I’ve known Mike Matheson professionally for years, but I finally got an opportunity to work with him earlier this year when a common client required we produce a nightly XML export out of Backshop in the C-MISMO data standard.
Mike, who sold a technology company to Midland and has a successful consulting company, Solve Development, has probably spent more time promoting C-MISMO than just about anyone.
After “brainstorming” on how to fix the industry, we both agreed that getting better information flows is a critical component and, along with the CMSA, C-MISMO and the MBA are leaders in trying to get traction.
I am willing and anxious to join the board of C-MISMO to help get some traction in acceptance of both data and underwriting standards.
Here is Mike’s letter of recommendation:
I got to know Jim while working with a common client going live on Backshop. The client was requiring Jim to create a nightly XML feed from Backshop out to a downstream data warehouse. The client directed Jim that the data structure of this nightly XML feed needed to be MISMO compliant.
I was brought in as an advisor to assist with the structure, and we successfully completed the project in June 2008. The experience not only left me impressed with Backshop, it also became clear that Jim has a unique position and knowledge as a bridge between the business needs and the technology required to make it so. Jim is a recognized innovator in the industry, helping bringing process improvements and standardization to all his clients.
In the past eight years, Jim and his companies have developed a web based loan origination system and earned clients and adoption by leading lenders such as Bank of America, RBS Greenwich Capital, CWCapital, NATIXIS, AIG, Genworth Financial, Hypo International and others. This speaks not only of Jim’s ability to understand the industry data problems and develop solutions, but also of his ability to get others on board with implementing change. In the process he has helped to prove that data structures and commercial real estate underwriting can be standardized.
Currently, Jim and company are working with the rating agencies to use Backshop as the “calculator” to re-underwrite the loans to apply the appropriate ratings for new CMBS issuance. The plan is to have Backshop issuers disclose their underwritings to the rating agencies via an XML transfer that includes cash flows tied out to rent rolls. This disclosure is significantly greater than the current standard of a flat “data tape” excel file with underwritings delivered in non-standardized Excel models.
Also, the firm is in the process of launching three new services. First, a “CMBS investor” site is launching in January 2009 that will bring standardized underwriting tools to investors. The product is essentially Backshop with the CMSA’s IRP data loaded and updated monthly with bond pricing and cash flow analysis from a product called Conquest, which CMBS.com acquired in 2005. In addition to allowing investors to perform “top down” analysis and loss projections, users will be able to perform “bottom up” analysis starting with the rent roll.
Second, a site for mortgage bankers is launching in February where brokers can create packages for financing requests that leverage the standardized underwriting tools used by the lenders. By brokers and lenders using the same calculator, greater efficiency and transparency is achieved.
Finally, CMBS.com is launching a site for primary servicers so they can perform their reporting functions to the master servicers in a more efficient way. The goal is to standardize the format of rent rolls and operating statements so the data can more easily flow through from the primary, to the master servicers, to the trustees, and ultimately to the investors.
As head of CMBS.com, Jim has the experience in standardizing underwriting and data for all participants in the CRE finance process. He has firsthand experience with existing MISMO data standards has already implemented substantial standardization and change to many of the market participants. His current plans are to expand this standardization with investors, brokers and servicers. His expertise and experiences would be greatly beneficial to the governance, adoption and success of C-MISMO. Jim is one of very few people who are truly equipped to help lead MISMO adoption and implementation, and therefore I am nominating him for CMISMO Governance.
For more information on Jim or CMBS.com visit www.cmbs.com or his blog located at www.cmbs2point0.com
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.pngjimflaherty2008-11-28 00:26:322020-09-17 00:27:21Mike Matheson Nominates Jim Flaherty for C-MISMO Board of Governance
I spent the day Fishing and Crabbing off of the Marin coast in the “High Tide” -– my 28 foot long, twin engine MasterCraft X-80 that can usually be found pulling us around on a wakeboard. Not today: We took up the carpets, loaded my 4th and 2nd grade kids, and got my buddy who actually knows how to fish to be our guide.
We started the day by dropping a crab pot in 150 feet of water about 7 miles off Bolinas. The trap was loaded with an old fish head and, after the drop, we hit the Man Over Board button on the GPS to mark our spot and then headed in toward the coast.
Andy with his monster from the deep.
We went to a spot called Double Point about half way between Bolinas and Point Reyes and got the poles ready. We were fishing for rock fish with sardine bait. Basically, you put a heavy weight on the line and bounce the weight off of the rocky shore below trying to get a fish to hit.
The closer you are to the rocks, the better, so there is a fair amount of positioning the boat. Needless to say, we crushed it!
My son Andy got the first hit and it turned out to be the best fish of the day — a 27-inch Blue Lingcod. The fish was ugly with big teeth and a gnarly looking face with spikes coming out of it, but lingcod are prized for eating. We went on to get six more fish including a Cabezon and a few Red Rock Fish.
We headed back out to the crab pot to see if we caught any Dungeness Crabs. After pulling up of the crab pot, we were pleased to see a bunch of keepers. We ended up with eight to keep and threw back five or so for being too small.
We powered back enough fish and crab to feed us and my buddy and his family for at least three meals (plus my dogs loved the skin and scraps). Awesome!
It was a big difference for me and the kids fishing in the ocean as we usually only fish for Trout in the Sierra lakes (Lake Kirkwood is our favorite) where a 12 inch fish is the norm.
To pull up a “creature from the deep” that feeds the entire family for a few days was awesome. Plus, to transform the boat from a Wakeboarding machine to fishing platform adds a new way to use the boat, which is always a goal.
Me and the kids: There’s no better way to get crab.
— — —
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.pngjimflaherty2008-11-23 00:27:502020-09-17 00:29:25The Not So Deadliest Catch
On Wednesday morning, my “happy” post-election emotion was replaced with a toxic combination of hangover and jet lag. I hit snooze a bunch of times and finally made it over to the conference for the afternoon sessions.
The takeaway was not all negative. A few buyers felt pretty good about recent trades buying AAA European CMBS for 60 cents on the dollar, driving yields up to 12% or so. But there have been only a few forced sales to date, and volume is very low.
That led to an interesting panel among special / master servicers, senior bond investors, junior bond investors and lawyers about the timing of enforcing non monetary loan defaults, the fiduciary responsibilities of the servicers to maintain a “servicing standard” and the potential liability created when folks in different parts of the cap stack want different strategies.
An example:
If a borrower breached a Loan-to-Value covenant but was still paying on the debt, should the loan be called for default and the special servicer take an enforcement action and foreclose / sell the asset?
Or, since the borrower is still paying, should the servicer waive the LTV default, maybe put in a cash sweep or some other modification, but hold off on foreclosure on the hope things get better in the next year or two.
Well, if you are the senior note holder and you think things are going to get worse over the next few years, you would rather the servicer foreclose on the property immediately and get you paid back. Your thinking is, since you own the top of the capital stack (say 0 – 70% of the debt stack), even at today’s depressed process, you should get most of your money back, and you do not want to risk further deterioration in values.
The problem is the junior bond holder (who owns say 70% – 90% of the capital stack) does not want the servicer to sell now. If the asset was foreclosed and sold today, his position would definitely be wiped out. So he would rather sit tight, keep collecting payments as long as possible, and keep his fingers crossed that values recover and things turn out OK.
Who does the servicer listen to? What happens if the servicer also owns either the senior or junior piece? How is this conflict of interest addressed? They were referencing a “Servicing Standard” to dictate the decisions, but it sounds to me that the only people that win in this scenario are the lawyers. …
While the debate among the servicers and investors was definitely interesting, other main themes included:
The mood was mostly (but not entirely) negative.
The primary CMBS market in Europe is shut down with virtually no new issuance.
The secondary market was also shut down with the exceptions of a few forced sales at around 60 cents on the dollar.
Sellers are only selling if they have to, because they believe government asset purchase programs might pay above market for assets in the not too distant future.
Cap Rates are believed to be rising and commercial real estate values falling, with some predicting stabilization as early as 2009, while others are predicting 2011/2012 and beyond.
Standards and Transparency will be harder to achieve in Europe because of privacy concerns.
I did have meetings with a major bank and rating agency to push the adoption of Backshop as an underwriting standard. I also spoke to the leadership of the CMSA about the importance of standardized underwriting and trying to make that part of any TARP / Bailout program for CMBS.
So, definitely worth the trip. Being oversees for the election was way cool.
— — —
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.pngjimflaherty2008-11-07 00:29:432020-09-17 00:31:37CMSA Europe Conference, Day 2: Not all negative
Mike Matheson Nominates Jim Flaherty for C-MISMO Board of Governance
/0 Comments/in Industry standards /by jimflahertyI’ve known Mike Matheson professionally for years, but I finally got an opportunity to work with him earlier this year when a common client required we produce a nightly XML export out of Backshop in the C-MISMO data standard.
Mike, who sold a technology company to Midland and has a successful consulting company, Solve Development, has probably spent more time promoting C-MISMO than just about anyone.
After “brainstorming” on how to fix the industry, we both agreed that getting better information flows is a critical component and, along with the CMSA, C-MISMO and the MBA are leaders in trying to get traction.
I am willing and anxious to join the board of C-MISMO to help get some traction in acceptance of both data and underwriting standards.
Here is Mike’s letter of recommendation:
Thanks Mike. Transparent standards today!
For more information: www.mismo.org
— — —
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
The Not So Deadliest Catch
/0 Comments/in What's going on /by jimflahertyI spent the day Fishing and Crabbing off of the Marin coast in the “High Tide” -– my 28 foot long, twin engine MasterCraft X-80 that can usually be found pulling us around on a wakeboard. Not today: We took up the carpets, loaded my 4th and 2nd grade kids, and got my buddy who actually knows how to fish to be our guide.
We started the day by dropping a crab pot in 150 feet of water about 7 miles off Bolinas. The trap was loaded with an old fish head and, after the drop, we hit the Man Over Board button on the GPS to mark our spot and then headed in toward the coast.
Andy with his monster from the deep.
We went to a spot called Double Point about half way between Bolinas and Point Reyes and got the poles ready. We were fishing for rock fish with sardine bait. Basically, you put a heavy weight on the line and bounce the weight off of the rocky shore below trying to get a fish to hit.
The closer you are to the rocks, the better, so there is a fair amount of positioning the boat. Needless to say, we crushed it!
My son Andy got the first hit and it turned out to be the best fish of the day — a 27-inch Blue Lingcod. The fish was ugly with big teeth and a gnarly looking face with spikes coming out of it, but lingcod are prized for eating. We went on to get six more fish including a Cabezon and a few Red Rock Fish.
We headed back out to the crab pot to see if we caught any Dungeness Crabs. After pulling up of the crab pot, we were pleased to see a bunch of keepers. We ended up with eight to keep and threw back five or so for being too small.
We powered back enough fish and crab to feed us and my buddy and his family for at least three meals (plus my dogs loved the skin and scraps). Awesome!
It was a big difference for me and the kids fishing in the ocean as we usually only fish for Trout in the Sierra lakes (Lake Kirkwood is our favorite) where a 12 inch fish is the norm.
To pull up a “creature from the deep” that feeds the entire family for a few days was awesome. Plus, to transform the boat from a Wakeboarding machine to fishing platform adds a new way to use the boat, which is always a goal.
Me and the kids: There’s no better way to get crab.
— — —
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
CMSA Europe Conference, Day 2: Not all negative
/0 Comments/in Industry news, Industry standards /by jimflahertyOn Wednesday morning, my “happy” post-election emotion was replaced with a toxic combination of hangover and jet lag. I hit snooze a bunch of times and finally made it over to the conference for the afternoon sessions.
The takeaway was not all negative. A few buyers felt pretty good about recent trades buying AAA European CMBS for 60 cents on the dollar, driving yields up to 12% or so. But there have been only a few forced sales to date, and volume is very low.
That led to an interesting panel among special / master servicers, senior bond investors, junior bond investors and lawyers about the timing of enforcing non monetary loan defaults, the fiduciary responsibilities of the servicers to maintain a “servicing standard” and the potential liability created when folks in different parts of the cap stack want different strategies.
If a borrower breached a Loan-to-Value covenant but was still paying on the debt, should the loan be called for default and the special servicer take an enforcement action and foreclose / sell the asset?
Or, since the borrower is still paying, should the servicer waive the LTV default, maybe put in a cash sweep or some other modification, but hold off on foreclosure on the hope things get better in the next year or two.
Well, if you are the senior note holder and you think things are going to get worse over the next few years, you would rather the servicer foreclose on the property immediately and get you paid back. Your thinking is, since you own the top of the capital stack (say 0 – 70% of the debt stack), even at today’s depressed process, you should get most of your money back, and you do not want to risk further deterioration in values.
The problem is the junior bond holder (who owns say 70% – 90% of the capital stack) does not want the servicer to sell now. If the asset was foreclosed and sold today, his position would definitely be wiped out. So he would rather sit tight, keep collecting payments as long as possible, and keep his fingers crossed that values recover and things turn out OK.
Who does the servicer listen to? What happens if the servicer also owns either the senior or junior piece? How is this conflict of interest addressed? They were referencing a “Servicing Standard” to dictate the decisions, but it sounds to me that the only people that win in this scenario are the lawyers. …
While the debate among the servicers and investors was definitely interesting, other main themes included:
I did have meetings with a major bank and rating agency to push the adoption of Backshop as an underwriting standard. I also spoke to the leadership of the CMSA about the importance of standardized underwriting and trying to make that part of any TARP / Bailout program for CMBS.
So, definitely worth the trip. Being oversees for the election was way cool.
— — —
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