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Why You Need Centralization — A Case Study

case study

Why do you need centralization?

Centralization grants you instant access to all of your critical data and allows you to easily manage it. This can be especially useful while working from home - it's easier to make a mistake when you don't have the exact loan doc in front of you. 

Here's a real example of the consequences this could have. 

Once upon a time, not long ago, there was a firm seeking to run a defeasance penalty. The firm asked one of their analysts to run the number using an online calculator so they could assess a sale opportunity for one of their properties. The online calculator did exactly what it was programmed to but the output was wrong — the analyst had made a mistake

 

Because the analyst was remote, he didn't have access to the loan docs and was unable to verify the notes he had on his computer; the analyst made assumptions about the defeasance provisions based on the information he had at hand. 

And you know what happens when you assume...

 

By his calculations, the prepayment penalty was $100k.

The team ran with it; everyone got ready for the sale and just as they were about to sell and pay off the loan, the bank came up with a different prepay number... 

According to the bank, the prepay number was actually $1.4mm! 

 

Needless to say, when a payoff was requested from the lender, the sale fell through; the sales agreement had an underestimated defeasance of $1.3mm. 

In the end, the analyst was laid off, the deal went into litigation, and everyone else at the firm learned a valuable lesson. 

 

Don’t be the company that loses millions because of decentralization and disorganization. Centralizing your data gives you instant access to all information so you never make mistakes like this. You can easily verify your numbers even if you're out of office.

 

 

Stay organized! Email us to talk about how we can help you centralize your data at

theboss@loanboss.com

 

Interested? Talk to the Boss