Partner Charles Lansden Quoted in Distressed Assets Investor on Covered Bond Pools

Charles Lansden, a partner in the firm’s Real Estate Practice, was quoted in an article in Distressed Assets Investor on the potential for covered bond pools in the U.S. market. Covered bond pools offer greater flexibility and transparency compared to CMBS, but the legislation required to make them a reality is considerable. “It’s a simpler structure, it’s simpler to understand and, among the players involved in it, there will be more known about them. It will be a cleaner way to provide mortgage financing, albeit with the current obstacles that need to be overcome,” Mr. Lansden says. Some of those obstacles, he explains, include the FDIC’s concerns about taking losses on covered bonds that become insolvent. He notes that covered bond pools would require more standardization, which has been stalled during the recession of the past two years. “Residential mortgage loans are pretty fungible. The documentation is pretty standard. However, when you get to commercial mortgage loans, you have variations in terms of the quality of the underlying property and, right now, a lack of standardization of the loan documentation,” he says. (“Covered or CMBS?” December 2010)