Going Commercial

Tired of the boom-and-bust cycle of residential lending? More than a few companies that have capitalized on their residential lending expertise to reap enormous profits in recent years are looking for ways to balance out their business equation with less interest rate sensitive loan products. Low rates fueled boom times for residential lending, but rising rates will take some of the steam off the industry - at least on the origination side of the business.

One option that has lured a number of firms that have historically focused on residential real estate is commercial real estate lending. Sure, commercial real estate is a more complicated asset class with greater price volatility than residential real estate, but prepayment lockouts and cycles of business demand mean that commercial loans prepay less quickly than their residential counterparts.

That means that commercial real estate lending remains a hot topic. And technology that can make the process more efficient and productive is also gaining ground in the market. Commercial real estate lenders don't have the luxury of standardization that makes residential lending automation so attractive. But experts in the industry nonetheless have developed systems that have the capability of helping servicers do more with fewer resources. Underwriting, collections, cashiering and investor reporting all benefit from the implementation of new technologies. And at least two of the leading providers of commercial mortgage technology are also in the commercial mortgage servicing business themselves, so they know the intricacies of managing complicated commercial mortgage and commercial mortgage-backed securities structures.

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