MBA: Terror Coverage Worries Servicers

Commercial servicers expect that only 20% of their portfolios, representing $132 billion in loans, will have terrorism risk insurance in place by next spring if the "make available" provision of the Terrorism Risk Insurance Act is not extended, according to a survey conducted by the Mortgage Bankers Association.The MBA said this represents a reduction of 76% in the balance of loans that would be covered by terrorism insurance. "It [the survey] underscores the significant need for an extension of the 'make-available' provision to ensure that terrorism insurance is priced within reach and that there is continued availability," said Gail Davis Cardwell, senior vice president in the MBA's commercial/multifamily group. "The MBA is urging the U.S. Department of the Treasury to extend this provision to avoid a potential market collapse." The organization reported that 94% of the servicers responding to the survey expect their expenses to rise if the "make available" provision is not extended. The survey covered servicers representing one-third of the $2 trillion commercial/multifamily servicing market, according to the trade association. The MBA can be found online at http://www.mortgagebankers.org.