentals (Using Databases).  Rating agency focus during CMBS 1.0 seemed to be on the financial structure and payment waterfall (among the bondholder class and the servicers) with  very little focus on the equally important underlying real estate fundamentals.

Am I incorrect in my belief that the rating agencies did not focus on real estate fundamentals?

My suspicion is that since so little of the loan level information (covering real estate fundamentals, such as lease issues, title issues, etc.) was in a database format, they really did NOT have the ability to focus on bedrock real estate issues.

There is an easy technology "answer" for this challenge: require the collection of loan level information as data, and the use of MISMO standards to achieve this information sharing.

Note that I experimented at collecting title, survey, lease and other legal information in a database format.  But the loan originators did not recognize the value in doing so.  Surely this will change in the near future.

If you have other observations or suggestions, please post a comment below.    

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Yesterday, the Commercial Mortgage Securities Association (CMSA) submitted a comment letter [download] to the FDIC concerning the FDIC's 'Safe Harbor' rule [down load the FDIC's Advanced Notice of Proposed Rulemaking] covering the securitization of commercial real estate loans. 

Of course, the CMSA is not the only industry organization to comment on the FDIC's proposed rule.  For example, Housing Wire [link] describes comments to the proposed rule raised by the American Securitization Forum, the Mortgage Bankers Association and the Securities Industry and Financial Markets Association.

The FDIC's proposed rule is designed to isolate, from the failure of a bank, the underlying assets of securities held by the bank.  The treatment by the FDIC of assets transferred by a bank in connection with a securitization, and the subsequent failure of the bank, is an underlying building block for securitization - simply because investors will NOT buy CMBS bonds if the underlying loans may be stripped from the CMBS pool, if the bank that originated the loan goes into FDIC conservatorship or receivership.

Under the proposed new rule, the safe harbor would be amended to include numerous preconditions regarding a transaction’s capital structure, disclosure, documentation, origination and compensation.

I really don't have anything to "add" to the pointed comments made by these organizations .  If you want the "detail" on their perspectives, I've furnished you the links (above).  (They contain some very, very interesting points.)

My focus is on the following statement in the CMSA' e-mail announcing its comment letter:

"[The] CMSA suggests that the FDIC work in concert with Congress, the Obama Administration and the other agencies that are developing securitization reforms to ensure that FDIC's safe-harbor efforts do not lead to a regulatory framework of conflicting or overlapping requirements that may impede the restoration of functioning credit markets."

My read of the situation remains unchanged:

• unlike at the creation of the CMBS model in the early '90s, the financial crisis and the role of CMBS 2.0 in it is a political process - which means a large number of parties have a voice in the process
• the changes needed to restart the CMBS model (referred to as "CMBS 2.0") are not easy
• mid-term elections mean that Congress will NOT address this critical component of the credit crisis once the heavy campaigning begins (in August) . . .
• . . . which leads to the conclusion that in 2010, we will NOT see a return to a meaningful CMBS market.  In other words, no CMBS 2.0 for the small commercial real estate borrower.  Sure, single sponsor deals with the best DSC, LTV and other uber-credit criteria will be launched (good for Wall Street).  But a multiple borrower pool of small loans (help for Main Street)?  I say not in 2010.

I hope that I'm wrong.

If you view it differently, please comment below.

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Unlike the CMSA January Conference (where the primary focus is on addressing substantive issues) [link], the MBA-CREF convention has a primary focus on relationships: mortgage bankers meet with lenders; and lenders meet with mortgage bankers.

However, the MBA does offer some very interesting Committee and Council meetings, where substantive issues are discussed.

But make no mistake about this: the focus is on the meetings.

Any way, here are my notes from two committee and council meetings that I found particularly interesting today: the Public Policy Committee; and the Investor & Originator Council.

As a general proposition, the general "atmosphere" is much, much more optimistic than the atmosphere at the CMSA January Conference.

Maybe the credit markets have radically changed in two weeks.  (Or not.)

Public Policy Committee

• Legislative climate: bad. "Hostile environment" for lenders.  Lenders are "demonized" by the administration. No one wants to help Financial Services sector. With this background, here are MBA priorities: financial reform (big issue for CRE: risk retention provision - skin in the game; MBA try exempt multi-family & CRE); FHA role & mission (housing finance system); future of Freddie & Fannie (altho only briefly mentioned in comments to the proposed budget). Revenue raising tax issues are important to the Administration.
• Financial reform: House bill passed. Action now in the Senate. Bi-partisan working groups at work in Senate since November. Senator Dodd is not under political pressure due to his announcement that he will not run for re-election. Risk retention is focus of MBA. Calendar constrained because no hope for bills after August (due to mid-term elections). Plus other regulator reform happening, such as the "Voelker bill" (which will severely restrict the activities of banks).
• Need specifics on Administration's proposal to fund $30bill for community banks
• The MBA has a long, long list of regulatory and legislative items
• GSE: part of restructure of housing finance system; no "hard" direction from administration; the unlimited funding of Freddie & Fannie (per the Dec 10 announcement) will not continue forever
• MBA will formally oppose the fee on regulated institutions (but caveat: no one loves bankers)

Investor & Originator Council

At the beginning of this meeting, the MBA's economist (Jamie Woodwell) discussed the MBA's 4thQ data (to be released on Tuesday, 2/2); CRE loan originations up 12% on average; caution - comparing to a low level (in 2008); CRE originations still at low volume; maturity volume survey - 13% of non-bank will mature in '10 and 7% in '11 (highest product is variable rate CMBS); all to be on MBA's website.

Next, a panel of speakers gave their perspectives on the following:

• Buzz in market - things are getting better; what is your origination prediction for '10? Life Cos have almost normal funds (and spreads a good relative to corp bonds), but conservative underwriting will limit production volume; wild card is employment numbers
• Trends in last 90 days: sentiment in market is improved, w/ people wanting to invest; but challenged by worsening CRE fundamentals; tale of two cities (intense competition for best deals and no $ for bad deals); several big banks have approval to take loan applications for multi-borrower loans for CMBS pools (but same challenge - the same tale of two cities); strong investor demand for GSE bonds (a lot of capital looking for a home); need to see job growth in order for lenders to believe rents have stabilize
• Risk of double dip in '11: due to foreclosed properties hitting the market; at same time, some properties will attract investors if in good location or unique replacement cost (high quality asset); one panel member did not believe in "double dip" theory; good, performing loans are being sold at close/at par
• Will rising employment save the "kick the can" lenders? Banks need to see an accruing loan, and thus A/B note structures will be attractive; but this will take time to implement
• Rush to fix CRE is not the best strategy; lenders are taking the right approach in extending & restructuring (charge off the new B Note); average loss on foreclosure is 2x loss following smart restructure (if B motivated & doing the right thing, and a performing loan will be in place); however, this approach will affect price uncertainty; but lenders will foreclose (if B can not cure a $ default) and are motivated to sell REO
• Risk Based Capital for life insurance companies: regulators have given concessions and are working for a long-term solution
• FDIC: maybe considering keeping assets and working them out - as opposed to taking the "RTC" approach (from the late '80s)

This is a very different crowd, with a much more optimistic attitude, than the attendees at the CMSA January Conference.

If you have any comments, please post them below.

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(This is part of a series of postings from the 2009 MBA-CREF convention in San Diego.) (Trends; Arriving;  Day One; Day Two; Day Three)

It is no surprise that the convention is markedly different from previous years.  Everything has changed (unfortunately that's almost NOT a terrible understatement): lenders have a new focus (and those with "real" investment allocations to lend are few in number), servicers are under scrutiny in the face of looming defaults, and mortgage bankers are seeking ways to serve (read "save") their best borrowers.

Kudos to the MBA for directly addressing these changes and challenges.  The sessions were informative.  The discussions were frank.  Too bad attendance at the convention is down.

Here are some of the topics, observations and comments:

• Servicing is servicing.  While servicing CMBS clearly has unique twists and challenges (such as the servicing standard of care, "tension" among the investor classes, etc.), portfolio lenders and CMBS servicers share many common hurdles in dealing with troubled loans.  (My next post will address some frequently asked questions about dealing with troubled CMBS loans.)
• The erosion of credit and value is a critical challenge.  Yesterday's debt service coverage and loan to value definitely is not today's story.
• The stack of first lien mortgage, mezzanine debt and even holding company leverage, which I affectionately call the "Other People's Money" mantra of the "old" economy, is yesterday's story and today's headache.  In prior conventions, sessions focused on these "tools" of the finance market.  This convention didn't even mention it - for good reasons: we're now dealing with the hangover.
• It is difficult to identify the correct asset disposition strategy when relative values are difficult to determine - values seem to change weekly.  In all sectors (products) and markets, appraisal valuations are problematic.
• Life companies are placing greater emphasis on debt service coverage, with less reliance on loan to value measures.
• The ability of borrowers to pay off a loan at maturity (the inability to pay is called a "maturity default") is under question due to the fear that community and regional banks are tapped out in their ability to place mortgage debt on their balance sheets.  And since these loans are limited term floaters, with equity pay-downs and guaranty agreements, they are only a temporary "fix" to the larger credit problem.  In other words, the boomerang remains in the air.
• Generally, the strategy of CMBS servicers and portfolio lenders is this: extend (if possible), wait and increase surveillance.  However, an extension has a price: new underwriting of the market, the project and the sponsor, with an extension fee, new reserves, lock box structures, amortization, etc.  An extension needs to make sense.
• Regulatory reform is coming.  For the life company, this means possible changes to risk-based capital (and the dreaded "mortgage experience factor") and possible "opt in" Federal licensor.  For the CMBS servicers, this means possible REMIC reform (again) addressing seller financing, control over the special servicer, etc.
• The need for greater information flow.  For the life company, this plays out in rating agencies asking for loan level information - like the information available in CMBS pools.  This second guess is totally new for life companies.  (For years, I periodically ask my life company clients: do you want outside counsel to prepare a loan and property summary like the ones we prepare when we close a CMBS loan? The prediction here is that the time has come for this change.)  For CMBS servicers, investors are asking for even more loan level information.  They've learned that they can not simply "trust" the certificate rating - they need to understand the current status of each loan in the pool (beyond the data contained in the current investor reporting package).
• Note sales are problematic.  On the CMBS side, they have slowed, with a wide gap between the bid and the ask price.  It was noted that there exists a correlation between AAA CMBS spreads and the volume of note sales.  Thus CMBS prices need to stabilize in order for loan sales to increase.  On the portfolio lender side, the risk-based capital rules literally rob the portfolio of the ability to craft loan restructures that place the lender in a position to increase its yield (and profit from a rebound in the market).
• Life company underwriting is now a return to the basics: 1.50x minimum debt service coverage; maximum 55% maximum loan to value (slightly higher for multifamily); shorter term; avoid hotels; beware of retail and "transitional" projects (which is a problem for banks seeking takeouts for construction loans); closely examine employment base of local market; scrutinize debt maturities of the principal; consider the use of lock box and SPE structures; less reliance on appraisals (due to valuation challenges) and more reliance on debt service coverage; etc.

This convention has been "rich" - not in the sense of money being thrown at deals (as in prior years); but rich in information, determination and the resolve to navigate these challenges.

The unspoken mantra seems to be: we can do tough times.

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