Interviews June 3, 2015

Karen Gelernt Highlights 2015 Finance Forum

Finance partner Karen Gelernt talks about mortgage financing in advance of the Finance Forum June 10 in New York.

Why is warehouse financing popular in the market right now?

There have never been more players in the market looking to deploy capital, and warehouse financing provides an ideal solution: short-term parking for capital.

What impact are funds and other new participants having on structure and the market?

Funds have structures that are entirely tax driven and often need to accommodate foreign investors. This is making the financing of assets much more complex with multi-tiered structures in which the lenders just want to make sure that they can get their assets if they need to liquidate. We focus a great deal of time ensuring that the transactions are structurally sound and that the lenders have all of the rights they need to seize and sell collateral in a timely fashion.

Everyone continues to talk about nonqualified mortgages. Is this developing into a real market?

I think that it is starting to take baby steps. Until there is clarity on how these will be sold in rated transactions, any market will develop slowly.

Regulatory issues were at the forefront last year; does that remain the number one challenge for lenders?

Banks are being challenged by regulatory capital requirements that may ultimately increase their funding costs. Many institutions are still trying to grapple with how these rules will affect how they can make liquidity available.

Your team is hosting your second Mortgage Finance Forum on June 10 – what attracts people to the event?

I think clients appreciate the opportunity to obtain market color. Everyone is selling some new deal or structure. The challenges that market participants face today are more complex than ever. Those who come to our event do so because they know that our panelists grapple with those complexities and are willing to share their perspectives on today’s market.
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