CMBS Downgrades Imminent, Terrorism Ins. Pressure Mounts

WASHINGTON, DC-The Mortgage Bankers Association of America issued a plea to the US Senate late Friday for action on terrorism insurance following news that Moody’s Investors Service has placed approximately $5 billion worth of commercial mortgage-backed securities (CMBS) on watch for possible downgrade in the near future. The watch list involves 14 CMBS–including 11 single asset office building securitizations and three large loan pool securitizations–with terrorism insurance that has either expired, will soon expire, or is inadequate.

With the US House of Representatives having already passed federal terrorism reinsurance backstop legislation, only the Senate can halt what could become a flood of downgrades that would negatively affect the nation’s economy.