When Ethan Penner and his team in 1992 started originating commercial mortgages with an eye toward securitizing them, few lenders were willing to do so. Times were so desperate that even the best operators had a hard time getting a mortgage for their properties.
To understand what exactly was going on, you’d have to rewind three years, to 1989, the peak of the savings and loan crisis, when more than 1,000 thrifts failed. Those institutions were among the top sources of mortgage capital for commercial property owners. Their failure and the regulations that ensued—most notably the Financial Institutions Reform, Recovery and Enforcement Act of 1989—resulted in a dearth of available debt capital. That, in turn, drove a collapse in property values…
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