We had a very active MISMO Council of Chairs call on Tuesday. IRP 6, rent rolls in XML and transparency where all being discussed. We had a “special guest” — a master servicer who gave us perspective on the challenges of getting the standards adopted.
I was swinging away as usual, and the back and forth really brought out the issues.
Interestingly, everyone on the call agreed that going to XML on the IRP without requiring rent rolls would not yield enough benefits in transparency to offset the costs and hassles of the switch (so keep the CSV/Excel format). But if rent rolls were to be included in the data set, then we would need to go to XML and should move forward with the IRP 6.
I argued rent rolls needed to be included in our disclosure/investor package in XML because that data is so fundamental to any real estate analysis. Without it, we are not transparent and will continue to suffer in the eyes of the market.
No doubt it costs money to deliver the kind of transparency I think our industry needs, especially if the primary servicers are not on board. I think the master servicers should be compensated for the extra work, either from the investors or the government. Nonetheless, I think transparency is so essential to the class’s viability in the eyes of the capital markets that we need to find an answer and get it done.
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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.