Commercial Servicer: Wall Street Offers Stiff Competition for Commercial Mortgage Loans.(Brief Article)

Faced with increasing competition from Commercial Mortgage-Backed Securities (CMBS) - especially in the larger value, higher quality loan market segment - insurance companies are trying to distinguish themselves on the servicing factor. To meet the needs of this segment better, insurance companies are stressing their personalized servicing terms as well as the flexibility they provide.

Robert Ruess, managing director, Northwestern Investment Management Company, Milwaukee, acknowledges that CMBS has had an impact on Northwestern's competitive position in the case of loans in the 70-75% range. He said, "CMBS has had an effect on our overall volumes by lowering pricing. We quote on those loans, but I would say that they are now a competitor in that loan segment where it was before just life companies and banks. Now CMBS is also a competitor for those kinds of loans. The volume is going somewhere and if it doesn't go to a life company, then it goes to CMBS and they have had an effect."

As a competitive strategy, Northwestern stresses the servicing aspect. Mr. Ruess noted, "Our biggest differentiation is that we are going to own the loan and so when it comes to servicing issues or changes in the property or needs for change in the loan terms, that can be done one-on-one with the life company rather than talking to different servicers and trustees which is the case in the CMBS transaction. We compete on service or special terms in the loan, such as partial releases or release of a property or things of that nature that are very difficult to do in the CMBS format."

Patricia Wilson, senior investment officer, Allstate Corporation, North Brook, Ill., also agrees that the competition from CMBS has had an effect, ...