It is likely that the federal government will extend the Terrorism Risk Insurance Act for only one year, according to Lisa Pendergast, managing director for CMBS strategy at RBS Greenwich Capital, Greenwich, Conn.Speaking at a media gathering organized by the firm in New York City, Ms. Pendergast said the government expects the industry to figure out some kind of private insurance market, for which there are models in some countries such as the United Kingdom. She said she expects two major rating agencies, Moody's Investors Service and Fitch Ratings, to be slower to downgrade bonds this time around for a lack of terrorism insurance. "A one-year extension does not buy a lot of time," Ms. Pendergast noted. Another current issue she cited is "froth in underwriting" of commercial mortgage loans. This is seen in the form of highly leveraged loans, higher interest-only use, and fewer structural protections for commercial mortgage-backed securities deals.

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