Minnesota-based van Wagenen Financial Services, a provider of collateral insurance for financial institutions, has partnered with Banker’s Toolbox to offer commercial real estate (CRE) loan stress testing software to their real estate customers.

van Wagenen is offering Banker’s Toolbox’s Crest as a way for CRE lenders to further mitigate risk by evaluating the impact of market changes on their CRE portfolios.

According to Banker’s Toolbox, the Crest helps banks comply with the 2006 Interagency Guidance on CRE Concentrations, which requires stress testing portfolios that exceed certain concentration levels. The software provides accurate stress test results with fewer data requirements, overcoming the ongoing data-gathering challenge faced by all banks.

van Wagenen mitigates the risk of uninsured real estate loss with insurance products and insurance tracking services. Insurance tracking keeps financial institutions up to date on the insurance status of their entire real estate portfolio. The company also provides lender placed insurance options to cover the mortgage balance in the event of damage or destruction.

Crest enables banks to segment their CRE loan portfolio based on varioous factors, including geography, property type or industry. Its universal stress factors enable financial institutions to run scenarios that incorporate hypothetical changes to income, property valuation, and interest rate. The stress test results and analysis make it simple for banks to outline hazardous CRE loan concentration areas within the lending base and forecast complications with risky borrowers.

Rob Wood, vice president of sales at van Wagenen, said: Community and regional banks have felt the brunt of the CRE market downturn. By partnering with Banker’s Toolbox, we can offer our bank customers another tool to mitigate their financial risk in managing commercial real estate.

Daniel Cho, CEO of Banker’s Toolbox, said: “van Wagenen has a long history of providing services to help banks reduce their risk of real estate loss. Banker’s Toolbox’s Crest perfectly complements their services by helping banks understand the future risks in their CRE loan portfolio far enough in advance to take actions to reduce that risk.”