Magazine article Mortgage Banking

Successful Project Management. (eMortgage)

Magazine article Mortgage Banking

Successful Project Management. (eMortgage)

Article excerpt

MODERN FINANCIAL MARKETS require flexible, modern tools. The commercial mortgage-backed securities (CMBS) market has been a major innovative step forward, driving pricing transparency and liquidity in the commercial mortgage markets and offering attractive, diversified, medium-duration returns to pension funds, mutual funds and other investors.

CMBS development, however, still lags far behind securitization in the residential mortgage market. Fewer than one-third of commercial mortgages are securitized, versus two-thirds of residential mortgages. The reason: Commercial mortgages are negotiated, large, lumpy, highly structured, unique instruments. Assembling and documenting these structures is expensive and time-consuming, and it's even more difficult to maintain the data integrity required for active, liquid secondary CMBS markets.

CMBS is one of the many special cases facing originators of highly structured assets such as commercial mortgages. A major focus of the new Basel II Capital Accords, which are scheduled to be finalized next year, is to achieve complete consistency in credit reviews, credit and collateral standards, and documentation across all wholesale assets--mortgages, leases, loans and lending facilities. The ultimate goal is to break down the information silos that exist in all large lending institutions, and make all important credit and risk-related information fully accessible up and down the management chain. At CapitalThinking Inc., we categorize the goal of the implementation of this strategy as "acting locally and managing globally." That is, supporting consistent and standardized business practices from a managerial oversight perspective while still providing the flexibility and creativity required of the day-to-day line of business professional to do his or her job to support the customer relationship and drive new opportunities.

How can we get there? An important part of the solution will come from a technology category that a recent paper by Framingham, Massachusetts--based IDC calls "deal management software." In a study released in May 2003, GE Real Estate: Out of the Office and onto the Web, IDC corporate banking analyst Jeanne Capachin analyzes how Stamford, Connecticut--based GE Real Estate has used CapitalThinking's bluewire [TM] deal management software to support its continuing efforts to automate manual processes and drive to Six Sigma process improvement objectives.

GE Real Estate is one of the world's largest commercial real estate lenders, with a $28 billion commercial real estate portfolio originated by more than 800 associates from 44 offices throughout North America, Europe and the Pacific Rim. The GE Real Estate solution is a workflow automation system called RESource. Because it is built on a Web-based deal management platform, it is accessible throughout the world, unifying and standardizing the origination, documentation and closing of commercial mortgages. Senior executives and credit officials can view deals in process from the very earliest stages, and all deal documentation is instantly accessible from an enterprisewide accessible system.

One of GE Real Estate's key information technology (IT) objectives is to achieve exceptional customer service to sustain its leading market position. GE Real Estate's objective was to review, underwrite, approve and fund customer proposals faster and more reliably than the competition, and at the same time reduce the variance in decision outcomes across like assets. …

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