an improved model for risk management ncsha conference 2015 september 28, 2015 leslie mcknight,...
TRANSCRIPT
An Improved Model for Risk Management
NCSHA Conference 2015September 28, 2015
Leslie McKnight, Director of Loan Servicing & Asset Management
Overview
• Recognized need for position to monitor multifamily performance portfolio
• Risk Rating Model created in 2012 to make system more proactive, as well as:– Promote efficiencies in data collection/storage
– Provide comprehensive evaluation of property performance, condition and owner/management capacity
– Provide ability to share most current site operating data between divisions to facilitate data-backed decisions
September 28, 2015
Overview (cont.)
September 28, 2015
• Multifamily Risk Rating Model utilizes existing staffing, software, infrastructure & reporting systems, but integrates them to maintain robust “point in time” repository of data
• Reports extracted from database have expanded proactive portfolio management in many areas:– Workout Committee analysis: problem loans, site issues,
decision-making reviews for potential loan workouts & reserve withdrawals
– Portfolio monitoring purposes
Overview (cont.)
September 28, 2015
– Identification of trends in operating performance– Determine compliance inspections to be waived in
following year, or which ones may require increase in visits
– Comparison tool in review of proposed pro forma data on contemplated financial transactions
A Better Model for Assigning Risk
• Risk-rating system based on specific point system• Grades each multifamily property in 4
performance categories & assigns points (max of 25 points in each category) according to:– Current and historic operating– Projected financial health– Physical condition of property– Strength of management
September 28, 2015
New Features
• 2014-2015: Added fields to further enhance ability to assess & compare developments:
- Development Type (Family vs. Elderly)- Sponsor Type (For-Profit vs. Nonprofit)- Location (City or Town)- # of buildings
September 28, 2015
New Uses for Risk Rating Model in 2015
• Review most recent operating performance data of real estate owned by developers being considered for new tax credit allocations
• Integrated data into application review process:– Historical performance of developer’s portfolio – Allows those allocating credits to have most
comprehensive data available for financial decisions
September 28, 2015
Data Collection
• Data comes from variety of sources within agency: Loan Servicing/Asset Management, Development, Finance, & Resident Services divisions
• Utilizing existing software (ACCESS) & Loan Servicing/Asset Management staff, initiative does not require additional infrastructure and remains cost-effective
• Bonus: Undertaking analysis using own employees results in deeper level of understanding of unique conditions at each development
September 28, 2015
2014 Highest 25 Overall Risk Rating Scores
September 28, 2015
For Profit Sponsors vs. Nonprofit Sponsors(with highest 25 overall scores)
September 28, 2015
Score Change Percentages from 2013-2014
September 28, 2015
-54
Management Companies overseeing sites with 25 lowest & highest scores
September 28, 2015
Outcomes
• Turning point for our Loan Servicing/Asset Management division– Easy to pinpoint sites struggling financially or suffering
from physical deficiencies
• New fields allow us to watch for trends in various geographic areas & compare developments
September 28, 2015
Outcomes (cont.)
• Collaborative interdivisional effort, which improved communication & established more evidence-based feedback
• System has streamlined processes within division and increased overall reliability of documentation & analysis
• Produces more robust reporting & executive dashboards
September 28, 2015
Thank you!Contact Information:Leslie McKnight, Director of Loan Servicing & Asset ManagementPhone: 401-457-1184Email: [email protected]
September 28, 2015