REG AB II Update : May 2015

It’s been about 7 months since the SEC came out with the final rules for REG AB II, and the industry response is becoming clear.

CREFC, the industry trade group that controls the IRP, has hosted several meetings with the IRP working group, and the emerging strategy for compliance with REG AB II XML reporting is disappointing.

Instead of taking the opportunity to update the IRP into an XML format, the current course is to add the 15 or so new fields required by Reg AB II to the current CSV/Excel formatted IRP. At some point at the end of the monthly reporting process, the trustee will simply convert the current IRP into a XML report and file it on Edgar.

Since the SEC did not require any additional data that would require XML earlier in the reporting process, the industry is taking the simple approach by keeping everything the same and just adding a “save as XML” step at the end.

So, while I still believe the XML requirement is a big step in the right direction, the CREFC and the IRP are missing an opportunity to improve the reporting process. Since REG AB II is not changing the foundation, the industry’s promotion and adoption of standalone XML standards for rent rolls and operating statements is that much more important.

MISMO Update

I am off to Boston this week for the MBA Tech Conference. The CMISMO leadership team is hosting a session where we will introduce the rent roll and operating statement standard. The standard has taken a while to get in a format that fits the MISMO approval process, but we’re ready to distribute a draft at the meeting.

This meeting is a chance for us to introduce the standard to key industry participants and get a last round of comments before we release it for official public comment — hopefully soon.

In addition to rent rolls and operating statements, we will start discussions on creating a working group to discuss risk metric standards based largely on the information in the rent rolls and operating statements.

The idea is that if we can talk about the data and what management can get out of the data, it will help adoption of the standard. Finally, we are going to discuss the success of the site inspection standard. If you are going to be at the conference, the meeting is at 10 a.m. on Tuesday.

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Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.

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