Reporting on Agency assets can be a challenge.
CWCapital utilizes RealINSIGHT Technology, built by a cross-functional team of CRE, finance, and software experts to manage the entire life cycle of the Freddie K Deal. Our technology allows us to track the details of bond, loan, and collateral activity, and roll up the results into top-level analysis and reports, allowing our team and clients to stay up-to-date on asset-critical performance indicators, cash flow projections, and investor returns.
With standardized ASR and Portfolio Reporting across your entire Freddie Exposure and dashboards and data analytics, this webinar will demonstrate the value that RealINSIGHT technology will bring to your team.
How to report on Agency Assets Transcript
Welcome to our webinar on “How to Report on your Agency Assets”. I’m Andy Sterling, I run new business development for CWCapital. We were last together back in April, and a lot has happened between that. In April, we discussed issues around the forbearance as well as improvements to the RealINSIGHT platform. Today we’ll focus on how RealINSIGHT can help you report on your agency assets, and we’ll talk about some new additions to the platform as well.
Overview of Agency Lending Market
For those of you participate in the Freddie Mac optical stream recently, technology and innovation is always key theme for Freddie Mac, but it is key to CWCapital as well. Our entire platform is supported by RealINSIGHT technology. That is just one important way we differentiate ourselves from the competition. This year, we’re proud to be part of a few Freddie Mac firsts. We were part of the CMBS deal of the year, KF73, which had the SOFR component, and their first green sustainable deal KSG1, to mention just a few. Also, on December 9, we’ll be auctioning off our first Freddie Mac asset on our sales platform Marketplace. The assets called Creekside Court Apartments, it’s located in Shippensburg, PA. I invite anyone who might have interest in the asset or just like to know more about Marketplace and reach out to us. We’ll make sure you get that information. We’re always happy to provide a demo on Marketplace and put you on our email distribution lists for list of upcoming auctions. I know, we’ll all be watching very closely.
At this point, you know, we virtually have every Freddie Mac product in our portfolio. And we recently added a rare Q deal, thanks to our friends over at California Community Reinvestment Corp.
I don’t need to really remind everyone, what a challenge the first quarter was, I think we spent a lot of time with Freddie Mac and our clients figuring out how we can reopen the market after the shutdown. We really didn’t know at that time, how long was going to last. But we got down to business and CWCapital is the first diligence provider to implement offer solution to our clients and Freddie Mac, to the pandemic dilemma, which was surrounding the underwriting protocol. We want to thank everyone who worked with us on that. We really weren’t down that long, under the circumstance that just points to the strength of Freddie Mac and the investor base in this market and how it performed this year. This year, we are ending the year strong, we’ve got $122 plus billion of AUM named special servicer, and that’s just in Freddie. Our next named deal is going to be our 150th!
Using RealINSIGHT as a reporting tool
For those who have seen RealINSIGHT before, this will be a good refresher on how CWCapital and clients use RealINSIGHT to surveil and monitor their Freddie Mac investments. In addition, what we’ll do is we’ll go over some of the new reports and reporting functionality that we added over this last year as we continue to take feedback from clients and keep on staying ahead, being innovative and providing our clients the best possible service and the best possible technology.
What is RealINSIGHT Asset Management, Surveillance and Servicing Software?
For those of you who are seeing the technology for the first time, RealINSIGHT is a web-based, cloud-based technology used across all CWCapital for their entire third party, Freddie Mac book across surveillance, asset management, and special servicing.
RealINSIGHT serves as both a complementary and subscription-based service. When we work with Freddie investors through RealINSIGHT, we provide the most accurate, most up-to-date information by pulling monthly remit data and updates on the Freddie investments from an API coming directly from Intex into RealINSIGHT. We also pull information from Freddie’s CRT system. If there are updates on forbearance or any type of COVID-related criteria, we’re able to pull that information and supplement what also comes from that CREFC IRP from Intex.
Finally, another way that information gets into RealINSIGHT is through our surveillance team, the asset management team, and through the special servicing team where we are monitoring and surveilling your portfolio. We also provide you clients access to RealINSIGHT so that you can see that commentary, those comments that update in real time on the very important investments that you guys have. If there’s important information, you’re seeing it from all of all of the sources.
How can I make reporting easier?
This data, centralization, and communication allows you, the investor, to report as quickly and as efficiently as possible to your investors, and internally to your team. Taking a closer look at RealINSIGHT and the Freddie demo environment you can see that there are a number of dashboards, which are updating in real time. For example, you could see this COVID-19, forbearance by loan and by bonds. If you wanted to understand the number of loans that are on the forbearance list, you have that ability to see it broken out by loan and obviously jump in to see the underlying loan information to get much more granular data. You also have the ability, to roll it up, for example, these are my Freddie investments, and these are the 20 loans/deals that I’m involved in.
One useful note is that these dashboards give you the ability to use specific criteria, specific stratification, and specific points of interest. For example, if you wanted to understand your stratification, based on MSA, based on property type, based on sub-property type, you would have the ability to view and then drill in further and look at that information. If you had 200 deals that are on the watch list, you can click through to get to that underlying information and drill in further to look or you could just output all of this into Excel or a custom report.
Can I do custom reporting in RealINSIGHT?
If you have specific types of templates, or if you have templates that you want to take from us and update or if you internally you know, want to give us a template and have it be part of real insight, you have the ability to do that.
These custom reports allow you to just click on this asset review form and the system generates the report. Here is the asset review form, branded for your company. You can output all your loan data, all your property data, all your information in one place. On top of that, in RealINSIGHT, you can focus on what is important to you, the investor. You can set various alerts, prompts, messages, calendar prompts, or whatever it is that you care about when you log in. What you’re doing here is you are managing by exception. If you wanted a notification to go both in RealINSIGHT into your email, telling you, something in debt service dropped, or a major lease is expiring, you can set that up, so you do not miss anything.
From this standpoint, you can see that there are several prompts that are notifying you that a loan/deal is in forbearance, and you can just click on that and drill in further and look at that information. This workflow makes your data actionable as information comes in from all these different sources. In order to give our clients the best service possible, we allow RealINSIGHT to be customizable so that you get what you want.
We understand that there are various fund structures that several nvestors have, and we want to be able to report in that way. For example, if I were to jump into portfolio reporting, I can open up and run this portfolio report.
How to automate portfolio reporting in RealINSIGHT
What I’m showing here is what we call our portfolio, bond stratification analysis. This is taking all of the loan data, property data, and bond data that is flowing into RealINSIGHT on a regular basis, and extracting it with all of the very specific structure, logic, and any type of important stratification that you need. For example, what you can see here is your entire portfolio. If you wanted to be more specific and choose specific portfolios or funds you can drill down and the report knows to pull the information that is related to the funds you selected. As the system pulls the information for all the loans, and properties, and then it populates it on the summary page. From there you can export and drill down on any specific criteria that you want to see. RealINSIGHT will pull all the information into the criteria that you have preset. As the information is being centralized into RealINSIGHT, it will be automatically updated, and you have the ability to report and see that information in the exact way that you want to see it.
The head of our surveillance group at CWCapital uses RealINSIGHT and is going to talk about how this is very helpful for Freddie investors.
How to use RealINSIGHT for surveillance with Freddie Mac
The real problem with most systems is the lack of ability to aggregate portfolio-level data easily. We built this specific report as no one really does fund-level reporting. We know that various structures exist within the Freddie universe, we know certain funds own certain portions of their funds/bond collateral, and they can kind of sprinkled through the fund structure. We thought it was important to develop a tool to be able to dissect those various fund structures at our DCH level. The most important part of this report is the engine in the back. Typically, we would hide it and, you would just pull the model. But the loans property and bond data in the back of this is 100% pulled from RealINSIGHT. This is all the data that’s in the system, coming from automated IRP feeds coming from special servicing, coming from CRT, all that information that we’re aggregating from various sources is coming and dumping into the back end of this model. So, while the front end, and the fund reporting, which is hugely beneficial, and has been well received by our client base, it’s very important to note that all of your loan information is on in the back end. This makes it easy to drill down to asset specific data as demonstrated earlier. This report is kind of the first step toward total automation in our reporting. A lot of these reports are customizable. If your investors want something specific, we will work with you, we will support you, and we’re listening to our clients. If you want to use what we have, we also have the flexibility to make these updates and work with you on that.
What is going on at CWCapital?
So, transitioning a little bit over to what we’re seeing in the market on the CWCapital side. Our agency book has grown to over $120 billion, and we are at 6,100 loans. What is really telling about the state of the Freddie market and the agency market right now is of those 6,100 loans we only have 11 total deals in special servicing. Two of those are on their way back to the master. On the forbearance side, we’ve granted 139, 1.0 forbearances. 81 of those are paying as agreed, 21 are either delinquent or in the process of getting some form of additional relief, 20 of those 1.0 loans have been paid off, and of the 139, 17 have requested some form of 2.0 forbearance. It will come as no surprise to anybody here but of those 17, five are student housing and nine are senior living. The bulk of our 2.0 forbearance deals is in those kind of at-risk sectors that everybody’s been talking about for the past 18 months or so. We have only rejected one 2.0 forbearance request.
All but two of the seventeen, 2.0 requests have DSC that is above 1.0. Unsurprisingly, there has been a material decline in the performance of those assets. On the delinquency side, and all of this is powered by RealINSIGHT, we monitor delinquency, our 30-day DQ has been creeping up. For a frame of reference in March, the percent of non- special service delinquent loans was 0.2%. Fast forward to October, we’re looking at a rate that has increased to 1.63%. The bulk of that movement has occurred between August and October, when our DQ rates kind of went from 0.5% level to the current 1.63%. Breaking that down a little bit further evidence would support again, that student, independent, and senior multifamily are having the toughest time. We’re about 3.5%, delinquent on student 5.37% delinquent on independent living, and about 3% on IOAL deals. Another particularly hard-hit segment, the walk-up product is also showing signs of a little bit of slippage at 9%. But from a comparatively smaller sample size. All things that we’re monitoring at CWCapital are all powered by RealINSIGHT. To monitor 6,100 loans and report on them and provide timely information would not be possible without an asset management system.
It goes without saying it’s an important business for us. We continue to upgrade not only our technology, but our staffing, and we’ve added some great people to both on the technology and on the credit side.