Midland Says New Platform Tested

Midland Loan Servicing says it has completed the testing of its Enterprise loan servicing platform and will begin marketing it in earnest to other commercial mortgage loan servicers next year. Stacy Berger, Midland's senior vice president, told Mortgage Servicing News, "We're ready to declare victory."

The company started down the path that would lead to developing its own platform about five years ago, in order to "control its own destiny by controlling the technology," the company said. Today, the Enterprise system is being used by three major companies and Midland, servicing about 3,000 loans worth over $20 billion.

Principal, Mutual of Omaha and I-Star Financial (formerly Starwood Financial) are currently using the platform.

By mid-2003 Midland plans to convert the remainder of its loan servicing portfolio from McCracken Financials platform over to Enterprise. That will add another $63 million worth of loans, said Mr. Berger.

"What we're doing now is the CMBS Master Servicing piece," he said. "We're making all of the money moves - reconciliation and reporting - work on a very large scale. We're finishing up the testing of those things now."

Once that testing is complete, Midland will move its portfolio over and then send out a staff of marketing people to let other servicers know it's available.

"Our vision was to use technology to create more efficiency in the commercial mortgage servicing market where there are thousands of smaller shops servicing a couple hundred loans."

The way Midland finally did that was by introducing the idea of shared servicing, in which Midland offers up the workflow technology and hosts the database on an ASP basis (the high-tech end), while the smaller servicer maintained the borrower relationship (high-touch end).

The Enterprise system allows Midland to offer a range of services from a completely outsourced solution to shared servicing to simply offering the servicing software to its customers. But before the company rolls out the platform, Mr. Berger says the company will make sure that it scales well enough to serve the market.

"We've always been first a user of technology and seen people's inability to keep their promises. As a seller of technology, we wanted to be very careful not to promise something we couldn't deliver," Mr. Berger said.

To make sure that it didn't get into trouble in this area, Midland decided to complete the transition of its portfolio before promising to bring on any new business.

"You're not going to be impacted by what Midland is doing internally," Mr. Berger said.

While Enterprise includes a deal management piece that works on the front end of the business, making it more like an end-to-end solution, the company expects to sell it in modules.

"We knew we couldn't go into a (major life insurer) and tell them we want to take over their servicing," Mr. Berger said. But he added that eventually, the Enterprise platform will change the way commercial servicers work, shaving 25% off their cost per loan.

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