API Integrations: How The Perfect Tech Stack Can Accelerate Your CRE Underwriting Process

If you’re in the commercial real estate (CRE) industry, adopting technology can help augment and automate your process – outfitting your tech stack with the right API integrations may be the answer for you.

This article will explore how API integrations can create a tech stack that accelerates the CRE underwriting process, enabling faster, more efficient decision-making. We’ll explain each stage of the loan process—its challenges and the various technologies you can use to simplify your CRE workflow.

The traditional loan process entails numerous manual steps, making it long-winded and prone to errors.

API integrations with existing workflows and business processes eliminate this problem by automating data transfer between systems while allowing lenders to take advantage of specialized features offered by third-party providers. 

It also helps improve regulatory compliance standards by providing better visibility into who has access to data stored on different applications within the system.

But first…

What is an API?

An Application Programming Interface, or API, works like a connector between two application systems, enabling them to communicate with each other effectively.

REST API is the most popular type of API used for web services, such as in commercial lending and marketing technology. 70% of public APIs are REST as they are flexible and easier to use.

API integration means connecting two or more applications, allowing them to interact and exchange data with each data. The integration process can benefit businesses that rely on multiple software components—or a full tech stack—in their loan origination process.

A CRE tech stack includes software applications that support the entire commercial real estate loan process. This typically includes (but is not limited to) the following:

• Customer Relationship Management or CRM (Salesforce)
• Collaboration (Slack)
• Banking software (nCino)
• Financial modeling platforms (Cube Software)
• Document management systems (Sharepoint)
• eSignature tools (Docusign)

All these SaaS and software tools can be integrated through APIs to streamline data sharing and reduce manual effort throughout the entire CRE ecosystem.

Proper integration with different types of APIs empowers a lender to cut down the time spent in loan processing from weeks to days—even hours!

What Tools Are Commonly Used in the Underwriting Process? 

A full tech stack can simplify the loan process by streamlining communication between lenders and borrowers, automating necessary paperwork, and reducing paperwork-related errors. By leveraging a comprehensive CRE tech stack and different API connectivity, lenders can access full features and functionalities to expedite loan origination activities. 

CRE lenders can take advantage of API integration tools throughout the entire lifecycle of the commercial lending process, which involves (but is not limited to) the following stages:

• Origination
• Analysis (Pre-Flight)
• Underwriting
• Closing
• Portfolio Managing/Monitoring 

Let’s dive deep into each and see how we use software and tools to simplify them.

Origination

Origination is the first stage of the CRE loan process. The lender seeks and receives loan applications from borrowers, which include: 

• Their financial information
• Requested loan amount
• Purpose of the loan
• Details of the property

The CRE lender reviews the application to ensure it meets its lending criteria and underwriting standards. If so, they will issue a letter of intent (LOI) or term sheet outlining the key terms and conditions of the loan.

This stage provides detailed documentation, such as appraisal reports, to help borrowers understand all risks in commercial real estate loans.

Challenges:

Origination in the CRE loan process presents some challenges due to the complexity of the industry.

Collecting data from various sources can be daunting and time-consuming. Lenders must gather information on property appraisals, borrower creditworthiness, and other important criteria from different sources, after which they must evaluate them. 

This process usually takes weeks, sometimes months.

Technology that can help streamline this stage:

Certain technologies can make the origination process simpler and faster. Blooma provides customized deal-scoring profiles to assess borrowers’ creditworthiness. 

Blooma’s platform can also extract relevant data from financial documents and other sources. With data parsing, lenders can understand borrowers’ financial health quickly and more efficiently.

Blooma’s loan origination systems track deals and clients while providing cloud-based document and data storage—ensuring that lenders have quick access to relevant information without needing physical access or manual search.

Analysis (Pre-Flight)

The Pre-Flight or Analysis stage helps lenders decide whether or not a CRE loan should be approved.

Pre-flight involves gathering and analyzing information to determine if the loan is viable. This step begins with an in-depth review of the property’s location, size, condition, current and potential cash flow, and other property details.

During this analysis, lenders will consider the borrower’s financial situation and the purpose of the loan. They will look into key financial metrics such as loan-to-value (LTV) ratio and debt service coverage ratio (DSCR) to determine whether they meet underwriting requirements.

Challenges:

The sheer amount of data that needs to be collected and evaluated can be incredibly time-consuming. Lenders need tools to aggregate data from multiple sources and generate valuations.

This stage can add another layer of stress to lenders considering the quick-moving nature of the competitive mortgage industry. 

In a tight timeframe, how can lenders make a sound decision on whether or not to provide financing? How can they ensure accuracy and completeness when dealing with large volumes of data?

Lenders need efficient systems to collect, analyze, and evaluate all relevant data accurately.

Technology that can help streamline this stage:

Blooma’s platform provides customized deal-scoring profiles and data parsing capabilities that use artificial intelligence and machine learning.

Blooma also offers borrower financial analysis, which scans the available documents and produces detailed reports with insights on potential investment opportunities.

By leveraging cloud-based storage solutions, market and property data can be securely stored in one place—allowing lenders easy access to reliable comparative information when considering a loan request. 

Blooma’s proprietary technology equips lenders to generate valuations and comp more accurately and quickly.

Underwriting

The Underwriting stage of the CRE loan process involves an in-depth analysis of the borrower’s creditworthiness, financial capacity, loan repayment ability, and overall risk profile.

Underwriters evaluate the borrower’s credit history, income, assets, and liabilities while looking into market and property conditions.

Sometimes, underwriters may require additional due diligence through appraisals, environmental assessments, engineering reports, zoning analyses, and property inspections to reduce potential risks further.

Once the lender has gathered and evaluated these data, they decide whether to approve or deny a CRE loan application.

Challenges:

Performing accurate risk assessments based on the information provided by borrowers is one of the major challenges of underwriting.

It can send lenders going down the rabbit hole of large amounts of financial documents, background checks, credit reports, and other documents needed to make an informed decision.

Time constraints often complicate the underwriting process as lenders must quickly assess all the documents within a specific time frame.

Lenders and underwriters must also present their findings clearly and concisely— aggregating data from multiple sources into one succinct report showing the borrower’s creditworthiness assessment.

Technology that can help streamline this stage:

Blooma’s technology provides a better improves the underwriting process by providing customized deal-scoring profiles that can accurately assess the borrower’s financial position.

It also offers data parsing capabilities using AI and machine learning to quickly analyze large amounts of data.

Blooma’s cloud-based document and data storage also streamline the process by allowing all related documents and data to be securely stored in one place.

The platform’s valuations and comp-generating technology are used to assess the property’s market value, while borrower financial analysis using AI and machine learning helps lenders understand a borrower’s creditworthiness.

Other technologies used during this stage include underwriting platforms, credit data providers, appraisal and other third-party reports, site inspection apps (such as HappyCo), narrative-building capabilities (like Closer), and underwriting templates in Microsoft Excel.

Closing

The Closing stage of the CRE loan process is the final step before the funds are disbursed to the borrower.

The lending institution will prepare all necessary legal documents such as a note, mortgage, deed of trust, etc. The borrower must then sign these documents to verify that they agree to the terms and conditions.

The lender will then disburse the loan proceeds to the borrower.

In addition, a recording of said mortgage or deed of trust must be made with the appropriate government entity.

Once all paperwork and requirements are executed, both parties can confidently move forward that the loan has been successfully closed.

Challenges:

The main challenge of this stage is ensuring that all necessary documents are obtained and properly executed.

Additionally, the borrower must understand the terms and conditions. That there’s clear communication between all parties, including but not limited to: the borrower, origination, underwriters, credit committee, legal counsel or team, the title company, and the closing agent. 

Another challenge lies in correctly submitting all necessary paperwork. Any incomplete or inaccurate documents can cause significant delays or even prevent a loan from closing. 

To avoid delays, all parties must ensure sufficient time for an accurate documentation review and meet all deadlines.

Technology that can help streamline this stage:

Electronic signature software creates secure, legally binding contracts electronically.

Document management platforms store and track documents throughout the loan process securely. These platforms can also be used for e-signatures and automated workflow processes.

Interactive forms can quickly complete documents from borrowers or other stakeholders during the closing stage of the loan.

Portfolio Management/Monitoring:

This stage involves assessing and tracking portfolio performance to ensure it meets the agreement’s terms. The lender will closely monitor payments, escrow accounts, insurance coverage, and market conditions.

Lenders will also pay close attention to the property values and assess potential risks associated with holding the loan in their portfolio. This may involve investing in additional or different types of insurance coverage to protect against a possible default or collateral loss.

In this stage, lenders must keep detailed records of all loan activity to ensure accurate reporting and regulation compliance.

Technology that can help streamline this stage:

Blooma’s software provides comprehensive portfolio monitoring and loan servicing capabilities, enabling lenders to manage their portfolios optimally. 

Blooma can also pull data from other sources, such as third-party vendors, allowing for deeper analysis of loan performance metrics. It offers automated reporting tools so lenders can quickly generate concise reports on their portfolios’ performance across multiple metrics.

Benefits of incorporating API integrations

Here are some of the benefits of API integration:

Automation: APIs can automate specific processes and operations, allowing businesses to free up resources and time for other tasks.

Scalability: APIs allow for efficient scalability with little effort. Businesses can quickly adapt their operations as needs change without investing in additional staff or IT personnel.

Visibility: API integrations give businesses an improved view of the activities taking place within their organization. Organizations can identify issues before they become real problems and take corrective actions accordingly.

Communication: APIs make communication between teams and departments easier, allowing better collaboration and information sharing.

Reporting: API integrations help generate reports showing detailed information about any activity in the organization in real time. With this data integration, businesses have greater insight into their operations and how they’re performing, which can benefit decision-making.

Reduced Errors: Using APIs reduces errors associated with manual processes by automating tasks such as data entry and verification of results. This helps improve accuracy, minimize risk, and prevent costly human error or oversight mistakes.

How Blooma’s API integrations can simplify your CRE workflow

Blooma’s cloud-based and flexible architecture is specifically designed to connect and plug into your existing tech stack and incorporate desired APIs. API integrations are designed to make the commercial real estate workflow simpler and more efficient for lenders.

By integrating with other software, Blooma allows lenders to monitor their portfolios and quickly access customer data and pre-flight information without manually inputting it into their software. This saves time and money since lenders can focus on more important tasks instead of having to spend time manually entering data.

Blooma integrates with various software, such as Salesforce and Ncino, to provide lenders with a complete picture of their lead generation process. These integrations allow users to directly access customer information such as contact info, credit scores, and loan details through the platform. 

By leveraging Blooma’s end-to-end integrations, lenders can automate parts of the CRE workflow that would otherwise take hours or days. 

Sign up for a demo to discover how to make your current CRE tech stack even more powerful.