1st Service Advisory Solutions first to recieve Morningstar’s CMBS trust advisor rating
DALLAS– 1st Service Solutions today announced its subsidiary, 1st Service Advisory Solutions, has been assigned a ‘MOR TA3’ ranking as a commercial mortgage trust advisor by Morningstar Credit Ratings, LLC (Morningstar).
1st Service Advisory Solutions is the first in the industry to be ranked as a Commercial Mortgage-Backed Securities (CMBS) trust advisor by Morningstar.
“This is a game changer,” said Ann Hambly, CEO of 1st Service Solutions. “This is the first time since Dodd-Frank that there is an independent and unbiased ranking that provides a meaningful level of insight into the capabilities of the trust advisor and their ability to enforce accountability by the servicers and order corrective steps where needed.”
“The role of an operating advisor was first introduced with the Dodd-Frank Act in 2010. However, there were no standardized rules and guidelines governing their duties and they had no real authority to do anything,” said Hambly, “CMBS investors have remained concerned about fees and conflicts of interest among servicers.”
She continued, “Developing a ranking for trust advisors is a critical step in bringing more transparency to the role of the trust advisor, and their ability to meet their obligations.”
Morningstar’s independent assessment of trust advisors and the MOR TA3 ranking denotes that an entity demonstrates compliance with standards required to oversee CMBS servicing. Morningstar’s assessment criteria include:
1) Highly Experienced Management
2) Solid Track Record with Distressed Assets
3) Knowledge of CMBS Governance
4) Depth of Oversight Experience
5) Effective Policies and Procedures
6) Investor Reporting Capability
7) Effective Conflict of Interest Management
Morningstar’s assessment report for 1st Service will highlight the parent company’s experience as an advocate for distressed borrowers in complex resolution scenarios as well as the depth of asset management and commercial loan servicing experience of its personnel.
As the first to develop the role of the CMBS borrower advocate in 2005, Hambly said 1st Service has resolved approximately 570 distressed loans representing approximately $8.5 billion in unpaid principal balances.
“We’ve seen some servicer behaviors during that time that really made us stop and say ‘whoa’,” said Hambly.
1st Service provides distressed debt resolution consulting and negotiation services to borrowers on CMBS loans. Hambly said it’s a natural evolution to parlay this first-hand experience with the special servicers into the role of a trust advisor for CMBS.
“We are in the best position to take this experience and also help senior bond holders,” said Hambly.
Beginning in 2013, Hambly said 1st Service Advisory Solutions will begin actively soliciting trust advisor work.