Charting the course of commercial loan administration

The level of sophistication required of today's commercial mortgage loan administrator has reached a new order of magnitude. No longer primarily a back room, paper-processing function, loan administration departments have been recognized as critical to the preservation of commercial real estate value. MBA members, like Bonnie Carter, Don Ennis, and Wayne Nelis, have been at the vanguard of this transition.

Bonnie Carter is manager of Mortgage and Real Estate Administration in the Investments Department of the American Fidelity Assurance Company of Oklahoma City, Okla. She supervises all loan servicing and coordinates all loan closing functions of a $130 million commercial mortgage portfolio, most of which were placed and are serviced through the correspondent system. While she formally began her leadership of MBA's Commercial Mortgage & Asset Administration Committee (CMAAC) in October 1995, Bonnie has been thoroughly engaged in most of the Committee's major initiatives.

A few years ago, the industry was without a comprehensive guide for formulating or updating internal policies and procedures manuals. As vice chair of CMAAC for two consecutive terms, Bonnie led the Pubs Team to develop just such a guide. More than twenty volunteers carved out sections, conferred with industry colleagues, legal counsel, rating agencies, investment banks and insurance carriers. In all, more than 100 individuals participated. The result was A Policies and Procedures Guide for Commercial Real Estate Loan Administrators, one of MBA's hottest new publications. During this same period, Bonnie and her Pubs Team also developed a highly regarded pamphlet entitled Minimum Insurance Guidelines for Servicing Commercial Real Estate Mortgages. Including a checklist and description of typical coverage for commercial mortgages, some 750 copies have been distributed.

Another active leader is Wayne Nelis, Director of Asset Management in the Real Estate Investments group at Providian Corporation in Louisville, Ky. Wayne is directly responsible for the management of all functions pertaining to the accounting and administration of a $5.3 billion real estate portfolio. He has been involved specifically with the administration of real estate investments for more than 21 years and began his involvement with MBA in 1989, when he attended his first commercial loan administration program.

Wayne has served on several panels as a speaker and moderator, has served as vice chair and chair of CMAAC and has served on the CREF Council. Under his leadership, several important MBA initiatives were launched. Among them was creation of "The Cutting Edge of Technology," seven state-of-the-art software demonstrations at MBA's February 1995 CREF/MFH Conference.

Perhaps the most far-reaching of his initiatives was development of MBA's CREAM (Commercial Real Estate Asset Management) Database. The Database is a comprehensive list of data elements for use in developing loan administration information systems. First released in 1993, it is currently in use in the loan servicing systems of approximately 300 firms. The group that created the Database was recently re-assembled to revise it. In addition to loan servicing professionals, the group includes four major commercial software vendors and a rating agency representative. During the revision, a totally new securitization section will be added.

Another long-time MBA member, Donald R. Ennis, will lead development of the new securitization section. Don is first vice president/director of Loan Administration at St. Paul Federal Bank. He is responsible for all loan administration for the nationwide lending division (as well as residential administration). Before joining St. Paul, Don managed a $6 billion portfolio for Metmor Inc. It was while at Metmor that Don began his involvement with commercial loan administration activities, although he had been involved in other MBA activities since 1977.

When Don assumed leadership of CMAAC a year ago, it was his goal to promote "proactive" loan administration and to develop programs that would increase the skills and the professionalism of commercial loan servicing staff. Under Don's committee leadership, three new programs were created to help accomplish these goals.

To provide an opportunity for mortgage bankers to evaluate the merits of lending their expertise to the burgeoning CMBS market, Don and his committee vice chairs developed a seminar entitled Rated Servicing: Is It Worth It? The seminar brought together 94 professionals from Wall Street, rating agencies and mortgage banking organizations. Another innovative program brought to fruition under Don's guidance was The NOT For Managers Only Workshop. Developed as a one-day, classroom-style clinic to sharpen the skills of mid-level commercial mortgage administration professionals, the seminar attracted more than 80 participants. The third new program created under Don's leadership will take place on November 20, 1995, in New York City. Entitled A Day In The Life: Mechanics of Servicing for CMBS, the program will explore the day-to-day issues faced by CMBS servicers. It will include experienced servicers, trustees, Wall Street attorneys and investors who will review documents, highlight pitfalls and clarify responsibilities of the various parties to a CMBS transaction.

Members like Don, Wayne and Bonnie each began by volunteering to help organize a panel or to review the draft chapter of a new book. Yet, they have each found themselves completely engaged in the heart of MBA's activities. By collaborating with industry colleagues to devise tools like the Policies and Procedures Guide, and the CREAM Database, their innovations have had far-reaching effects on the commercial loan administration industry. Their collective vision continually recognizes new challenges that await the industry just over the horizon. The result has been development of new programs like The NOT For Managers Only Workshop and A Day In the Life: Mechanics of Servicing for CMBS.

Their single efforts and combined leadership have helped many loan administration operations to increase their efficiency, enabled their professionals to sharpen their skills and to become pro-active in their management of commercial mortgage portfolios. Loan administration professionals have been recognized for their role as preservers of commercial mortgage portfolio value. Volunteering their energies and experiences, MBA members have brought commercial loan administration from the back room to the boardroom. Future volunteers will continue to chart the course of commercial loan administration.

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