XSite Validation, a real estate technology firm based near Detroit, has rolled out a new banking industry tool that evaluates the toxicity of commercial property loans within a portfolio.

The program ranks performing, non-performing and real estate owned (REO) properties from first to worst, BEST TO WORST? as it assesses the concentration of types of properties within the portfolio. It also provides a best-use evaluation of loan portfolio properties by proposing potential uses for each property.

Some lenders have already used the toxicity analysis to stabilize and revitalize their commercial real estate loan portfolios, XSite reports. Bill Pilkington, executive vice president of Michigan-based Warren Bank, a former regulator with the Federal Reserve Bank, said the analysis showed which properties needed further scrutiny for later sale or repurposing.

“This has resulted in a higher ROI [return on investment] for our shareholders as we were able to objectively assess our performing and non-performing loan properties as well as bank-owned properties for their short-term and long-term viability,” said Pilkington, in a statement. The bank quickly determined how to realign property category concentrations to meet its goals for diversifying the portfolio.

For each property in a financial institution’s portfolio, a scoring system assesses market viability in conjunction with the institution’s own loan grade risk factors, to create a composite risk score. Banks can then use the composite XRI score to make sale or repurposing decisions about the properties, says XSite managing director Brian Ferrilla.