Data Developments Push eMortgages

MBA (6/16/2008 ) Palaparty, Vijay
WASHINGTON, DC—Complete eMortgages may emerge sooner than later as MISMO and other industry partners focus on data issues such as standardization and security to create a total electronic process flow—end-to-end from application to investor delivery.
“The big news is the move to MISMO Version 3.0 that is based on XML Schema,” said Harry Gardner, vice president of industry technology at the Mortgage Bankers Association, speaking here Thursday at MBA's Government Housing and Loan Production Conference. “It involves advanced technology that gives greater capability in data transactions, better structural consistency and new capabilities such as XML name spaces where users can identify their own name spaces.”

Gardner said version 3.0 also offers users data point-level encryption, where sensitive data such as social security numbers can be made private. MISMO hopes to launch the new version in January.

Business benefits of MISMO include a shared, common language that is maintained through a data dictionary, Gardner said. “MISMO achieves consistency and commonality. The commonality also allows for mapping of terms between process areas. Standardized data transactions provide faster, cheaper and better,” he said. “Other business benefits are that an interface can be developed in two weeks versus six months. Also, it is much easier to add or subtract interfaces with business partners. It helps overall business focus as well, allowing people to compete on products and services rather than interfaces.”

Gardner said developments in electronic signatures and digital signatures, such as capturing biometric data in holographic signatures and using alphanumeric codes in digital signatures will help achieve the complete eMortgage.

In discussing electronic documents, Gardner explained differences between document imaging and electronic documents, the latter being more interactive and electronic where the legal original document is electronic—created, signed and managed electronically.

“For lenders, eMortgages offers lenders better control of the process, shortened timeframes, reduced errors and easier quality control, JIT (Just-in-Time) document generation and no paper shipping, eDelivery immediately upon closing and eRecording with no delay,” Gardner said. “There are costs savings throughout the process.

For borrowers, Gardner said eMortgages provide a better, enhanced experience, the ability to preview documents, easy access, easier closing process and overall cost efficiency.

Gabe Minton, chief strategy officer at Mortgage Cadence, Denver, and vice chair of MBA’s Residential Technology Committee, said the ResTech is currently focusing on data quality, integrity and purity initiatives. “The current data quality initiative is to agree on a manageable subset of critical data points that are typically used to make an execution decision in the secondary market, initially,” he said.

ResTech is evaluating data points through the loan life cycle to identify how many times they are “touched”—re-keyed, scanned or potentially changed. The evaluation involves measuring how many entities typically touch the data point and how important the data point is on a scale of 1-10.

“We are also measuring how the data point ages,” Minton said. A data risk level is assigned to the data—colors that match Homeland Security codes. The final deliverable of the data quality initiative will be an industry glossary that defines importance and illustrates “touches” on specific key data points. The glossary is slated to be released at MBA’s Annual Convention this October in San Francisco.

Bonnie McCloskey, program/policy specialist at FHA, said HUD and FHA are in the process of adopting MISMO standards in its B2G (business-to-government) transactions. “We are moving ahead with this so government agencies can standardize data fields for mortgage transactions,” she said.

The FHA Total Scorecard, developed by HUD, evaluates risk. “With the implementation of risk based premiums, we have been working with vendors to implement required changes,” McCloskey said. “The Total ScoreCard doesn’t meet MISMO standards but we are working with MISMO to map data fields for adoption by the industry.”