CUs Eye CMBS Market

In a move that could increase liquidity in the commercial mortgage-backed securities market, the National Credit Union Administration has proposed to allow the nation's 6,000 federally chartered credit unions to invest in securities backed by commercial mortgages or by a mix of residential and commercial mortgages.Federally chartered credit unions are currently limited to investing in Treasury and agency (Fannie Mae and Freddie Mac) securities. The nation's credit unions held more than $10 billion of residential MBS at the end of the third quarter. Those were mostly collateralized mortgage obligations or straight mortgage pass-through certificates. The proposal by the federal regulator, issued for a 60-day comment period, would allow well-run credit unions to buy CMBS that are rated in one of the two highest categories by at least one national rating service.