Browse Tag: big data

Can Having The Wrong Facebook Friends Interfere With Your Financing?

In commercial real estate, as with most commercial financing, a borrower’s personal credit rating looms large in the eyes of “A” list lenders offering the most attractive interest rates.

A recent patent filed by Facebook has raised eyebrows, suggesting that the credit ratings of your Facebook friends could possibly affect decisions made by lenders about you — or by extension, about any entity doing any borrowing where your personal liability is a factor.

As reported in The Atlantic by Robinson Meyer, the online giant Facebook recently made a patent filing totaling many pages, saving the best for last. Nestled toward the tail of Facebook’s US Patent And Trademark Office filing, under a heading “Summary Of The Invention,” (a list containing technologies they seek to patent) Facebook included the following paragraph:

When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual […]. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.

The suggestion is that Facebook seeks a patent on the ability to speak to your creditworthiness by allowing analysis of the creditworthiness of your Facebook friends.  Conspicuously missing from the above wording: any mention of a fair analysis of your own hard-earned credit rating.

A Return Of Redlining?

Critics of the practice of amassing Big Data from every corner of the lives of consumers, tenants, or users of a social media platform like Facebook have warned for years about future unintended consequences. It doesn’t take much imagination to see Facebook’s proposal as one such problem. What’s more, the future isn’t the only place where data about borrower’s surroundings have been unethically treated as conclusions about a borrower’s creditworthiness. In the context of the real estate industry, the notion of making credit decisions based upon one’s “neighborhood” has a specific and sad social-legal history, called redlining.

Decades-Old Legal Framing

The recent shifting picture of technology innovation having its way with the credit scoring industry — itself worth its own post — runs up against the legal barriers set down in 1970 under the Fair Credit Reporting Act and, in the case of any loans issued on the basis of such reporting, the Equal Credit Opportunity Act of 1974.  Any classification of Facebook as a credit reporting agency akin to TransUnion or Experian would be a application of laws written decades before social media information began to voluntarily flow from all of us, a troublesome and awkward legal situation to say the least.

While this patent application is preliminary and comes with no evidence Facebook is actually using or marketing credit data on its users, at least one overseas company is claiming to aggregate Facebook and other social media data to provide lending decision support.  From the Atlantic piece:

Which isn’t to say that social-network-based credit is an irreparably bad idea. In countries that do not have America’s financial system, friend scores can help extend credit to those who need it. In Mexico, Columbia, and the Philippines, a company called Lenddo already analyzes someone’s Facebook, LinkedIn, and Twitter to gauge their creditworthiness.

Newest Warning From The East

As if on cue, we find a very recent announcement by China’s government, saying that it will be holding certain online actions of its citizens and their social media friends in bad light credit rating-wise. This news, taken seriously by the ACLU  serves as yet another warning among many:

These days, it’s worth keeping in mind that online, we’re all a small part of Big Data.

“Building Distress” — And How NYC Models It Using Data

Residential apartment building in Harlem, NYC ...

In the multifamily building, operational problems can go hidden for a very long time, affecting performance for owners and managers as well as quality of life for tenants. If there’s one thing technology has done to commercial real estate, it has been to expand the amount and variety of information that can be captured about a property, all with the idea of revealing such problems.  A significant portion of the new tools and techniques for information collection are there for the use of managers and owners — capabilities ranging from smart meters for water and electricity usage to using software to shape the ideal mix of amenities.

To get a great update on the state of building data collection sensors and other items that fall under the “Internet of things”, check out this excellent free webinar from Chad Curry, Managing Director of NAR’s Center for REALTOR® Technology.

Technology’s giant impact on the commercial property industry means government is also in the business of collecting information on property performance.  As various governmental departments of New York City have recently demonstrated, it’s a task at which they can excel.

NYC Does Numbers

City agencies in NYC compile a great deal of information about commercial properties of all kinds, and in the multifamily sphere, they tend to focus less on economic performance and more on health and safety concerns. What’s worth noticing here is the degree to which these previously far-flung agencies are now actively sharing data, leading to new categorizations that affect, or potentially affect, landlords and managers.

Tenant complaints, court outcomes, code violations, liens, foreclosures — in the past, all were collected separately and stayed in separate piles.  That era is over.

“Building Distress”

Knitting together these categories of information under a single governmental warehouse is the Mayor’s Office Of Data Analytics (MODA) and the Department of Housing Preservation and Development (HPD).  One key result of all this collection and focus on the entire profile of a multifamily property is the notion of “building distress”.

An eye-opening blog post about this process and about “building distress” was published at DataLook’s blog,   The fundamental takeaway should be a wakeup call to owners and operators of multifamily property.  The technologies and techniques being used in NYC are in no way solely the domain of huge cities.  Which means that no matter where you own, your relationships with local government could soon enter a phase where scrutiny of your property is going to be informed by more history of that property than has ever been mustered at any one time.