Whether originating, underwriting, serving on a credit committee, or performing ongoing surveillance on a debt portfolio, impartial data from Reis can help facilitate interdepartmental negotiations, and negotiations with the borrower.
For originators, performing the rigorous due diligence that is so essential to making sound decisions can be difficult, especially when considering an application for a loan in an unfamiliar market. Sure, the metro as a whole is performing well, but what about the particular submarket in which the collateral is located? Considering the location and class of the property, the performance of its peers, and the expected changes in market health, are the income projections, LTV ratios, and DSC ratios in the loan packet reasonable and can I defend them to my underwriters?
For underwriters, checking the assumptions of originators can be equally time consuming. Here again, a review of the Reis data can reveal that a loan falls within acceptable LTV and DSC parameters or, if it does not, can help answer the question of whether the subject property’s performance justifies the exception.
With the responsibility for final approval, the credit committee benefits from the same Reis data that has been used previously by the originator and underwriter. Reis data may be used to give approve the loan, or to challenge earlier assumptions, leading to rejection or adjustment of the loan terms.
Finally, portfolio managers responsible for overseeing a lender’s loan portfolio can use Reis to help determine whether conditions in some markets are deteriorating to a degree that may negatively affect Loan-to-Value or Debt-Service-Coverage ratios, suggesting that perhaps the lender should shed or refinance those loans.