Investors worry about CMBS special servicer changes: Fitch
Investors are becoming increasingly concerned about changes in ownership, management and strategic direction among special servicers of commercial mortgage-backed securities, according to Fitch Ratings. Analysts said the credit crisis has put more focus on the role of special servicers, especially after a dramatic decline in commercial mortgage loan performance the past couple of years. Earlier this week, the Federal Housing Finance Agency proposed two mortgage servicing compensation models. "Recent events in particular have turned the spotlight on the largest CMBS special servicers, all of which have undergone ownership changes in the past few years," Fitch said. The ratings agency also said additional changes have included staffing, strategies and expanding business lines. "Naturally, these numerous changes, coupled with the influx of loans into special servicing leave investors concerned" about potential conflicts between existing CMBS borrowers and ownership interests, according to Fitch managing director Stephanie Petosa. "Additional issues attracting market attention are fair-market valuations and special servicers' expansion into related fee-generating businesses," Petosa said. Fitch said some of the largest special servicers are either being acquired or are using in-house professionals to handle services that used to be contracted out. "Fitch expects CMBS servicers to protect the interests of all bondholders regardless of its own interests and not be motivated by their ownership interests or advancing affiliated entities," the ratings agency said. Write to Kerri Panchuk.