Earlier this week, Housing Wire commented on a Moody’s report that covered bonds (finally) are receiving serious consideration as a very viable structure for the US real estate finance market.
Housing Wire summarized the report as follows: "More banks based in the United States will establish covered bond programs to fund future mortgages on the perception of less risk and still lingering uncertainty over private and agency securitization markets."
Periodically, I bang the drum about the importance of covered bonds.
While there are serious issues to address, such as protecting the mortgage bond pool from creditors and liquidation by the Government upon the failure of the bank . . .
. . . I still stand by this comment made by me in December of ’09: "Covered bonds are our ultimate destination for a capital markets solution that includes the middle majority of the CRE market."
The current slump or "pause" in the CMBS market only supports this perspective. We need to get to work on alternative structures or ways to bring public funds into the commercial real estate finance market.
Covered bonds are the structure.
- do you see it the same way?
Please comment below.