Beyond Excel: Richard Trepp on Smarter Tools for CRE Underwriting

Good news is in Excel, you can do absolutely anything. The bad news in Excel is you can absolutely do anything. Excel is probably one of our bigger competitors. From a bank point of view, if you don't mind having people build individual models, which can't really be verified and therefore, you don't really know what you're necessarily approving, you have an exposure there. The second problem with Excel is that it tends to sit in people's C drives on their computers. And if you don't mind losing your data over time with old computers and lost C drives and an inability to aggregate, then Excel works for you.

Most institutions have underwriters and have analysts, and the banks have developed the best underwriting system. So, if you go to five banks, you will find five best underwriting systems. That's something that in the underwriting of commercial properties, that's something historically that, as I said, that each has had their own. So, what we did within Rockport and our strategy within Rockport was we built a very flexible, configurable underwriting model that could handle any property type and could handle all the various aspects and variables that you wanted to worry about.

However, realizing that each of our potential institutions may have a better underwriting model. We created a direct link between their underwriting model and the Rockport platform. So that someone, if they want to, can work in those Excel models, save the data back to the platform, back to the Rockport. We update thousands, tens of thousands of pieces of information every night from servicing systems. When those things are updated, next time you go into the underwriting model, it is has refreshed their underwriting model, and they can continue to work in their underwriting model.

Rockport has spent a lot of years and, made major investment in being able to handle as I say, all property types, to be able to handle each of the different levels, whether you're buying bonds or whether you're buying loans or you've got property exposure. The smaller systems tend to do a part of that. And then if you look at it, there's really two major components, which is the origination of loans or acquisition of properties, and then there is the asset management of them.

The smaller systems tend to do parts of it, but not all of it. Rockport has been designed to go across the entire coverage, and most of the larger institutions have portfolios of bonds, portfolios of loans. They may have equity positions or equity related positions. The smaller systems do not cover that.