In addition, the CMSA says, "reliance solely on borrower representations as to market conditions justifying a loan modification is inconsistent with the servicing standard which obligates the servicer to act prudently and in the best interests of the certificate holders, and typically involves independent assessment and evidence of market conditions."

Such a change, according to the association, would make investors "hesitant to buy bonds if the constraints on that modification are essentially eliminated as some have proposed, especially when the cash flows and duration could be restructured at any time under that relaxed standard." Because investors expect contract certainty, "proposals that effectively eliminate that certainty will serve to undermine investor confidence in CMBS" and have the opposite effect of the Obama administration's other market recovery efforts.

For servicers, too, there would be downsides, says the CMSA. "If servicers are given an effectively unlimited modification authority as some have proposed, they would be subjected to increased liability from multiple parties adding substantial costs and burdens to securitized credit markets." Moreover, servicers that are already dealing with significant increased activity levels anticipate they will be overwhelmed with inquiries and demands by virtually all borrowers hoping to take advantage of the new rules to negotiate a better deal.

The white paper cites other issues, including investor demands for additional spread premiums for CMBS loans and the challenges that ratings agencies would face in "rating a deal with so much uncertainty." The CMSA did not respond to GlobeSt.com inquiries about the status of these proposals.