Regulation AB, Servicers and MISMO

The SEC wants transparency. Frankly, most Americans are looking for more transparency in commercial real estate financing.

I suppose I fall in the camp of simply wanting to see that those who are involved have substantial "skin in the game." Without that I can't see how prudent and long term decisions are made. Whether or not this is a way to get to that point, I'm not really sure...

To achieve some of this transparency the SEC is proposing changes to Regulation AB or "Reg AB" as most call it, regarding asset backed securities. A large part of the burden will fall on the primary and master servicers as they have the responsibility of collecting and reporting data. Historically this has been done through the IRP or Investor Reporting Package (Microsoft Excel format).

Moving forward XML will be favored instead of Excel and there will be some costs associated with that transition (though I think this has been blown WAY out of proportion - it is not millions at the end of the day). The Master servicers may mandate XML of the primaries and this is viewed as a burden to the primaries. One way to get over this is to provide a "reader" that can interface, read and convert XML to/from the historical Excel template that has been used.

Really this all comes down to the loan docs that specify how data should be provided. Attorney's of the world unite!