New Software Analyzes Commercial Mortgage Risk

Moody's Investor's Service and Torto Wheaton Research, Boston, have teamed up to offer software for analyzing the risk associated with commercial mortgage whole loan portfolios.

The software, which they are calling Moody's Commercial Mortgage Metrics, will allow holders of whole loan portfolios to analyze the risk of the portfolios using standards that are used to analyze their other fixed-income holdings, the two companies said.

Tad Philipp, managing director, Moody's commercial mortgage-backed securities group, said that commercial real estate lenders will be able to find out the probability of default of their loans and the loss that might be sustained if a default situation arises.

Using commercial real estate inputs such as loan-to-value ratios and debt service coverage ratios, the software produces outputs that bring commercial mortgage analysis closer to "the advanced techniques currently being used to analyze corporate credit risk," according to him.

Lenders can also draw on the Torto Wheaton property market database to get additional property level information.

Raymond Torto, principal and managing director, Torto Wheaton research, said that the software would help portfolio lenders to "more efficiently size capital allocations and price new loans."

A Web-based portfolio version of the software is scheduled for the first quarter of 2004, the companies report.

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