Although information technology developments such as Mortgage Industry Standards Maintenance Organization (MISMO) standards have historically permeated the residential mortgage world more rapidly than in the commercial mortgage industry, numerous commercial loan information aggregation and dissemination advances recently have been launched or are planned for imminent release.
These reporting technologies promise enormous labor and cost savings – and have already made their mark on many parts of the loan life cycle, according to industry experts who spoke at the recent Mortgage Bankers Association (MBA) Commercial/Multifamily Capital Markets conference in Washington, D.C.
In general, ‘We are an industry that is slow to adopt,’ acknowledged Dave Bodi, executive vice president at Midland Loan Services Inc./PNC Real Estate Finance.
But in a world where instantaneous access to available data has come to be expected for commercial finance professionals, investors and related third parties, ‘Information is no longer a novelty; it's a necessity,’ stated Daniel Szparaga, senior director of industry technology at MBA. Consequently, he added, ensuring both the security and clarity of data transfer has emerged as a chief concern for anyone responsible for transmitting that vital information.
The movement toward data standardization has been one critical initial push that allowed for further technological advances. ‘Ambiguity is friction in the passing of information,’ Szparaga remarked.
Developers of MISMO standards, which have previously included a servicing transfer standard introduced in February 2006 and an environmental site assessment summary report released in June 2007, are now focused on the conversion of the Commercial Mortgage Securities Association Investor Reporting Package (CMSA IRP) from its existing Excel format to a more efficient XML incarnation.
Regardless of its current financial turmoil, the commercial mortgage-backed securities (CMBS) industry was ripe for reform from the reporting side. ‘The pain points involved in the CMBS industry in moving data into an Excel format and then accommodating changes to the Excel format over time have proven now to become cumbersome,’ Szparaga explained.
Nonetheless, the switch to XML, which he describes as an extremely large project, has been developed with ample caution. Most importantly, noted Szparaga, the operation must be structured so that it does not jeopardize the liquidity of the CMBS market.
Implementation is anticipated to occur sometime in mid-2009. Once the move is complete, ‘Every firm in the CMBS industry will have implemented – at least at some level – XML, which means that the suite of MISMO standards then becomes accessible to them at a much lower implementation curve and cost than otherwise would have been seen,’ Szparaga said.
Standardization and full utilization of XML also characterize a recently developed data dictionary now in use at Midland Loan Services Inc./PNC Real Estate Finance, according to Bodi.
Loans in the revamped and information trade-focused system can have an unlimited number of parties associated with them, as well as multiple pieces of collateral. ‘We've also been successful where we transferred loans from one servicer to another,’ he pointed out.
In addition, rather than relying on the cumbersome and inconsistent scanning methods that dominated earlier operating methods, the firm now takes advantage of a standardized electronic file-naming system.
‘This classification standard allows us to take all the documents that are in an image file and bring them into our imaging system and have them automatically indexed,’ Bodi explained. The company can then locate applicable information by searching by either loan number or collateral – and then conduct transfers.
Steven Powel, principal and chief operations officer at Situs Capital Services Inc., pointed to recent technological advances in Reportbuilder 2.0 – a commercial real estate appraisal business process manager for appraisers and brokers – and CLOSER – a pipeline management and loan underwriting system – as consequential for improving data aggregation flow and analysis.
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The most important feature of the former, he said, is the software's ability to push information through from application to application via XML feeds. This capability, which is linked to MISMO, is expected to be particularly useful during the due-diligence process, when third-party providers must perform multiple levels of analysis.
‘The bottom line here is, with these technologies – and what MISMO is allowing us to do, along with the other data standards – we're able to move massive amounts of data in seconds, not hours,’ Powel concluded.
FL: HILTON GARDEN INN/HOMEWOOD SUITES, JACKSONVILLE
WHAT: Located in the central business district of Jacksonville and adjacent to the upscale and trendy San Marco community, the 123-unit Hilton Garden Inn and 98-unit Homewood Suites will be connected to the Skyway Express transit system and part of the new 250,000 square-foot transit-oriented, mixed-use Kings Avenue Station. The two adjoining hotels will be constructed in a single 8-story building.
WHO: First American Realty Associates of Fairfield, N.J., secured the funding from a Wall Street investment company for San Marco Hotel Partners LLC, a joint venture between Jacksonville-based Landcom Hospitality Management and Alex Brown Realty of Baltimore.
$$$: $20.8 million.
TERMS: A combination LIBOR-based construction loan/nonrecourse mini-perm was arranged.
First American Realty Associates: (973) 575-7547.
NE: CLAREMONT APARTMENTS, LINCOLN
WHAT: Claremont Apartments is an 89-unit student housing property built in 1992. The property was 100% leased at closing.
WHO: Green Park Financial, Bethesda, Md., provided the loan for the borrower, Prime Property Investors.
$$$: $5.18 million.
TERMS: The acquisition loan was structured with a nine-year term – plus one-year extended maturity, five years of interest-only payments, and a 30-year amortization. LTV: 80%. DSC: 1.20x.
Green Park Financial: (301) 215-5500.