Billions in CMBS at Risk Due to Hurricane Harvey

Bloomberg reports that major flooding in Texas in the aftermath of Hurricane Harvey is putting at risk approximately $19.4 billion in properties financed through commercial mortgage-backed securities. However, the total scope of the impact on CMBS and other asset classes remains unclear. “I don’t think as investors we should react to this in a panicked way,” said Tracy Chen of Brandywine Global Investment Management. “Right now we’re still in monitoring mode.”
Meanwhile, Federal financial regulators issued a statement recognizing the serious impact of Hurricane Harvey, both on customers as well as on financial institutions affected by the storm, stating that “efforts to work with borrowers in communities under stress can be consistent with safe-and-sound banking practices as well as in the public interest,” and that they “encourage institutions in the affected areas to meet the financial services needs of their communities.”

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