"When these agencies said they were going to do this in the spring, it was viewed with skepticism," MBA's Laura Armstrong tells GlobeSt.com, speaking of both Fitch's and Moody's recent downgrading activities. "This underscores that terrorism insurance is a real problem and we hope Congress will act." German American Capital Corp.'s series 1996-3 class A-1, A-2 and X were downgraded a notch. The $54 million securities are backed by a loan on the Parklawn Office Building in Rockville, MD. Nearly 100% of the 1.5 million-sf office complex is leased to the General Services Administration through July of 2010. However, the property was never insured against terrorism attacks and owners have yet to attain such coverage.

Houston Galleria Trust's Series 200-HG class A and class X certificates--valued at $144.1 million and $208.4 million, respectively--have also fallen victim to the terrorism insurance quandary. It was just back in February 2001 when Fitch described the 1.7 million-sf shopping mall's collateral quality "strong with an excellent location and a very strong tenant base. Owned by Rodamco, which acquired the property for $500 million in 1999, the 32-year-old mall is 44% occupied by big name anchors Neiman Marcus, Saks Fifth Avenue, Macy's and Lord & Taylor.

Finally, 280 Park Avenue Trust, 2001-XL280 was, perhaps, the hardest hit, with the downgrading of classes A-1, A-2, A-2F, and X-1--all valued at a total of nearly $427 million. The two-tower office complex in midtown Manhattan serves as the asset backing the securities. Boston Properties owns the 30-story and 40-story class A buildings, which were built in 1961 and 1968 and account for nearly 1.2 million sf of space.

"We hope Congress will get to this before they go out for the session," Armstrong adds. "If there is another attack and there is no terrorism insurance legislation in place, it will have an enormous impact, the likes of which we've never seen. While both the US House of Representatives and the Senate have passed their respective versions of terrorism insurance laws, the two chambers have not managed to come up with a singular bill through conferencing.