“Mortgage Servicing” does not quite top the litany of reasons one engages Clifton Blake. Mortgage servicing, like mowing the lawn, bathing the dog or changing the diaper, inspires the sense of an unwelcome task that needs to be done and done well! A poorly changed babe does not sit on anyone’s lap well!
Mortgage servicing, though admittedly not glamorous, is one the key tools employed by secured lenders and asset managers of real estate assets to keep apprised of what is happening with its borrowers. A mortgage administrator does more than collect payments when due and distribute them back to the manager. The mortgage administrator is the asset manager’s “boots on the ground” - it is the mortgage administrator who interacts directly, day to day, with the borrower.
When a mortgage is created there is often a lengthy covenant pattern within the document. A “covenant pattern” is the list of undertakings, or promises, the borrower makes to the lender in addition to paying back the mortgage. For example, the borrower makes commitments to pay its taxes and have appropriate insurance for the asset. The mortgage administrator will confirm taxes are paid on time and that the borrower has not just any insurance in place but the appropriate insurance for the relevant real estate property in question and its use.
It is the responsibility of the mortgage administrator to oversee the borrower’s compliance with the terms of the mortgage. Asset managers want more than just the promise to repay. Lenders and asset managers need to know that the borrower remains able to repay the debt owed through the course of the loan commitment. Therefore lenders and asset managers will insert into the covenant pattern various reporting obligations the borrower must satisfy regularly.
They will as well require a borrower to pass various financial tests from time to time to confirm to the lender or asset manager its ability to repay. Mortgage administration is about assessing the information received and the results of the financial tests applied.
The art of mortgage administration is discovering a problem long before there is ever a payment default! Between our Advisory Board and Management there is over 100 years of cumulative mortgage underwriting and administration experience. We see the clouds ahead of any storm. Because we only lend in our industry (and we know our industry very well), we hope to act quickly long before there’s ever a payment default.
At Clifton Blake we are both the lender and an administrator. We are pleased to extend our institutional grade administration platform to other private funds and non-bank lenders. Mortgage administration is all about keeping your finger on the pulse of your borrower and responding quickly if the touch tells you the borrower is about to skip a beat!