Report Sees New CMBS Outsourcing

While commercial mortgage servicers have been outsourcing some aspects of the servicing function for a while, some newer outsourcing trends also have emerged.

Stephanie Petosa, senior director, Fitch Ratings, said, "Fitch views traditional outsourcing of commercial mortgage servicing functions as a viable alternative for servicers looking to improve the quality of their operations and decrease costs.

"To ensure that servicing quality is maintained, Fitch's review and analysis focuses on ongoing oversight procedures, documented training programs, and performance metrics."

The rating agency has identified outsourcing of operating statement analysis and review of borrower requests for loan assumptions and modifications, as well as offshore outsourcing, as some of the newer developments.

These "distinct outsourcing trends" have come about as servicers recognize the benefits of outsourcing arrangements, prime among which is cost savings, according to Fitch.

In one such trend, several CMBS servicers have now started to outsource parts of the process of collecting and analyzing property operating statements, the results of which pooling and servicing agreements require to be reported on a quarterly or annual basis.

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