GlobeSt.com: Looking at the bigger picture, will the risk retention rule affect the CMBS delinquency rate?

Ginsberg: Again, on your lower-class loans, the rate could be affected. But what's interesting is that there's a lot of different competing forces at play. There's upward pressure generally on interest rates, but you also have the regulatory relief that the Trump administration is proposing—not that it's likely to come in the first 100 days, but certainly there's a push within this administration to ease up on regulation and reduce taxes. I would think that both of those would have a very positive effect from a macroeconomic standpoint on the commercial real estate market.

GlobeSt.com: At the same time as the risk retention rule is in effect, you also have the current administration's interest in regulatory rollback. Could the one balance out the other in terms of the refinancing environment?

Ginsberg: Absolutely, and particularly if some of the regulatory rollback provides some relief to those regional banks. The key is that regulation is good if it's well thought-out. We don't want to go back to the pre-crash environment. But you do want to give institutions the ability to make good-quality loans that make sense and are prudent, with the right underwriting approach. The risk retention rule itself could be part of that regulatory relief; who knows? These are all things that could be on the table.

The underlying concept of risk retention probably isn't a bad idea, because all of a sudden the originators of CMBS loans have some skin in the game. In that lies some value, but there's obviously a lot of different moving parts in these regulations, and I think there's always room for streamlining.

GlobeSt.com: Is it fair to say that the CommLoan value proposition isn't really affected by whether the regulatory rollback happens fairly rapidly or occurs more gradually?

Ginsberg: Yes, no matter what the economic environment and no matter what the regulatory environment, what CommLoan does is to bring all options to the table for borrowers. As certain segments of the commercial lending marketplace might back off because of a new regulation or just certain issues within their segment, other segments very often step forward and fill the gap. When CMBS started backing off, banks stepped in, and when banks back off, CMBS steps in, or the life companies, or in certain cases, the private money institutions. The beauty of providing the marketplace and the data, particularly to underserved borrowers in the $5-million to $25-million range, is that they truly understand the options and very often will find options that they didn't know existed.

SCOTTSDALE, AZ—Commercial real estate lending would seem to be such a natural application for a Priceline-style online marketplace that CommLoan founder Mitch Ginsberg was surprised to find that no one had done it before he launched the startup last year. Currently, the platform gives borrowers access to 350 lenders across a variety of lending classes; Ginsberg intends to grow that number to 1,000 by year's end. A veteran of more than 25 years in finance and accounting, Ginsberg sat down with GlobeSt.com recently to zero in on the current climate for CMBS borrowers in this, the 10-year anniversary of the most active year to date for securitized commercial mortgages which now will be coming due.

GlobeSt.com: What do you see in terms of the current regulatory environment for the individual CMBS borrower and for the CMBS market as a whole?

Mitch Ginsberg: The biggest regulatory piece, which came into effect at the end of last year, was the risk retention rule. It has had an impact, but the market will adjust. My feeling is that the smaller CMBS lenders will be more affected, even the smaller ones that are able to bring in partners on the risk retention piece. With the B-grade loans, it creates a pause when the lender realizes that the 5% portion of that is going to be sitting on their books for five years as well. However, while the B-grade transactions are going to be looked at a little more closely, ultimately the lender is going to make the loan.

Where there could be some challenges are in those areas where possibly you haven't had the level of recovery as far as values are concerned; they might have challenges in getting a CMBS loan. Therein lies the value of what CommLoan brings to the table: it really levels the playing field and gives any borrower access to the marketplace. It may be a regional bank that understands that local region better, that is more familiar with that particular property class in that geographic area, and would be willing to step in and make the loan where a CMBS lender might not be comfortable.

GlobeSt.com: Looking at the bigger picture, will the risk retention rule affect the CMBS delinquency rate?

Ginsberg: Again, on your lower-class loans, the rate could be affected. But what's interesting is that there's a lot of different competing forces at play. There's upward pressure generally on interest rates, but you also have the regulatory relief that the Trump administration is proposing—not that it's likely to come in the first 100 days, but certainly there's a push within this administration to ease up on regulation and reduce taxes. I would think that both of those would have a very positive effect from a macroeconomic standpoint on the commercial real estate market.

GlobeSt.com: At the same time as the risk retention rule is in effect, you also have the current administration's interest in regulatory rollback. Could the one balance out the other in terms of the refinancing environment?

Ginsberg: Absolutely, and particularly if some of the regulatory rollback provides some relief to those regional banks. The key is that regulation is good if it's well thought-out. We don't want to go back to the pre-crash environment. But you do want to give institutions the ability to make good-quality loans that make sense and are prudent, with the right underwriting approach. The risk retention rule itself could be part of that regulatory relief; who knows? These are all things that could be on the table.

The underlying concept of risk retention probably isn't a bad idea, because all of a sudden the originators of CMBS loans have some skin in the game. In that lies some value, but there's obviously a lot of different moving parts in these regulations, and I think there's always room for streamlining.

GlobeSt.com: Is it fair to say that the CommLoan value proposition isn't really affected by whether the regulatory rollback happens fairly rapidly or occurs more gradually?

Ginsberg: Yes, no matter what the economic environment and no matter what the regulatory environment, what CommLoan does is to bring all options to the table for borrowers. As certain segments of the commercial lending marketplace might back off because of a new regulation or just certain issues within their segment, other segments very often step forward and fill the gap. When CMBS started backing off, banks stepped in, and when banks back off, CMBS steps in, or the life companies, or in certain cases, the private money institutions. The beauty of providing the marketplace and the data, particularly to underserved borrowers in the $5-million to $25-million range, is that they truly understand the options and very often will find options that they didn't know existed.