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INCANS Risk Insight Publication: The Power of Data

"In simple terms, the real estate industry needed to recognise the power of data in driving accurate and transparent decision making. The Credit Crunch of 2008 was initially driven by a sharp rise in defaults on subprime mortgages in the US. Here the fundamental problem arose because interest rates were too low, lenders didn’t have a robust underwriting process in place, the quality of the borrowers was far lower than declared, and the underlying assets held as collateral were far less valuable than predicted. This perfect storm of factors emerged because there was very little data available to quantify these risks, and it was labour-intensive and cumbersome to estimate the overall risk of rental default within a portfolio. More alarmingly, nobody could be bothered to look in the box and see what was in there. Nobody checked the quality of the underlying cashflows that ultimately supported asset values and serviced the debt."

Read the full article HERE.

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