But there may be trouble again for this sector if the realestate market or the economy starts to soften. The concern is overthe loss of documentation--a problem that has already affected some$1 billion in transactions, one source tells GlobeSt.com: "One ofthe critical parts of a CMBS is the transfer and recording ofdocumentation representing the transfer of the ownership of themortgages," says Brian Lancaster, a managing director in locallbased Bear Stearns' Financial Analytics and Structured TransactionGroup. A whole series of documents have to be recorded bymunicipalities. They are sent out, but often don't come back for ayear or more.

"Meanwhile, the deal has to progress," he says. "Lawyers canissue variants of documents in lieu of the originals, which issufficient to the have deal done," he adds. There is no problem aslong as the borrower makes payments on the loan. But if a defaultoccurs, and the special servicer has to foreclose, "it can makelife much more difficult for him and potentially much moreexpensive. And it can make the loss potentially greater than itwould otherwise be" Lancaster says. He is the author of a 13-pg.report issued by Bear Stearns, Missing CMBS Documents: A Wake UpCall.

What's to be done? Most rating agencies do not take this issueinto consideration when determining subordination on CMBS althoughthere has been a little movement in this direction. There is littleconcern in the near term, however, because with the markets sorobust there have been few foreclosures.