Fitch Ramps Up On-Site Reviews As Part Of CMBS Originator Analysis

creased stress felt in the U.S. commercial mortgage-backed securities (CMBS) sector warrants more attention on the role of the originator in influencing the performance of CMBS portfolios, according to Fitch Ratings, which is undertaking more rigorous CMBS originator reviews. Fitch will evaluate companies with at least a 20% contribution in a CMBS transaction every 18-24 months. Additionally, one of the enhancements to its CMBS originator review criteria is that the review will be led by a Fitch analyst with operational risk review experience who is outside of the deal-rating process. Fitch's continued areas of focus, including origination personnel, underwriting and due diligence practices, take on more weight in an environment where CMBS performance is under increased pressure, according to Senior Director Richard Carlson. "Origination practices can influence loan performance, so Fitch will adjust credit enhancement levels accordingly, and in more extreme cases, may decline to rate a transaction altogether," says Carlson. SOURCE: Fitch


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