Lenders Find Terrorism Insurance Backstop Has Shortcomings.(Commercial Mortgage Securities Association)

At a "servicers forum" session at the Commercial Mortgage Securities Association's annual CMBS investors conference here, servicers talked about the shortcomings in the recently-passed terrorism backstop legislation.

As well, an emerging issue relating to certification on CMBS deals to comply with the Sarbanes-Oxley legislation was discussed.

Bob Vestewig, COO of the Houston-based GEMSA (he is also the chair of the Mortgage Bankers Association's Commercial and Multifamily Board of Governors insurance task force), said that insurers who really don't want to write terrorism insurance coverage are "construing it (the legislation) as narrowly as they can."

And in the interim period of waiting for a final guidance from the Treasury on the legislation, the process of certifying an act as an act of terrorism is not clear, Mr. Vestewig said.

As well, it is not clear what the $5 million threshold in the act refers to.

The Treasury has been charged with gathering data on the effects of the law, Mr. Vestewig said.

After the initial three-year horizon of the legislation, it might be extended "on some basis or the other," he expects.