Today’s commercial mortgage lending landscape is much different than it was even 10 years ago. The industry has made impressive strides in adopting technology despite its historical reluctance to change. But what comes next? As much headway as the sector has made, advances never stop in a business as complex as commercial real estate finance. In terms of change, one such sign of progress is a new ability for lenders and mortgage brokers to study an investor’s entire portfolio and determine if that borrower is a good candidate to refinance.
Mortgage professionals have historically had a hard time accessing a prospective borrower’s records. Until recently, commercial mortgage data has existed in siloes, making it more difficult for professionals to evaluate refinancing opportunities and determine which property owners would be good candidates for a loan. One of the problems is that the true owners of a property are often shrouded behind the curtain of limited liability companies (LLCs).
Ownership entities exist to protect the identities and assets within a real estate portfolio. These are great for individuals, but troublesome for the brokers and lenders who are trying to vet potential prospects and uncover necessary information on past loans, origination and maturity dates, and mortgage signatories.
Unlike other business sectors, the commercial mortgage industry has been slow to move away from paper-based systems and embrace digitization. This is largely rooted in the sheer amount of information involved in commercial real estate transactions.
Data is fragmented in three core vacuums. The first is property data, such as building and lot details, zoning and so forth. A second category is data about the property owner, who might be a prospective refinance candidate. The third is information about the LLC, which is often the official owner of the property in question. You need information from all three categories to present a full picture of a borrower’s risk and determine whether that individual will be a viable loan prospect. Rarely, however, is all the information easily accessible.
Thanks to innovation, however, technology is changing the way commercial mortgage professionals access and analyze a prospect’s asset portfolios. Breakthroughs in machine learning and artificial intelligence have streamlined how mortgage and property data is collected and connected. Pertinent data can now be more easily extracted from disparate files and converted to usable digital formats. The digitized data can be tagged and linked to a borrower regardless of where it was originally sourced.
As a result, lenders today can gain access to a complete set of data about prospects and their respective portfolios. Additionally, financial-technology (or fintech) companies have developed platforms and tools whereby mortgage brokers can easily research — and thoroughly vet — a property and its owners.
What fuels this accessibility? In a digital format, commercial real estate data can be recorded with unique property and people identifiers that makes it easier to share and search. As a result, lenders can analyze the prospect’s complete portfolio with pertinent property, people and ownership-entity information. By tying the financial and transactional data of a property back to its individual owners and other related assets, lenders have access to the rich, granular insights that propel better business decisions.
Unlike other business sectors, the commercial mortgage industry has been slow to move away from paper-based systems and embrace digitization.
Changing the game
This new level of transparency is game changing for commercial real estate financiers. It introduces a robust network to the industry that had never previously existed.
Technology has been able to piece together the once-disparate world of commercial real estate. This is an achievement in and of itself but, for lenders and brokers in particular, it makes for easy vetting of refinance prospects. LLCs will continue to exist, but commercial mortgage professionals can pierce their barriers to uncover the information that once required heavy lifting to unlock.
This new transparency also is revolutionizing the depth of insights available to mortgage originators and other financing professionals. They now have access to a prospect’s full and accurate portfolio history, including current and past assets, associated lenders and the interest rates for any attached mortgages. This gives lenders and brokers all the information they need to perform comprehensive due diligence. Rather than seeing a sliver of loan data for a single asset, mortgage companies can unlock a treasure trove of property intelligence. The ability to conduct such a thorough analysis reduces uncertainty and helps originators strategically approach both prospects and potential deals.
Lenders can do a better job of networking when they have full access to a prospect’s portfolio. There’s no denying that commercial real estate lending is a relationship-driven business. Regardless of how much technology changes the financial sector, the importance of networking will remain. Portfolio transparency makes it easier to expand your opportunities for successful, more competitive dealmaking.
A prospect’s complete portfolio can reveal all of the people and companies associated with their assets. Increased access to companies and people expands your network of lenders and prospective clients. It widens the pool of potential prospects who might be ripe for refinancing, and it also can help lenders and brokers maintain their competitive edge.
Thanks to machine learning and artificial intelligence, evasive and opaque asset portfolios are now a thing of the past. Commercial mortgage professionals of all types have the resources to identify potential prospects, then fully vet and connect with them.
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Technology has exponentially transformed portfolio access, pushing users past LLCs and straight to the true owners. With this increased accessibility, the commercial real estate lending community is empowered to cast a wider net for refinancing opportunities and unlock insights that take the guesswork out of due diligence. A new era of accessibility has arrived. Given the insights and opportunity it gives to mortgage professionals, it should be here to stay.