CAPITAL CONSORTIUM IMPROVES DOCUMENTS FOR ORIGINATING, SECURITIZING COMMERCIAL MORTGAGES.

A group of five leading commercial real estate trade associations known as The Capital Consortium recently released a streamlined set of documents designed to expand the secondary market for commercial mortgages and encourage the flow of capital to income-producing real estate properties, including muttifamily housing.

The Capital Markets Initiatives, as these documents are known, are meant to be used as guidelines to promote greater efficiency, credit availability, and cost savings in the capital markets for commercial and multifamily real estate loans. They were first issued in 1996 by The Capital Consortium, a coalition representing all aspects of the commercial real estate industry whose members include the Mortgage Bankers Association of America (MBA), the National Realty Committee (NRC), the National Association of Realtors (NAR), The Bond Market Association (TBMA), and the Commercial Real Estate Secondary Market and Securitization Association (CSSA).

The recently unveiled updates are the result of feedback from lenders, borrowers, rating agencies, mortgage-backed securities investors, and other users of the Initiatives over the past three years. These updates include:

* A revised Capital Markets Mortgage/ Security Agreement--a template for commercial mortgages that can be easily and predictably rated to facilitate the pooling of multiple mortgages for securitization and sale into the secondary market. Designed to ease document review and address the lack of document conformity.

* A revised Assignment of Leases and Rents--provides broader lender protection in the event of a borrower bankruptcy filing.

* A revised Promissory Note. The original Capital Markets Initiatives released in 1996 also contained:

* A Due Diligence Checklist--identifies whether specific information is located within a loan document file. Intended to ease review of document loan files and expedite transactions.

* Data Elements Guidelines--acts as a framework for issuers, investment bankers, loan servicers, and investors to better manage reporting information for security holders.

* National Policy Initiatives--recommendations for reducing legislative and regulatory barriers to development of an efficient commercial secondary mortgage market. The revised Capital Markets Initiatives (Capital Markets Mortgage/Security Agreement, Assignment of Leases and Rents, and Promissory Note) may be downloaded directly from a special section on the Mortgage Bankers Association Web site at www.mbaa.org/capitalconsortium A summary is also posted in several areas on the National Association of Realtor Web site at http://nar.realtor.com and in Commercial-Source at www.realtor.com.