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Wrap up 2007

An interesting mix of responses came in for last week’s quick poll. Some 41% of those taking the poll dub 2007 an official Wash. A more fortunate, albeit smaller, 32% think it was a Home Run. The sorry, but mercifully smallest–group of 26% said they’d Rather Not Talk About It. Commentator Frank G. Creamer Jr. of MMA Realty Capital in Manhattan will talk about it, in industry-wide terms at least, as he explores the split. Here’s what he had to say:

“The voting doesn’t surprise me. It really depends on where you are in the business. For many mortgage lenders, 2007 will be a year to remember for sure. If you’re an insurance company or German landesbank, the market came to you in early August, and 2007 will likely be a record year, or in the parlance of the poll, a home run.

“If you’re a mortgage company with a securitization execution as an exit strategy, the second half of 2007 brought significant challenges to your business, and on a full-year basis, it won’t be a happy year. At this time, it’s not so much about the quality of the origination team as much as it is about capital and its sources.

“The good news is that debt markets will stabilize and probably with a level of discipline that will be with us for some time. There’s a lot of speculation about how long this will take, and four to six months is as good as any target, but that’s pure speculation.

“For borrowers, it’s a period of adjustment. However, in my experience they do quite well when they adjust. Further, it’s safe to say that real estate debt and equity remains an important asset class for investors and that’s good generally.

“Clearly, since August, when debt markets started dislocating, depending on where you are in those markets, the responses can be entirely different. I heard people say this was as good a time as it gets. They were seeing opportunities to extend the duration of their loans, increase their yields and in some cases go up-market in terms of the quality of their borrowers. That hasn’t been seen for some time.

“On the other hand, if you’re a company where your sources of capital are based on a securitization of some type, you’re sitting there with overhead and trying to figure how to position yourself in the market. Some are doing it; others are having more difficulty doing it. “

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