In this FedFin report, we follow our initial assessment of the overall newly-proposed risk-retention rule with a focus on how the revised standards would apply to commercial real estate (CRE) and commercial mortgage-backed securities (CMBS) mortgages. The revised NPR departs from the initial proposal in several significant ways, somewhat widening CRE eligibility for retention-free securitization and liberalizing a unique aspect of the CMBS rules, which allow risk-sharing with certain third parties. Because CRE sold to Fannie Mae and Freddie Mac is exempt from risk retention while the GSEs are in conservatorship, their share of the multi-family market could well increase.
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