If you get a bunch of CRE lenders together it won’t take long for the conversation to turn to loan loss severity risk and the CRE non-performing loan problems they have to face. Living in fear that today is the THAT day the regulators will call and tell you that more loans have to be re-classified and your lending capacity and earnings are going to take a hit must be the CRE lender’s worst nightmare to be sure. I remember back in the day when FICO credit scoring was going to be the be-all and end-all for this problem. The reality is that FICO scoring only leads to subjective decision-making and even though “good old Bob would never default on our loan”, the reality is that good old Bob will act in good old Bob’s self-interest because that is the way the world works. In fact, if we had FICO scoring one hundred years ago the most successful banker in history and the world’s largest bank wouldn’t exist today because the FICO score would have made it impossible for J.P. Morgan to borrow money.
It’s time to put an end to this charade of pretending we can manage non-performing loan loss severity risk by having better decision-makers making better decisions based upon better subjective decision-making data. The INVIZEN RTS Asset Care Protection Program is the only end-to-end solution available today that is designed to help end non-performing CRE loans by addressing the root causes of CRE property business failures.