Midland Rolls Out CRE Technology to Large Clients

Early this year, Midland Loan Services here started rolling out its Enterprise! loan management system to external clients after converting its own $90 billion commercial real estate mortgage portfolio to the system.

Stacey Berger, executive vice president at Midland, recently told MSN that Midland's conversion of its own portfolio involved converting 70 million data elements onto the new system over the course of one weekend. Enterprise! is the evolution developed from Midland's earlier acquisition of the Univest servicing system.

Currently, Mr. Berger said one of the nation's leading banks in the commercial real estate business has signed a contract to use the system, and that conversion is expected to happen toward the end of the year. In addition, the company is negotiating with one of the largest life insurance companies that is likely to convert to it as well.

"We've been intentionally moving slowly to make sure the system and the processes around it work in very large-scale organizations," Mr. Berger said.

Midland believes that its system allows clients to streamline their servicing operations and better manage their portfolios. The company describes its service as "the first Web-based technology platform developed specifically to manage the entire commercial mortgage lifecycle, including loan origination, securitization, servicing and portfolio management." Midland says that Enterprise! can support complex deal and ownership structures.

Midland made a name for itself in the commercial mortgage-backed securities field, and it remains one of the largest CMBS loan servicers.

After these "strategic users" implement the platform, Midland plans to expand its marketing of the technology to other lenders. After large clients have been converted, the company will begin seeking smaller lenders that want the commercial mortgage servicing technology.

Midland is offering the technology as a "shared servicing" option, which allows clients to choose from a menu of selected processing options and keep certain functions in-house if they so choose.

He said Enterprise! is delivered as a hosted application, so clients are using it the same way Midland uses it on its own portfolio of commercial mortgage loans. Using a hosted platform, similar to a service bureau in the world of residential loan servicing automation, is likely to become a trend in the world of commercial mortgage automation, Mr. Berger said.

The cost of owning software and the hardware to support it, plus the expense of hiring technology staff to support that computing infrastructure, has become "really expensive," he said.

In addition, a hosted application allows lenders to outsource business continuity and disaster recovery functions related to loan servicing, he pointed out. "We have found that a number of institutions view outsourcing the technology and the platform as being beneficial from an economic perspective and beneficial from a risk management perspective," Mr. Berger said.

The technology is delivered through dedicated telecommunication lines to the client, and Midland maintains a separate data center, as well as business continuity measures including a "hot site" backup.

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