CMBS reported at 1996 levels

That's right. Not a typo. We're talking $12 billion in the first half of 2008, or 91% less than the first half of 2007. They can't compete with other lenders (to the extent deals are being done at all) because of the crazy spreads.

Are conduit loans dead? No.

“Most market participants, including Moody’s, believe that the industry will survive, but in a simpler, scaled-down form. It will be a very long time, if ever, before the industry sees issuance volume in excess of $200 billion again,” the credit rating agency says.

Is that a bad thing? No. First of all, we don't need cowboy lending. But just as important, I think there were a lot of commercial borrowers who, frankly, didn't belong in REMICs; they nonetheless went into the deals anyway, attracted by low rates.

But man, was it a pain to then discuss things like defeasance, lockout periods, assumption nightmares and other lovely details in the CMBS market that they just didn't really understand were realities when they wanted to actually do anything with the property. And trust me, these were sophisticated real estate people. I'll never forget the astonishment on one person's face when I told him/her that the loan was in a lockout and could not be sold, thus killing or postponing a killer deal to sell the peoperty.

I also wonder how badly B-piece buyers are being hurt right now.

Does that means CMBS is awful? Heck no! Just like most any product, it has its time and place. But it is also not for everyone, so hopefully we'll see borrowers (and lenders!) using these kinds of package deals more judiciously in the future.