So far during this consolidation, our enterprise software business has been coping pretty well.
Bank of America buying Countrywide and RBS buying ABN AMRO were negative events in the fact that, since all four were users, four contracts became two. But, we were still left with fair multiyear maintenance contracts. Bank of America buying Merrill Lynch and Lehman failing were, in a way, good for Backshop because a two big securitized players that were not on Backshop are now gone.
In all those deals, we survived the consolidation and ended up as the system of record. In this deal, PNC is the acquiring bank. Within the different divisions of NatCity, the use of Backshop is limited to the Structured Product Groups in Stamford and not the balance sheet commercial real estate group run out of Cleveland.
While I have been in the Board Room in the NatCity tower in downtown Cleveland presenting to the chief credit officer and various division heads, and we have good support among many groups to convert the entire NatCity portfolio onto Backshop, as of now Backshop is only used by SPG.
So, the question is, after PNC closes the deal and completes the acquisition, will the system of record be Backshop or will it be the PNC system?
I do not know much about the PNC loan origination system. I never tried hard to sell them because they own Midland Loan Services who in around 2002 bought an origination software company run by Mike Matheson. We competed against them in RFPs from 2002 to 2005, but they eventually pulled out of the origination business and focused on Enterprise, their loan servicing system. Nonetheless, PNC was on Midland’s system, and they were not going to change to Backshop so why waste time trying to sell?
But now, PNC just bought an ASP License to use Backshop (my standard ASP license is assumable in the event of acquisition). Midland is not in the third party origination software business, so, as far as I can tell, PNC is on a custom origination system. I’m sure that system works perfectly well for their internal use, but that proprietary approach does not advance the cause of standardizing commercial real estate underwriting.
I’ve read the combined bank will be the fifth largest in the country. An important player for sure and one that, I hope, will get on board with Backshop. But, I’d be going into the weekend with a little less stress if PNC, the acquiring bank, was on Backshop and NatCity, the one being acquired, was on Midland’s system.
I’ll keep the blog posted as this plays out over the next several months. …
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2008-10-24 00:35:382020-09-17 00:36:24NatCity was bought by PNC Today
My takeaway from this week’s conference was the Mortgage Bankers Association is absolutely serious about enacting reform at every level. The words transparency, standards and credibility were used over and over. Because of the massive losses and the government’s long-term commitment to providing financing for homes, the pressure to standardize is greater than ever.
However, the words are not new — people have been saying them for years. The question is: Can they and will they do it?
Believe it or not, the mood at the convention was not all that bad. Remember, the home loan market is still going along at about $40 billion per month. While that number is way down, it still represents a significant volume of loans. Lenders, brokers, little companies and lawyers are all still in business, just not as busy.
The $40 billion number is almost 100% government backed (Fannie, Freddie, FHA, etc). The private market has basically shut down because of a lack of trust in the loans, the rating agencies, the economy, etc. If not for the government intervention, this would have been a different conference, and the liquidity crunch would be affecting a lot more people.
The commercial MBA conference is San Diego in February, and I expect it will be much more depressing. The CMBS market is not supported by the government. So, with the exception of apartment building loans that Fannie and Freddie are doing, volume in commercial is basically $0.
I would call the mood humble but professional. The leadership knows we have issues as an industry, and that we should have done a better job over the past few years. But the attitude was, “We can — and will — do better.”
The folks who attend the industry’s annual trade show are generally professional, honest, hard-working mortgage bankers. The “slime” brokers don’t pay to attend these types of things. There was a kind of “pick yourself up and dust yourself off” attitude, but with an openness to learn some lessons.
The factors for positive change are all there:
1) A humbled market.
2) Government intervention with strings attached.
3) Honest people who want to make things better.
But change is hard, and the forces that stand to lose are powerful.
The mortgage industry need standards more than ever.
Can they do it? Will they do it?
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2008-10-22 00:36:402020-09-17 00:37:27MBA — Serious about reform — Not that depressed, but certainly humble
I headed into San Francisco this morning for the opening session of the 95th Annual Mortgage Bankers Association Conference and was subjected to a group of protesters objecting to the bailout, foreclosures and mortgage bankers in general. Read more
https://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.png00jimflahertyhttps://www.cmbs.com/wp-content/uploads/2019/03/cmbslogo030619.pngjimflaherty2008-10-20 00:37:442020-09-17 00:39:01MBA Conference Draws Protesters
NatCity was bought by PNC Today
/0 Comments/in Industry news /by jimflahertySo far during this consolidation, our enterprise software business has been coping pretty well.
Bank of America buying Countrywide and RBS buying ABN AMRO were negative events in the fact that, since all four were users, four contracts became two. But, we were still left with fair multiyear maintenance contracts. Bank of America buying Merrill Lynch and Lehman failing were, in a way, good for Backshop because a two big securitized players that were not on Backshop are now gone.
In all those deals, we survived the consolidation and ended up as the system of record. In this deal, PNC is the acquiring bank. Within the different divisions of NatCity, the use of Backshop is limited to the Structured Product Groups in Stamford and not the balance sheet commercial real estate group run out of Cleveland.
While I have been in the Board Room in the NatCity tower in downtown Cleveland presenting to the chief credit officer and various division heads, and we have good support among many groups to convert the entire NatCity portfolio onto Backshop, as of now Backshop is only used by SPG.
So, the question is, after PNC closes the deal and completes the acquisition, will the system of record be Backshop or will it be the PNC system?
I do not know much about the PNC loan origination system. I never tried hard to sell them because they own Midland Loan Services who in around 2002 bought an origination software company run by Mike Matheson. We competed against them in RFPs from 2002 to 2005, but they eventually pulled out of the origination business and focused on Enterprise, their loan servicing system. Nonetheless, PNC was on Midland’s system, and they were not going to change to Backshop so why waste time trying to sell?
But now, PNC just bought an ASP License to use Backshop (my standard ASP license is assumable in the event of acquisition). Midland is not in the third party origination software business, so, as far as I can tell, PNC is on a custom origination system. I’m sure that system works perfectly well for their internal use, but that proprietary approach does not advance the cause of standardizing commercial real estate underwriting.
I’ve read the combined bank will be the fifth largest in the country. An important player for sure and one that, I hope, will get on board with Backshop. But, I’d be going into the weekend with a little less stress if PNC, the acquiring bank, was on Backshop and NatCity, the one being acquired, was on Midland’s system.
I’ll keep the blog posted as this plays out over the next several months. …
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
www.cmbs.com
www.backshop.com
MBA — Serious about reform — Not that depressed, but certainly humble
/0 Comments/in Industry news, Industry standards /by jimflahertyMy takeaway from this week’s conference was the Mortgage Bankers Association is absolutely serious about enacting reform at every level. The words transparency, standards and credibility were used over and over. Because of the massive losses and the government’s long-term commitment to providing financing for homes, the pressure to standardize is greater than ever.
However, the words are not new — people have been saying them for years. The question is: Can they and will they do it?
Believe it or not, the mood at the convention was not all that bad. Remember, the home loan market is still going along at about $40 billion per month. While that number is way down, it still represents a significant volume of loans. Lenders, brokers, little companies and lawyers are all still in business, just not as busy.
The $40 billion number is almost 100% government backed (Fannie, Freddie, FHA, etc). The private market has basically shut down because of a lack of trust in the loans, the rating agencies, the economy, etc. If not for the government intervention, this would have been a different conference, and the liquidity crunch would be affecting a lot more people.
The commercial MBA conference is San Diego in February, and I expect it will be much more depressing. The CMBS market is not supported by the government. So, with the exception of apartment building loans that Fannie and Freddie are doing, volume in commercial is basically $0.
I would call the mood humble but professional. The leadership knows we have issues as an industry, and that we should have done a better job over the past few years. But the attitude was, “We can — and will — do better.”
The folks who attend the industry’s annual trade show are generally professional, honest, hard-working mortgage bankers. The “slime” brokers don’t pay to attend these types of things. There was a kind of “pick yourself up and dust yourself off” attitude, but with an openness to learn some lessons.
The factors for positive change are all there:
1) A humbled market.
2) Government intervention with strings attached.
3) Honest people who want to make things better.
But change is hard, and the forces that stand to lose are powerful.
The mortgage industry need standards more than ever.
Can they do it? Will they do it?
— — —
Jim Flaherty is CEO of CMBS.com and the creator of the Backshop loan origination system. He is a trained credit professional with experience installing enterprise underwriting systems for commercial real estate lenders, rating agencies and investors.
www.cmbs.com
www.backshop.com
MBA Conference Draws Protesters
/0 Comments/in Industry news, Industry standards /by jimflahertyI headed into San Francisco this morning for the opening session of the 95th Annual Mortgage Bankers Association Conference and was subjected to a group of protesters objecting to the bailout, foreclosures and mortgage bankers in general. Read more