SFR is new—what brought this product to market?
This product has been in the market for quite some time, and the past couple of years has seen an increased volume of SFR loans by what would otherwise be nontraditional lenders in this space. These lenders have been sourcing capital that in the past local and small regional banks, which to a large extent do not exist, would have normally competed for. Volume demands market pricing, and that leads to securitization.
How are servicers responding to the new product, and are they making any money?
Servicers are responding by servicing, hard to tell just yet how and if servicers will be able to profit from SFR; and our panel will discuss some of the unique features of SFR servicing, which should provide some insight on how the future looks for servicers of SFR.
Are some servicers declining to jump into this market?
The current market is young, and how things progress will be a good indicator of what servicers jump into this market. SFR servicing requires a level of sophistication and experience that not all shops have.
As SFR matures as a product, do you see servicers adapting?
No doubt it is already happening. Servicers are fitting SFR into their current platforms — time will tell how long this product will exist as a CMBS alternative.