Stacey Berger of Midland Loan Services on Servicing Technology
MBA NewsLink recently interviewed Stacey M. Berger, Executive Vice President of Midland Loan Services, Overland Park, Kan., a PNC Real Estate business. He co-heads the Midland Loan Services business and is responsible for business development, corporate development and strategy activities and is a member of the PNC Real Estate senior leadership team. Midland is a provider of loan servicing, asset management and technology services for the commercial mortgage finance industry and one of the largest commercial mortgage-backed securities master and special servicers.
Berger served as Vice Chairman of the Mortgage Bankers Association’s Commercial/Multifamily Board of Governors and received the association’s Distinguished Service Award. He has written numerous articles on commercial real estate finance, servicing and asset management.
MBA NEWSLINK: 2020 was an unusual year and particularly hard for several sectors in commercial real estate. Do you see that continuing into 2021?
STACEY BERGER: 2020 was an extraordinary year for the commercial real estate finance industry as a result of the economic impact of the COVID-19 pandemic. The hospitality and retail sectors were significantly impacted by COVID-19-related reductions in travel and in-store shopping. These challenges resulted in declines in rental income and the ability to service existing debt or refinance maturing loans. Government financial and monetary relief efforts and strong market liquidity have provided better than expected commercial and multifamily loan performance. The anticipated availability of widespread vaccinations and further economic interventions are expected to positively impact the commercial real estate recovery.
Midland, as one of the leading commercial mortgage servicers and special servicers was faced with an unprecedented volume of CMBS borrower relief requests and a ten-fold increase in special servicing volume concurrent with a rapid transition to a work-from-home environment. Midland was successful in addressing these challenges, adding special servicing staff, implementing significant technology advances and adding new servicing and technology clients in this challenging environment.
NEWSLINK: At a macro level, what do you expect to see across the servicing industry in 2021?
BERGER: The commercial loan servicing industry has been challenged by the unprecedented volume of borrower-related activities as a result of current economic conditions. Commercial loans have gotten significantly more complex and difficult to service. Many servicers have multiple product types including life company, multifamily agency, CMBS, CRE CLO bridge and mezzanine loans. Low interest rates have reduced interest income on escrow and reserve deposits, which are a significant source of servicing revenues. These factors have put tremendous demands on existing staff and servicing economics.
NEWSLINK: Are there any emerging trends that are having an impact on the industry?
BERGER: The current economic challenges, responses to borrower requests and increased delinquencies and defaults are impacting servicers’ resources and economics. Improved information is critical to support asset and portfolio risk management. Commercial and multifamily servicers are implementing technology innovations, which provide opportunities to automate manual processes and improve operating efficiencies. Commercial loan servicing is a scale business. The industry has consolidated over the last decade. The need for technology investment to improve operating efficiency and servicing economics may drive further consolidation.
NEWSLINK: We’ve seen technology impact nearly every company over the last year, whether it be Zoom calls or new systems. Can you tell us about how technology is impacting the servicing industry?
BERGER: Servicing is fundamentally a processing business, which is highly dependent on technology, and servicers are investing in technology innovations to position themselves for future growth and profitability. Commercial and multifamily mortgage bankers, portfolio lenders and servicers are focused on fully integrating their technology platforms from origination, underwriting, servicing, asset management and default management or special servicing. Cyber security and business continuity are critical concerns and require continuous investment in infrastructure and monitoring, which are supported by PNC Bank for Midland.
NEWSLINK: How about Midland specifically? Are there any special initiatives or plans for Midland on the horizon for 2021 that you can share?
BERGER: Midland is a commercial servicing technology vendor, providing the Enterprise! loan management system to a variety of servicers, mortgage bankers and portfolio lenders. With the support of PNC, we have made a significant multi-year investment in modernizing the platform, adding automation features, workflow and functionality. We are investing in robotics, API’s and enhanced user interfaces. In response to client interest, we are also transforming our hosting alternatives to offer a public cloud option. We have added a number of new servicing technology clients and expect to see continued growth in our servicing and technology businesses.
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