Prior to 2000, the absence of historical transaction data impeded the ability to quickly and accurately price assets, making a 3rd party valuation of a loan or loan portfolio an expensive and time consuming prospect. In 2000, DebtX launched the first Internet marketplace for loans, and in 2005 we opened the marketplace to direct loan sellers and loan syndicators.

Since launching the platform more than 15 years ago, DebtX has captured precise trade data on whole loan and participation sales executed via the DebtX marketplace. DebtX leverages this data to provide an independent, reliable and defendable estimated market price for our clients’ loans and loan portfolios. DebtX is the only company with such market insight and industry experience.

DebtX’s loan valuation products, DXMark® and DXValue®, offer the industry’s most accurate, objective, and defensible mark-to-market valuations of commercial & industrial (C&I), commercial real estate (CRE), and single family residential (SFR) loan portfolios. Our unique pricing models incorporate over 15 years of transaction data collected from hundreds of thousands of loans sold through the DebtX marketplace.

DebtX leverages valuation and analytics and its extensive market data to provide clients with realistic scenario analysis and credit default modeling. Financial institutions use these tools to aid in risk assessment and measurement of future credit risk for individual loans and loan portfolios.

DebtX also offers a variety of innovative information services, including Market Data, historical statistics, and analytical research. DXScore® is our credit rating system for commercial real estate loans.

Typical Client Engagements

  • CRE, Residential and C&I Loan Portfolio Valuations
  • Fair Value Accounting/FASB-157 Compliance Footnoting
  • Stress Testing & Scenario Analysis; DFAST or CCAR “Challenger” Model
  • CMBS Collateral Pricing
  • Loan Loss Reserve Adequacy
  • Merger & Acquisition Portfolio Valuations
  • Transfer Pricing 

Product Highlights

  • Managed Service Offering
  • Performing & Non-performing Portfolios
  • Stress Testing & Scenario Analysis
  • Consistent, Repeatable Methodology
  • Standardized Output & Customized Reporting



DXMark®

DXMark® is a highly automated loan valuation service for loan portfolios. DXMark models are calibrated using actual secondary market loan sale data from trades executed through the DebtX marketplace. DXMark, including the professional oversight and review process, is an SSAE 16 audited service and is used primarily by clients with large portfolios that require daily, monthly or quarterly pricing.


DXValue®

DXValue® is a consultative loan valuation service, which utilizes market expertise to provide in-depth, professionally underwritten asset analysis and a detailed “Appraisal for a Loan.”

When defensible valuations supported by fully detailed loan write-ups is required for regulatory, audit or litigation purposes, DebtX provides deep, asset-by-asset analysis and reporting. In addition to utilizing our vast pool of quantitative data that goes into model-based pricing, a DXValue report draws on the collective market expertise of our seasoned real estate finance professionals.


Scenario Analysis/Stress Testing

DebtX leverages its market experience and pricing models to provide real world scenarios for portfolio analysis, stress testing, ALLL planning, capital budgeting and portfolio surveillance. Our customizable default calibration can be client driven, DebtX driven or both.


Market Data

DebtX sells billions of dollars of loans and participations each year through its marketplace, capturing precise trade data on all loans offered and bid through the DebtX platform. We also value approximately US $10 trillion in loan principal balance on an annual basis. DebtX utilizes data from these sales and valuation assignments to enhance our market knowledge and to calibrate our pricing models.

Banks and insurance companies, under scrutiny by regulators and auditors, use our products to justify internal Fair Value pricing methodology and answer detailed inquiries around FAS 157 Level 3 disclosures. Data products include actual loan prices from secondary trades, market spread matrices for whole and mezzanine loans, and secondary market liquidity indices.


Valuations & Analytics Case Studies

Client Concerns and Goals:

A diversified financial institution was interested in historical trends in the secondary loan sale market in order to assess future opportunities and challenges. This client sought an objective and expert resource to better understand past market trends as a means of predicting future market outcomes.

The client was concerned they did not have access to accurate and reliable historical information that would allow them to accomplish their goal.

Solutions and Outcomes:

DebtX culled actual trade data from its vast loan sale database and prepared a comprehensive report for the client that analyzed historical pricing trends within the secondary debt marketplace. The report addressed 14 asset classes, including residential loans and related sub-groups.

DebtX’s report was formatted so that it could be easily updated at any time, allowing the client the flexibility of scheduling future updates whenever necessary. The client now has an expert and reliable resource for documenting real estate debt market trends.

Client Concerns and Goals:

A real estate fund manager owned a performing, subordinate loan in a credit facility secured by a portfolio of office buildings in a suburban sub-market whose real estate fundamentals had been severely affected by the recent market dislocation. The fund manager needed to mark the position to market at year end for GAAP purposes.

Solutions and Outcomes:

The scope of the assignment was to provide a fair value for a subordinate “B-note” using DebtX’s DXValue® methodology. The DXValue of a loan represents an estimate of its market value, which is defined as the amount at which the asset could be bought or sold in a current transaction between willing parties, other than in a forced or liquidation sale.

The valuation process included an analysis of the real estate collateral and an evaluation of the debt at all levels of the capital stack. DebtX credit analysts first reviewed the performance of the underlying collateral, comparing current status to original projections and market comparables. Next they reviewed the strength and capabilities of the sponsor and the other entities that held subordinate debt or equity positions in the asset. DebtX also surveyed current lending terms for similar collateral in the new origination market. Finally, recent trades of similar subordinate paper were identified and analyzed in comparison to the subject investment.

The final valuation consisted of a discounted cash flow analysis, a discussion of the discount rate build-up and an analysis of recent loan sale comparables. The report was reviewed and approved by the fund’s external auditor and formed the basis for the year end fair value of the fund’s investment.

Client Concerns and Goals:

An investor was seeking to acquire a portfolio of commercial real estate loans held within a CMBS trust. The Pooling and Servicing Agreement (“PSA”) required the investor to purchase the loans out of the trust at the greater of the current unpaid principal balance or the aggregate fair market value of the loans as determined by an independent valuation consultant acceptable to the Trustee.

Solutions and Outcomes:

With the approval of the Trustee, DebtX was hired by the Master Servicer to provide a fair market value of the loan portfolio. A team of seasoned DebtX real estate analysts reviewed at-origination and current loan and property level data and documentation to determine the market value for the $50+ million portfolio, consistent with the requirements of the PSA.

DebtX’s analysis was facilitated by its DXMark® valuation technology, which uses current secondary market loan sales and other factors to estimate the amount at which an asset could be bought or sold in a current market transaction between willing parties. Through its relationship with Bloomberg, DebtX currently prices all loans in the $650 billion US CMBS market on a monthly basis.

Client Concerns and Goals:

A large regional bank wanted to conduct pre-acquisition due diligence on two prospective bank acquisitions simultaneously. Though the bank had completed several acquisitions in the past without seeking outside underwriting assistance, the volume of work coupled with some significant exposure to classified CRE loans at the target banks led the chief credit officer to engage DebtX to supplement his internal due diligence team.

Solutions and Outcomes:

DebtX provides full-service asset evaluation, loss forecasting and cash flow analysis to support strategic acquisitions. In this case, the target bank’s portfolio contained nearly 9,000 loans including commercial real estate, commercial & industrial, single family residential and consumer loan types. DebtX stratified the portfolio by loan type, risk classification and other factors (e.g. geography, relationship, collateral type, loan type, collateral performance, loan performance) in order to select a representative sample of loans to review.

DebtX then mobilized a five-person due diligence team to review the selected loan files at the due diligence site. Following the file review, DebtX utilized its DXValue® methodology to value the sampled loans. This included determining likely loan resolution scenarios, modeling the resulting cash flows and writing brief narrative reports.

For the remainder of the portfolio, DXMark® technology was used to estimate the value of each loan based on the loan data tape provided by the seller of the bank. DebtX’s analysis provided valuable input into the client’s investment decision.

Client Concerns and Goals:

The chief appraiser of a multi-billion dollar (AUM) real estate fund manager was under pressure from external auditors and clients to hire an independent party to estimate the market value of the existing debt on commercial real estate assets owned by the fund. The value of the debt calculated on a periodic basis is used as an input to the calculation of each fund’s net asset value (NAV).

Solutions and Outcomes:

Since the implementation of FAS 157 in 2008, NCREIF members, consisting primarily of institutional real estate fund managers, have been particularly focused on establishing an agreed-upon approach to measuring the fair value of real estate debt liabilities.

To assist the client, DebtX provides equity value adjustments for each of the assets encumbered by mortgage loans within each of the funds it manages. An equity adjustment reflects the impact on the value of a real estate asset from the mortgage loan encumbering the property. For instance, when a property is subject to a fixed rate loan at an above market interest rate with prepayment restrictions, there is generally a negative equity adjustment reflecting the unfavorable terms of the mortgage debt. Conversely, if a property has a corresponding mortgage with a below market rate, there is generally a positive equity adjustment.

DebtX’s quarterly valuations have been deemed acceptable by the chief appraiser and the internal valuation committee as well as by the external auditors for each of the various funds.

Client Concerns and Goals:

The client is a large investment bank with a portfolio of high quality commercial real estate loans. Prior to the financial crisis, this client relied solely on internally generated loan valuations for financial reporting purposes. As a result of increased internal and external scrutiny, the valuation process became more cumbersome, taking valuable time away from loan producers who were tasked with providing valuations. What had been a simple exercise became a complicated process, encumbered by layers of management and business group reviews, each of which had a financial stake in the outcome.

Soon after, the Financial Accounting Standards Board (FASB) issued FAS 157, requiring the firm to report assets at fair value and to provide valuations based on objective and observable market inputs. The new financial reporting standards caused the client’s internal valuation process to become increasingly time and resource intensive.

Solutions and Outcomes:

Using a combination of DXValue®, an in-depth consultative valuation methodology, and DXMark®, an automated valuation model that uses observable market inputs from actual DebtX loan sale data and other sources, DebtX created a program to provide daily loan valuations for the client.

The intial valuation process involved an extensive loan file review, allowing DebtX to gain an understanding of the assets not possible by just reviewing a data tape. Each DXValue consisted of a 5-10 page report summarizing the assets as well as DebtX’s valuation methodology and final value conclusion. Using this as a baseline, DebtX provides daily valuation updates using its DXMark automated valuation model.

Using this hybrid approach, DebtX was able to provide an initial auditable report for its client while streamlining the daily update process.

Client Concerns and Goals:

This client, a large government sponsored entity (GSE), owns a portfolio of high quality performing loans. In the past, the GSE relied on internally generated loan valuations for its financial statement reporting. The system worked well until a restatement of the firm’s financials precipitated enhanced scrutiny regarding the objectivity of its methodology.

Soon after, the Financial Accounting Standards Board (FASB) issued FAS 157, requiring the firm to report assets at fair value and to provide valuations based on objective and observable market inputs. The new financial reporting standards caused the client’s internal valuation process to become increasingly time and resource intensive.

The client sought an objective, reliable and defensible means to value its very large loan portfolio using observable market inputs while allowing the return of its personnel to revenue generating activities.

Solutions and Outcomes:

Using DXMark®, DebtX created a streamlined process for valuation that is completed within hours. A secure FTP site enables the client to easily and securely transmit loan data to DebtX. DebtX extracts the requisite information, values the loans and returns the loan prices and other data that is then exported to the client’s servicing and accounting systems.

By utilizing DXMark, the industry’s only trade-based valuation model capable of accurately pricing hundreds of thousands of loans in a timely manner, the client adopted an objective, reliable valuation methodology. The client was also attracted by DXMark’s ability to generate time-stamped, auditable models that can consistently reproduce historical results. This functionality is necessary to support extensive audit and reporting requirements.

Client Concerns and Goals:

The client is a warehouse lender that provides debt financing to its financial institution clients. This large company had previously used the collateral loans’ book value to determine the amounts of its loan advances. As the markets became more volatile and the client’s desire to manage risk grew more acute, the client decided to move to a market-based methodology to determine advance rates.

The challenge was to balance the competing desires of the institution’s loan origination and credit departments, especially in light of the volatile credit markets and reduced liquidity of the pledged loans. The client sought an objective, reliable, timely and defensible means to value the loan collateral on a periodic basis.

Solutions and Outcomes:

Using DXMark®, an automated valuation model that uses observable market inputs from actual DebtX loan sale data and other sources, DebtX created a simple process for valuation. The client uploads the loan data via secure FTP. DebtX then reviews the data, scrubbing it to achieve consistency among the multiple warehouse borrowers. DebtX prices the portfolio and produces customized valuation reports enabling the client to monitor liquidity and concentration risk.

Having the collateral loan data pre-loaded in its proprietary systems, DebtX is also in a position to leverage its global loan sales platform to rapidly bring the loan pools to market in the event collateral needs to be liquidated.