EuropeServicing 2006 Program

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195, PICCADILLY, LONDON

WWW.EUROPESERVICING.COM

ES 2006

31 MAY – 1 JUNE 2006

ES 2006

ES 2006


WWW.EUROPESERVICING.COMES 2006

31 MAY – 1 JUNE 2006ES 2006

ES 2006

195, PICCADDILLY, LONDON


31 MAY – 1 JUNE 2006ES 2006

ES 2006



31 MAY – 1 JUNE 2006ES 2006

ES 2006

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Letter from Toni Moss

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6Welcome to EuropeServicing 2006 London.As an investment advisory and market-positioning firm dedicated to accelerating new market and cross-border entry, EuroCatalyst’s public efforts in Europe have been focused on developing and positioning the entire mortgage value chain across national borders. However, our heart lies firmly in the servicing sector, and this event is dedicated to all who share our goal of increasing the profile, improving the capabilities, creating the opportunities and highlighting the importance of servicing and administration across European mortgage markets.The event incorporates my own experience navigating European mortgage markets for the past nine years, initially as the Director of International Business Development for STATER at a time when it was the first third-party residential servicer in Continental Europe. While I have been the most identifiable individual “champion” of the European servicing sector, I am also its most harsh critic. I would like to see the servicing sector grow as much as I would like to see current capabilities improve and that is the sole purpose driving this event.

There are four key concepts that I hope every participant will walk away with:• Although housing and real estate are fundamentally local activities, their funding is increasingly global. Despite natural differences among national markets (and indeed even among different states in the US), mortgage markets vary in form – but not function. When looking at a wider picture of the mortgage and real estate value chain, servicing is the bridge between primary and secondary markets. The best way to understand how mortgage markets really work – and to make them more efficient – is to view that value chain from the servicing perspective.• The key drivers for cross-border lending in Europe are securitisation, the ability to share risk and the ability to outsource servicing to third parties. Both securitisation and mortgage insurance/monoline schemes are advancing much faster than third-party servicing. There must be more efforts, initiatives and assistance – beyond the pioneering firms themselves – toward developing the third-party sector, and we thank the CMSA, CML and ESF for their willingness to support our collaboration toward this goal.• The loan-level and portfolio-wide information that servicers manage is the ultimate currency of the mortgage and real estate industry. As such, servicers are the repository of that information. The perception of servicing must change from the outdated view of it as the “originator’s back office” to a more accurate one of servicing as the shareholder and investor’s front office. From that perspective, we hope to impact the way in which servicers acquire, process, distribute and protect the information that serves as the ultimate currency of the global mortgage industry.• The sponsors, co-hosts and panellists in this event have demonstrated remarkable leadership, particularly when you consider that it is far easier to be against something than to be for it. Please recognise this fact, and thank them for it.I also express my gratitude to Louise Hunter, Samantha Armstrong, Claire Escudier, Della Sullivan, Nishi Chundee, Christa Buttigieg and the team at Thomson Financial/IFR Conferences who have worked tirelessly on event marketing and back office activities.My most heartfelt thanks go to the individuals and firms who continue to act as pioneers of the European servicing sector, most of whom you will see onstage at this event. As much as I have done my best in capturing their story in the programme content, I have had a bit of help. In particular, “Wheels” (or Helena Day, as opposed to a week) has been absolutely instrumental in the content and design of the CMBS sessions.

I would also like to thank Eddie Register for his personal assistance and FitchRatings for allowing me full access to the universe of FitchResearch, truly a dream for insomniac information hounds like me.Finally, as anyone who knows EuroCatalyst well will tell you, for the past five years my colleague Shirley Jackson has been the one who gets things done with the least amount of credit and the most productivity.

Thank you for hanging in there, once again.We’ve been challenged by the industry to make servicing sexy. We’ll leave it up to you to decide.In the meantime, lights, camera, action and on with the show!

Toni Moss CEO, EuroCatalyst BV

EuroCatalyst’s mission is to shape and define the

European mortgage servicing industry at a strategic

level and drive innovation, vision and capabilities

throughout the administration, servicing and asset

management value chain.

Hosted by Europe’s leading servicing expert, Toni

Moss, EuropeServicing 2006 is distinguished by

its high-level discussion of European CMBS, RMBS,

and covered bonds from a servicing perspective.

Servicing has reached critical mass in Europe

and is key to accelerating the development of

the mortgage industry and solving many of the

problems facing the sector today.

This year’s event includes two days of compelling

content, separating commercial real estate from

residential mortgage lending into a full day on each

sector. As always, the event programme not only

reflects what is currently happening throughout

the servicing sector across Europe, it provides

ideas and suggestions to drive changes that should

occur in order to constantly improve the functions,

capabilities and opportunities of those working in it.

Featuring the leading originators, issuers, investors

and servicers in Europe in an interactive, talk-show

format, we hope to provide you with knowledge

and experience that you cannot find anywhere

else... and insights that you cannot gather from any

other source.

For those who want to understand the issues

that will guide the industry in the future,

set strategies for the year ahead, establish

and strengthen business partnerships and

enjoy great discussions and debate, we look

forward welcoming you to EuropeServicing

2006 in London.

www.europeservicing.com

Tel: +31 (0) 35 678 1190

Email: [email protected]

EuropeServicing 200631st May & 1st June 2006, BAFTA, London

EuroCatalyst, in association with IFR, is proud to present EuropeServicing 2006, “Bridging primary and secondary markets, enabling cross-border lending and protecting asset value in European mortgage and real estate markets”.

At Morgan Stanley, we have been servicing EuropeanCMBS loans longer than any other firm. We haveserviced over 20 billion of commercial mortgageloans throughout Europe since 1998. This extensiveinvolvement has made Morgan Stanley MortgageServicing Limited one of the most experienced CMBSservicers in Europe. We’re now rapidly building a thirdparty platform as an expansion of our services. Whateverneeds you have, Morgan Stanley is here for you.

Please contact:Robert Wojciechowicz, Executive Director+44 20 7677 [email protected]

Morgan Stanley Mortgage Servicing Limited is rated CPS1– and CSS2– by Fitch Ratings and Above Averageby Standard & Poor’s.

Selected U.K. and Pan-European Transactions

£581,883,000United KingdomMorpheus (European LoanConduit No. 19) plcCommercial MortgageBacked Notes

Servicer andSpecial Servicer

August 2004

419,350,450FranceLeto (European LoanConduit No. 18) FCCCommercial MortgageBacked Notes

Servicer

July 2004

302,900,300Pan-EuropeanKhronos (European LoanConduit No. 17) S.A.Commercial MortgageBacked Notes Collateral Manager andSpecial CollateralManager

December 2003

£514,537,500United KingdomPerseus (European LoanConduit No. 22) plcCommercial MortgageBacked Notes


December 2005

312,805,000FranceOdysseus (European LoanConduit No. 21) FCCCommercial MortgageBacked Notes

Servicer

December 2005

1,545,500,000GermanyImmeo ResidentialFinance plcSecured Notes


November 2005

458,030,000FranceDionysus (European LoanConduit No. 9) FCCCommercial MortgageBacked Units

Servicer

June 2002

£547,581,650United KingdomCoronis (European LoanConduit No. 8) plcCommercial MortgageBacked Notes


November 2001

£524,909,600United KingdomEuropean Loan ConduitNo. 5 plcCommercial MortgageBacked Notes


April 2001

£394,198,330United KingdomIolaus (European LoanConduit No. 15) plcCommercial MortgageBacked Notes


September 2003

£347,758,000United KingdomEuropean Prime RealEstate No. 1 plcCommercial MortgageBacked Notes

Master Servicer andMaster Special Servicer

August 2005

£462,175,000United KingdomEuropean Loan ConduitNo. 4 plcCommercial MortgageBacked Notes


September 2000

£813,320,000United KingdomJuturna (European LoanConduit No. 16) plcCommercial MortgageBacked Notes

Servicer

July 2003

340,133,400ItalyNereus (European LoanConduit No. 20) plcCredit-Linked NotesServicer andSpecial Servicer

September 2004

£359,440,000United KingdomEuropean Loan ConduitNo. 2 B.V.Commercial MortgageBacked Notes


December 1999

Issued by Morgan Stanley & Co. International Limited of 25 Cabot Square, CanaryWharf, London, E14 4QA. Regulated by the FSA. © 2006 Morgan Stanley.

Our European CMBS servicing expertiseis designed to meet your needs.

Global Realty Outsourcing (GRO) and

Blackheath Financial have joined forces

as part of H-Cube, LLC, a premier

global business process outsourcing firm

focused on the financial services sector.

By integrating the expertise and

experience of over 1,000 highly trained

mortgage and property professionals, we

are now able to offer an unmatched

range of outsourced solutions.

Whether it’s commercial servicing, due diligence and underwriting, or residentialpackaging to securitization, you’ll haveaccess to an expanded portfolio of servicesdesigned to satisfy all of your onsite, offsiteand offshore mortgage outsourcing needs.

By partnering with H-Cube, GRO andBlackheath have the financial resources tobuild an even more robust and innovativemortgage services platform.

As our firms set out to capitalize on thiswinning combination, one thing remainsunchanged: a total commitment toproviding our clients with the highestlevel of service in the industry.

For more information about our expanded range of services, please contact Colette Prior([email protected]) or Nick Woodcock ([email protected]) at 020 7643 4034.

Blackheath Financial

Industry Expertise. Global Resources.A Winning Combination.

506110_EuropeServAdA4AW.indd 1 24/5/06 3:23:41 pm

506110_EuropeServAdA4AW.indd 2 24/5/06 3:26:18 pm



31 MAY – 1 JUNE 2006ES 2006

CMBS / RMBSES 2006

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DAY 1 (MAY 31): ‘THE WORLD IS NOT ENOUGH’SERVICINg FOR COMMERCIAL REAL ESTATE, CMBS, AND COVERED BONDS 08:00 COFFEE, REGISTRATION, EXHIBITS OPEN

09:00 INTRODUCTION AND OPENING COMMENTS:

HOST: TONI MOSS, CEO, EUROCATALyST BV

09:15 SESSION 1: FROM ‘MODERN TIMES’ TO ‘THE MATRIX’

Changing perspectives on servicing from the “originator’s back office” to the “investor’s front office” and the currency of information GUEST HOST: HELENA DAy, VICE PRESIDENT, MORGAN STANLEy MORTGAGE SERVICINGThe European servicing sector has been undervalued and slow to develop due to the dominance of on-balance sheet funding and bundled national markets with an inherently negative perception of servicing operations as a labour-intensive and industrialized factory for portfolio administration. The drive toward integration and internationalization of European markets and the increased optimization of funding efficiencies, risk transfer and economic capital management have resulted in a gradual “unbundling” of national European markets in order to leverage the entire mortgage value chain more efficiently. This session explains why common perceptions of servicing are outdated by shifting the perspective of servicing from yesterday’s “originator back office” to today’s “investor front office”. This perspective more accurately reflects the proactive role that servicers play in managing the informational currency that drives capital market funding.

We’ll start by discussing the evolution and growth of CMBS in the U.S. in contrast to the growth of European covered bonds and CMBS; explain the different functions and types of servicers that have evolved; explore how information acts as currency in secondary market transactions and how servicers acquire, process, distribute and protect that information in fulfilling their responsibilities among the various parties in capital market transactions. We will end with some challenging thoughts about why information serves as the industry’s most valuable long-term asset and how much further that information can be leveraged as a strategic asset beyond traditional investor reporting and market transparency. Is it possible to create a repository of aggregated data for European MBS markets to use as a Basel II reference point?

PANEL: Alexander Batchvarov, Head of International Structured Finance Research, Merrill Lynch International Clive Bull, Director, European Commercial Real Estate group, Deutsche Bank AG Howard Esaki, Executive Director, Morgan Stanley Holly Hammarstrom, Head of ABS Research, European Credit Management Limited10:00 REFRESHMENT BREAK

10:15 SESSION 2: ‘BAMBI MEETS GODZILLA’

When European privacy, flexibility and innovation meet American transparency, standardization and commoditization . . . how do we engineer a better outcome GUEST HOST: CHARLES ROBERTS, PARTNER, CADwALADER, wICKERSHAM & TAFT LLPTransparency is the key to expand our discussion last year on the contrasting evolution and pace of the American CMBS vs. European CMBS and commercial real estate finance markets. The commoditization of the US market has achieved the transparency that investors expect; its standardization has enabled servicers to streamline and centralize operations to cut costs and outsource or offshore non-core functions, and the creditor-friendly American regulatory environment allows for an overt, hard-line approach toward borrowers. The complex jurisdictional nature of European markets demands innovation, flexibility and patience across multiple jurisdictions in which standardized regulations, practices and technology are only recently beginning to take shape. Furthermore, the relationship-banking and borrower-friendly regulatory environment throughout Europe requires a customized, relationship-oriented servicing approach toward borrowers that prevents scale or volume-driven approaches.

AgENDA



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DAY 1 (MAY 31): SERVICINg FOR COMMERCIAL REAL ESTATE, CMBS, AND COVERED BONDS (CONTINUED)

The increasing numbers of American players entering European markets from the outside through greenfield operations and joint ventures or from within as key personnel in distinctly European initiatives have raised concerns over the “Americanisation” of European real estate markets. While the context for any national market today is a global one that requires all market practices to be differentiated by those that are “local” vs. those that are “worldclass”, it is impossible to benchmark direct parallels between US and European markets. However, as European markets take shape, we now see how some servicers are finding the right balance between adapting best U.S. practices and applying them - where possible - to optimise European operations and the overall development of European markets. Lest Americans feel too over-confident, we’ll take a deeper look into covered bonds and other areas in which Europeans have a distinct advantage. Should the same impulse strike Europeans, we’ll point out areas in which they are not yet fully exploiting those natural advantages and some fresh ideas that have not yet been considered as the development of loan tranching in Europe takes flight. PANEL: Bill Cohane, Managing Director, wachovia Securities Scott Goedken, Investment Director – Acquisitions, LNR Partners Europe Michael Gutierrez, Director, Servicer Evaluations, Structured Finance, Standard & Poor’s Rodney Pelletier, Managing Director, FitchRatings Hans Vrensen, Director, Securitisation Research, Barclays Capital

13:15 SESSION 4 ‘BEING THERE’ VS. ‘THE STUNTMAN’

Differing challenges between captive and third-party servicers and their impact on pan-European market developments GUEST CO-HOST: EDDIE REGISTER, DIRECTOR, SERVICER RATINGS, FITCHRATINGS

The race that never ends is the pursuit of quality and performance. European CMBS and covered bond administration is traditionally performed by in-house or “captive” servicers with only five third-party servicers – so far - actively providing alternative solutions. While we expect the number of third-party providers to increase substantially in the next year (indeed, most likely by the time EuropeServicing 2006 is actually held), already the presence of such limited numbers of third-party providers has dramatically impacted European CMBS market developments on crucial issues including servicer quality, communication, Chinese walls and conflicts of interest.

This session focuses on how servicer quality is impacted by ownership and responsibility across different scenarios; how market and deal structure challenges differ between third-party and captive servicers; how those differences are currently managed and how those differences will widen further with more entrants to the sector. The session will raise questions about which entities or market players will mediate, reinforce and regulate the conflicts and considerations that will arise as a result, with a response at the end of the day’s programme from rating agencies and issuers.

PANEL: James Bannister, Senior Manager, Morgan Stanley Mortgage Servicing Jayne Black, Partner, Real Estate Finance Practice, Katten Muchin Rosenman Cornish LLP Anne Bridges, Director, European Securitisation group, Hatfield Philips International Monica Filkova, Vice President, European Debt Capital Markets – Securitisation, EUROHyPO AG Robbie Hughes, Director, Business Development, Capmark Europe

14:45 SESSION 5 ‘HEAVEN CAN wAIT’

Special servicing from loss mitigation on sub-performing loans to the afterlife of nonperforming loans (NPLs) GUEST CO-HOST: GLENN AARONSON, CO-HEAD EUROPEAN ASSET MANAGEMENT, MORGAN STANLEy REAL ESTATE FUND, AND HEAD OF ACqUISITIONS, GERMANy AND HOLLAND

Sometimes quality is considered after the fact. Exceptional circumstances throughout the lifecycle of many loans drive the need for “critical care” units to diagnose and repair, remediate or dispose of loans that cannot be “nursed” back to profitability. Relaxed underwriting at origination, a downturn in the economic environment, over-optimism or a dramatic change in socio-political demographics, fraud, bankruptcy, and many other circumstances impact a borrower’s inability to pay, yet the inherent value of the underlying real estate remains. This is when the value of servicing is at its highest as



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special servicers step in to execute strategies and systematic actions to mitigate recurring losses, workout alternative loan solutions or liquidate loans for which there are no further possibilities. In fact, the majority of loans that go into special servicing eventually result in a net loss. Working against those odds requires a well-coordinated and multi-disciplinary team approach of servicing specialists who fundamentally understand the nature of real estate, particularly in markets with volumes of NPLs that exceed the internal capabilities of most banks’ internal work-out facilities. We’ve themed this session “Heaven Can Wait” to reflect the goal of every special servicer and highlight the “afterlife” of NPLs as issuers gear up to securitise acquired NPL portfolios.

During the RTC sales in the ‘80s that established the foundation of the U.S. CMBS industry, tough lessons were learned about the correlation between the price paid for distressed assets and special servicing required to optimize exit strategies. Today almost all buyers of European NPLs anticipate exit strategies before making bids on any portfolio and regard special servicing as their most strategic asset. As the most hotly contested NPL acquisition markets, Italy and germany feature the most active special servicers in Europe. This session takes a look at the abundance of new players in those markets with a focus on lessons learned in the strategies and timing of loss mitigation efforts in distressed markets and how those lessons can be applied throughout other European markets.

PANEL: Maurizio Coggiola, Deputy Chairman, Capitalia Service JV Matt Grefsheim, Vice President, Morgan Stanley Mortgage Servicing Tom Haverkamp, Member of the Management Board, GFKL Financial Services AG Jörg wulfken, Partner, Mayer, Brown, Rowe & Maw LLP Edward Zughaib, Partner, Real Estate Finance Practice, Katten Muchin Rosenman Cornish LLP16:00: SESSION 6 ‘SENSE AND SENSIBILITy’

Rating agency, issuer and investor perspectives on servicer capabilities, surveillance and operational risk GUEST HOST: HELENA DAy, VICE PRESIDENT, MORGAN STANLEy MORTGAGE SERVICINGThis session gives “the last word” on servicing to a panel of leading issuers, rating agencies and investors. In building confidence among all parties that appropriate risk measures are in place, we’ll get an outside perspective on the progress of the servicing sector in addressing current market needs and complexities. The session also provides a response and further commentary on issues raised earlier in our session on differing challenges between captive and third-party servicers, and asks provocative questions which have no answers but clearly define the need for enhanced collaboration among all parties involved in advancing the development of European CMBS, covered bonds and commercial real estate.

Specific discussion topics include: Are servicers fairly balancing the interests of all parties in transactions, and what can they do to further improve that balance? How will the combination of Basel II compliance and the massive consolidation of the European banking sector impact originators, issuers and servicers over the near term? Is there sufficient servicing capacity in Europe to manage the increasing numbers of conduits launching? Regarding the value of servicer ratings, as the complexity of European CMBS transactions increase and covered bonds now include MBS in their cover pools when can we expect ratings to become mandatory for all servicers involved in any public issuance – and who should enforce that requirement? What should be the minimum tenure for servicers to be operating successfully in a market before receiving a rating? Are current servicer ratings too broad to be effective in differentiating servicer quality? How will rating agencies or issuers look upon secondary outsourcing by servicers themselves? Under what circumstances would issuers be comfortable utilizing, and rating agencies accepting servicer advances in place of liquidity facilities? Considering the absence of back-up servicing in European CMBS and a move toward advancing, what should the minimum capital requirement be for all third-party servicers?

PANEL: Faten Bizzari, Senior Credit Manager, HBOS Treasury Services Marie-Noelle Brisson, Director, Standard & Poor’s Giovanni Pini, Credit Analyst, European Credit Management Edward Register, Director, Servicer Ratings, FitchRatings17:00 EUROPESERVICING AwARDS AND NETwORKING COCKTAIL



31 MAY – 1 JUNE 2006ES 2006

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DAY 2 (1 JUNE):‘TOMORROW NEVER DIES’MORTgAgE PROCESSINg, ADMINISTRATION AND SERVICINg FOR RESIDENTIAL MORTgAgE LOANS AND RMBS07:45 COFFEE, REGISTRATION, EXHIBITS OPEN

08:30 OPENING COMMENTS AND INTRODUCTION PRESENTATION ‘CONFESSIONS OF A DANGEROUS MIND’

Optimising servicing considerations throughout the capital structure from an RMBS investor’s perspective

PRESENTER: DOMINIC SwAN, HEAD OF STRUCTURED INVESTMENTS, HSBCThis introductory presentation puts the day into context by looking at the investor’s position in the capital structure and how it affects their servicing considerations, and what RMBS investors look for the most and what they fear the worst from servicers on transactions.

09:00 SESSION 1 ‘LOST IN TRANSLATION’

The economics of outsourcing and ethics of offshoring in European mortgage marketsIn European mortgage lending, outsourcing continues to grow across specific, “non-core” activities. However, despite the use of third parties as a means to reduce costs, increase flexibility, and streamline operations, most European institutions remain reluctant to outsource their entire administration process, and relatively few third-party providers have successfully picked up substantial numbers of clients in what would appear to be fertile markets such as the UK. Are current levels of service, price, and capabilities strong enough to validate the economics promised by third-party administration? Or are other factors, such as risk considerations and the ownership structure of existing third-party providers, presenting a competitive barrier to outsourcing considerations in home markets? Many of the same institutions which are reluctant to outsource at home actively arbitrage high domestic labour costs against lower costs elsewhere, taking advantage of the comparative benefits of offshoring. (At a recent U.S. servicing conference it was estimated that offshoring by U.S. seller/servicers could reach as high as 80% in the near future. )

In the labour-friendly markets of Europe, lenders must weigh the value of outsourcing and offshoring against the social turmoil and political strife raised by the inevitable loss of jobs (in addition to operational, reputational, legal and country risks). Henry Ford famously said that he paid his workers well because he wanted them to buy his cars. Coming from the founder of the first company to apply assembly line techniques to the mass production of affordable automobiles, the deception of his statement took decades to uncover. On the other hand, if we apply that logic to European mortgage industry growth we can’t help but ask, “Are workers being paid enough to be able to afford a mortgage?The title of this session, “the economics of outsourcing and ethics of offshoring” outlines both the dilemma and the opportunities facing European mortgage market developments. Our panel evenly balances the range and complexity of perspectives, persuasion and possibilities to balance economics and ethics in an industry that has been slow to react to globalization

PANEL: Larry Banda, Head of Mortgages, Nationwide Building Society Jean-Louis Bravard, Managing Director, Global Financial Services, EDS Steve Haggerty, group Commercial Director, Skipton Building Society Nick Laird, Founder and CEO, Global Realty Outsourcing RECOMMENDED READING:

“SMARTER OUTSOURCING, AN EXECUTIVE GUIDE TO UNDERSTANDING, PLANNING AND EXPLOITING SUCCESSFUL OUTSOURCING RELATIONSHIPS”by Jean-Louis Bravard and Robert Morgan, published by FT Prentice Hall



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10:15 SESSION 2 ‘BRAZIL’

Bringing transparency and improved reporting to the increasingly complex world of RMBS transactionsA rise in the number of accounting errors in the European RMBS market, as noted in a recent special report by FitchRatings, has placed the spotlight on back-office problems involving documentation, the need for standarisation, the growing complexity of deals, and the overall lack of transparency. Arguably, these errors are still not a threat to investors, but the increase in errors has been significant enough to warrant reporting in the daily press. This session looks at the complexities of relationships between originators, servicers, and trustees, and highlights issues regarding the collection and distribution of information across the back office. We also focus on efforts by the European Securitisation Forum to introduce a set of standardised reporting fields and definitions for the RMBS market (similar to the efforts in the CMBS market by the CMSA) to harmonise the information available in RMBS transactions and thereby promote transparency in the secondary market. Moreover, should specific back-office functions currently held in-house by the majority of issuers be unbundled to an experienced third party?

PANEL: Rick watson, Managing Director, European Securitisation Forum Ron Roark, Chairman, Crown Mortgage Management Robbie Sargent, Associate Director, FitchRatings Ian Stewart, Head of Securitisation and Structured Analysis, HBOS Treasury Services RECOMMENDED READING:

“CALCULATION ERRORS IN EUROPEAN STRUCTURED FINANCE” FitchRatings RMBS/Europe Special Report. 18 April 2006

11:15 REFRESHMENT BREAK

11:30 SESSION 3 ‘AROUND THE wORLD (OR EUROPE) IN 80 (OR 90) DAyS (OR MINUTES)’

Cross-border lending and new market entry - an overview of options for third-party administration in key European RMBS markets (and the lack thereof)This session provides an overview of “best practices” for residential servicing and an inventory of third-party options to reduce the cost of new market and cross-border entry across Europe. Considering the crucial importance of third-party administration to cross-border lending, this session looks at how cultural, commercial, and regulatory attitudes have facilitated the development of the third-party sector in certain markets; have slowed development in others and have rendered the sector virtually non-existent, most notably in Spain. We’ll also discuss the prospects for change through the expansion of cross-border servicing; take a look at how bank consolidation will impact third-party servicing and profile the leading players across European markets.

NETHERLANDS11:30 The Dutch market’s early adoption of securitisation in the mid ‘90s, compared to the rest of Continental European countries, has led to some of the most complex and unique mortgage products in Europe. The Dutch market is also renowned for embracing third-party mortgage administration as early as 1996. Thus it should be no surprise that, despite being headquarters for three of the world’s largest banks in a small country of 17 million people, the Dutch market was among the first to experience the post-Euro wave of foreign market entrants. We see the ability to outsource the administrative process to third parties as one of the most important drivers for entry into any market. Clearly the presence of three outsourcing options led (in order of size) by STATER, Quion and most recently, Ordina says much about the commercial dynamics of the Dutch market. This session takes a look at how the Dutch experience will spread across other European countries. PANEL: Peter Besuijen, Managing Director, quion Group BV Ryszard Kruzel, Director XXL, Stater NV Rob van den Berg, Director, GMAC-RFC Nederland Tom van der Geest, Director, Hypsotech Management Consultancy BV



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gERMANY12:00 The german market has been relatively slow to embrace third-party servicing, primarily due to the three pillar banking system and the related preference for shared utilities among banking group sectors. Despite the early presence of Hypotheken-Management (now owned by KreditWerk) in 1998 and the cross-border entry of STATER in 1999, the implosion of the german mortgage banks and explosion of NPLs has led to a market dominated by special servicing ventures in the past 3 years. The experience gained by workouts on NPL loans has created a natural position for special servicers gearing up for the expansion and entrance of non-conforming and sub-prime lenders. This session looks at how Europe’s largest mortgage market views the importance of servicing today, and how new ventures are lining up to capitalise on the changes to come. PANEL: Clarence Dixon, Managing Director – Continental Europe, Crown Mortgage Management Christian Fein, Head of Europace International, Hypoport AG Gerd Koidl, Board of Directors, HSH Nordbank Jörgen Louw-Pedersen, Consultant

SPAIN12:30 The first European country to utilise both covered bonds and RMBS in volumes that now exceed the UK, we’re bullish on Spain (pun intended). So bullish, in fact, that we launched our signature event in Madrid in 2002 to point out why that significance would have such a profound impact on European and global mortgage markets moving forward. In case any of you missed it, we’re going back to Madrid for our 5 year anniversary this October to prove another point (and you’ll have to be there to see it). In the meantime, we’ll give you a piece of the puzzle. Today, we see the most striking feature of the Spanish market as being the lack of complete third-party servicing alternatives. Although parts of the value chain can be outsourced in Spain, to date no solution exists for cross-border lenders to outsource their entire back-office. We know how many lenders want to get into the Spanish market, but what has been holding them back? And why is the cost of entry so unusually high? We’ll let you make your own decisions upon hearing from key market participants.

PANEL: Eric Klesta, COO, International and Corporate Development, Unión de Créditos Inmobiliarios Baralides Alberdi, Consultant, Associate Partner, EuroCatalyst BV Juan Güell, First Vice President, Cibergestión

13:45 SESSION 4 ‘I CAN GET IT FOR yOU wHOLESALE’

Servicing considerations for whole loan sales and tradesAs European funding alternatives continue to diversify and balance sheet re-engineering moves into high-gear, whole loan sales are an effective funding alternative, allowing lenders to accelerate new business and achieve lending targets through the bulk acquisition of whole loan portfolios. Loan sales provide a more cost-effective way for lenders to increase assets and diversify their overall book while reducing fixed costs or strategies that conflict with core operations and capabilities. For intermediaries, whole loan sales provide a wider range and consistent source of products. Finally, customers benefit from greater choice and more competitive and transparent products, creating a win/win solution across the value chain. In the past two years investment banks have become large portfolio buyers as product to securitise through their own conduits, increasing the premiums paid for portfolios in a robust seller’s market. It’s a terrific “blue sky” scenario across Europe with one small problem holding back the trend – the lack of third-party servicers for portfolio buyers. This session features top buyers, sellers and current servicers leading the trend that will fundamentally alter the European lending sector in the next decade. In particular, we’ll be discussing: Motivation for buying and selling with a discussion of key transactions across Europe Servicing transfers of new portfolios Improvements in data sophistication and cost including credit scoring and automated property valuation models (AVMs) Changes in regulation that simplifies the documentation required for portfolio sales Current efforts to increase portfolio transparency, standardize sale contracts and reduce transaction time

PANEL: Craig Beresford, Director of Asset Sales - Capital Markets, GMAC-RFC UK Ltd. Geertjan Jellema, Director, Stater Mortgage Investment Services Gordon Jolly, Managing Director, Amber Homeloans Limited Brian Kane, Managing Director, Structured Finance Ratings Services, Standard & Poor’s Patrick Currie, Co-Founder and Managing Director, Hometrack Data Systems



31 MAY – 1 JUNE 2006ES 2006

CMBS / RMBSES 2006

ES 2006

14:45 REFRESHMENT BREAK

15:00 SESSION 5 ‘GREAT EXPECTATIONS’

As non-conforming/sub-prime lending expands across Europe, are special servicing capabilities GROwING ALONG wITH IT?

Definitions of “non-conforming” and “sub-prime lending” vary as greatly throughout Europe as the number of languages spoken, and despite the possible repetition are often placed together as we have done in title of this session to refer to anything that falls outside of the category of “prime”. We assume by now that everyone has read the April, 2005 report on “Risk and Funding in European Residential Mortgages,” in which Mercer Oliver Wyman convincingly identifies a 15% market expansion of untapped opportunity equivalent to €500 billion of lending in Europe. Before you run off to capitalize on it, please read further. Outside of the UK where the sub-prime market is the most evolved (if not saturated), the greatest opportunities are found in germany, Italy, France and Spain. On the Continent, if you were to describe your own working definition of a non-conforming loan to most lenders, they will often tell you that whatever you have described “happens” in their market although not as frequently, but due to the sensitive nature of relationship banking it is not publicly marketed as such. Occupancy status (Buy-to-Let), how high lenders go on LTVs, how much documentation is provided for underwriting, and borrowers with impaired (or non-existent) credit histories all fall outside of the range of “prime” mortgages and onto the widening non-conforming/sub-prime lending spectrum. The best way to understand whether or not a mortgage is considered a higher risk by the originating institution is to evaluate how those loans are currently serviced. Why? Because we assume by now that everyone understands the direct correlation between high risk and/or high LTV loans and default frequencies. Or do they? This session explains how special servicing is distinct from other servicing roles and what skill sets and strategies are required to establish special servicing departments and/or separate operations; why special servicing is crucial to the expansion of non-conforming/sub-prime lending throughout Europe, and hear from the leading players (both originators and third parties) on servicing considerations in product development and proactive servicing actions that begin much earlier in the value chain, once loans are funded. In short, where the Mercer Oliver Wyman report identified “great expectations” for the expansion of high-risk lending, this session reminds everyone of the equally “great expectations” placed upon the servicing of the higher-risk sector.

PANEL: Paul Fenn, Development Director, Homeloan Management Limited Hoesli Labhart, Director, Principal Finance, Citigroup Diane Pendley, Managing Director, FitchRatings Jodi van Breda, AVP/Analyst, Moody’s Investors Service

16:00: SESSION 6: ‘CRASH’

When High Street meets Wall Street in The City, which way do you turn?This session moves beyond last year’s lively discussion, “Fighting in the food chain and survival of the fittest”, and zooms in on the Darwinist transformation playing out along the front-end of the mortgage value chain across major European markets as a battle over mortgage distribution. With more than 10 formidable new lenders entering the nonconforming sector over a short period of time, the UK market is the best place to watch the drama unfold. The discussion will provide ideas and inspiration for some and a warning for others, but no one in the European mortgage industry remains untouched by its implications. With the churn-driven 10-year prime market coming to an end, mainstream lenders face a struggle between generating profit from their books vs. regulatory pressure to price for risk. Enter the investment bank conduits and principal finance. The same regulatory hurdles that many anticipated to act as barriers to entry have instead provided the market stability that attracts investors. The result is a clash between the relationship-driven, operationally expensive “High Street” approach to mortgages vs. the operationally lean, commoditization-driven conduit lending model. The ultimate showdown is the battle over distribution for those closest to the largest volumes of customers. The nature of nonconforming lending demands increased labour and documentation in the mortgage fulfilment process, a need that has risen to the growth of packagers who specialize in collecting and organising information faster, cheaper and more efficiently. Morgan Stanley’s recent acquisition of packager Advantage Home Loans and the tieup between Investec and Infinity Mortgages to create Unity Homeloans (lending arm of the Professional Mortgage Packager’s Alliance) shows exactly where battle lines are being drawn. With all of the new competition entering the lending market, which parties will be making the credit decisions, process and administer the volume, collect the payments, provide loss mitigation and arrears management? Stay tuned for a provocative session to see who stands to benefit most from the fallout, how they intend to pursue it and how the third-party sector will change as a result.

PANEL: Rob Bier, Chairman, Sparck Hypotheken Michael Bolton, Chief Executive, MBAC Consulting Bill Dudgeon, Managing Director, db Mortgages David Grant, Managing Director, Homeloan Management Limited John Maltby, Chief Executive, Kensington Group

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We are pleased to sponsor this year’s EuropeServicing Conference and look forward to another record year.

William StanleyManaging Director

Anne BridgesDirector of Securitisation

The European securitisation group at Mayer, Brown, Rowe & Maw LLP is considered to be apowerful, heavy-hitting, technically excellent team who regularly represent issuers, underwriters and placement agents, investors, trustees, servicers, credit and liquidityenhancers, multi-seller conduits and rating agencies, and is continuously active in securitisation in North America, Latin America, Europe, and Asia.

The team has experience in almost all types of assets, including many exotic asset-classes,such as operating leases, future export receivables and charged-off consumer loans, and various types of CLOs and CBOs.

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Contact:

EuropeServicing 2006 Program

Documents

Transcript of EuropeServicing 2006 Program