The timing is right, Bill Hughes, SVP and managing director ofMMCC, tells GlobeSt.com. This time last year, lenders were sittingtight; not only were they not making loans, but they also hadhunkered into a defensive stance over borrower defaults andmodifications.

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"One of big issues investors have had with lenders is theirnon-response," Hughes says. "We have had clients that haven't madea payment in six months and still have not heard from theirlenders. So the borrower is just sitting in limbo not knowing whatto do."

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Much of lenders' response was due to the overwhelming nature ofthe crisis, he says. Now, lenders have sorted out theiroptions--and are starting to address borrowers who have gone into,or about to go into, default.

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GlobeSt.com: How do you see 2010 shaping up?

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Hughes: Certainly as we start off 2010 we are in a betterposition than we were in 2009. The credit markets have become moreliquid, relatively speaking. Think back to where we were in 2009.The equity markets have improved and the fear factor has droppeddramatically.

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GlobeSt.com: Commercial real estate is still in the woodsthough.

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Hughes: Yes of course, but there were other intangibleslast year that made the environment so difficult for both borrowersand lenders. We had a brand new administration and didn't know howit would react to events. Also, lenders unfortunately read the sameheadlines as borrowers do and irrespective of the fact that theyhad money to lend the incredible uncertainty about the economyworked against deals--even if they were solid ones. Many times wewould work through the loan process and by the end of the duediligence the credit officer would back off not because of the dealbut because something new had happened to undermine confidence evenmore in the economy.

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GlobeSt.com: I'd like to hear more about the capitalmoving into the market. What are some of the new sources, orre-emerged sources, that you think will be active thisyear?

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Hughes: Life insurance allocations have improved--wedon't have a quantitative number from them but it is clear thatthey have increased allocations for commercial real estate in 2010.Also we have seen a number of successful securitizations with TALF.And finally, a number of issuers are starting to use their balancesheets to accumulate debt in order to securitize it. Goldman Sachs,Deutsche Bank, JP Morgan Chase, they are all accumulating loans nowthat will ultimately be securitized.

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GlobeSt.com: Do you think we will see CMBS reemerge thisyear?

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Hughes: Yes. It'll be different, of course, than what wehad in 2007, but it will be there.

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GlobeSt.com: Meanwhile, though, the commercial real estateindustry still has significant debt issues with loans coming duethat were underwritten with far different standards than today, notto mention the underperformance of the asset that they are likelyexperiencing. That is where your new group comes in. How are yougoing to help those borrowers? What can you do for them that theycan't do themselves?

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Hughes: We look at their problems from the lenders'perspective and counsel them on the best way to negotiate a deal.We have developed plans with lenders to work through these debtissues before and we know what makes them feel secure and at whatpoint they are ready to take the property back.

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GlobeSt.com: I guess we will be seeing more ofthat--taking properties back--this year now that lenders havegotten their sea legs again?

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Hughes: Oh yes. I guess that is the downside, if youcould say that, about the stabilizing economy at least from theborrower's perspective. Lenders are getting ready to act again.

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