Q&A with Ruth Lee of MetaSource


Ruth Lee is senior director of mortgage services for Titan Lenders Corp., a MetaSource company. She has been an occasional contributor to MBA NewsLink. She can be reached at ruth.lee@titanlenderscorp.com.  

MBA NEWSLINK: Titan Lenders Corp. was recently acquired by MetaSource. From an industry solution standpoint, why was the time right for these two companies to come together?  

RUTH LEE, METASOURCE: Right now, we are at the nexus of an interesting regulatory evolution where data and enterprise content management are critical to the efficient execution of the mortgage process. In today’s regulatory landscape, the raw materials of data and documents utilized throughout the mortgage lifecycle are serving as the basis for the surveillance and the monitoring of each aspect of loan production and loan administration on both the origination and servicing sides.  

MetaSource brings a wealth of experience in applying enterprise content management and process management to a variety of industries. As such, the time seemed right to marry the mortgage operations expertise Titan has cultivated with the workflow and data management solutions MetaSource provides to offer the industry a more comprehensive solution to address these challenges.   

NEWSLINK: In the acquisition announcement, you used the term “data-centric mortgage services.” Why has data become a focus for the mortgage industry?  

LEE: Data provides the underlying structure and value of every asset our industry produces. No one puts a loan package on the scale and determines the price. Investors are looking at the underlying data and extracting information in order to establish the price.  

This increased demand from customers, investors and regulators for data transparency throughout the loan lifecycle clearly stems from the market crash of 2008. Exposure of the unrealistic valuation of properties and the resulting financial fiasco led to a natural evolution of our industry to become very data-centric. There’s really no other way for a regulatory body to surveil and monitor our success unless they’re looking at the data, which is the part of the reason we’re seeing an overwhelming push across the industry to normalize data.  

NEWSLINK: What data challenges continue to plague the industry, and how can they be addressed?  

LEE: Increased regulation requirements have certainly spurred the need for data-centric mortgage services and expertise, as these changes focus on data transparency and come with some very real challenges. Recent regulatory announcements can make it sound very easy to institute changes and have a trillion-dollar industry just lock step and change processes that have been in place for decades. I assure you, it’s not a simple undertaking.  

Data is a complex, organic idea. It’s fascinating to observe the ways in which data can be interpreted, as well as the manner in which it moves, flows and deteriorates. The past five years have demonstrated a meaningful democratization of mortgage technology. Prior to the meltdown, mostly top banks and mortgage lenders had best-in-class enterprise-wide technology, but when much of their raw input was coming from people who were basically using fax machines and typewriters, it was pretty “one sigma.”  

Now that that level of sophistication and technology has trickled down to become standard throughout society, the mortgage industry has to take these opportunities to use technology and the bandwidth that it offers us and create something that’s significantly more efficient. We have to challenge our assumptions on how we use our data for business information, compliance, reporting and process quality.   

Originating, supporting and securitizing a mortgage requires a multitude of documents and data. Couple that with regulatory requirements from a variety of agencies, which could vary state-to-state, and you can see the challenges that arise. For example, the annual Quality Assurance audit that MERS members have to conduct to ensure servicer data matches both what has been documented in MERS and the collateral documents can be a challenge, but one that can be addressed through innovative technology solutions.  

Perhaps one of the most grumbled about challenges comes from delays associated with defining an industry-wide uniform dataset. While MBA, the GSEs and other industry leadership have been actively pursuing a master dataset, it is complicated by the organic nature of loan data. Not all data is taken from the documents; servicing data, for example, is also a derivative of the loan administration process, investor accounting and customer service. This makes mapping closing fields to servicing fields a complex and often divisive process.  

When we talk about data-centric mortgage services, there’s no other choice. That’s the requirement, and we are actively building technology and process solutions that address these challenges.  

NEWSLINK: With UCD becoming mandatory in 2017 and ULDD not long behind, what should lenders be doing to prepare for these GSE initiatives?  

LEE: The original purpose of the UCD and the ULDD was to provide a common industry dataset from closing through investor delivery. Now these initiatives have the additional role of supporting the Consumer Financial Protection Bureau’s surveillance and monitoring of TRID compliance. While industry leadership is still solidifying the dataset, lenders need to be doing an inventory of where their strengths and weaknesses are, especially as it relates to data and document management. They need to frame that evaluation with their ability to action their data and respond to GSE initiatives. It doesn’t matter how small you are, even if you are not selling to a GSE, the person that you are selling to is almost always selling to a GSE.  

It’s a bi-directional responsibility all the way up and down the supply chain, from the broker, the retail person, and the loan officer all the way up through the most sophisticated non-bank servicer. Everybody is on the same team and needs to be aware of what they can and can’t do, and if they can’t do it, how do they get there in the most expeditious and cost-effective manner possible. Sometimes that includes looking at best-in-class solutions that you might not have looked at otherwise.  

NEWSLINK: What other data-centric initiatives/regulations should be top of mind for lenders?  

LEE: Beginning now and throughout 2017, lenders will be preparing for changes that the CFPB has made to the Home Mortgage Disclosure Act. With an effective date of January 1, 2018, lenders need to invest time and resources now to ensure that they have the proper processes, documents and technology in place. Specifically, financial institutions will need to report on 48 data fields on each borrower, up from the existing nine data fields. I encourage lenders to begin immediately verifying and validating what that expansion of the data fields will mean to their existing systems.  

If lenders, originators and their technology service providers fail to prepare, I wouldn’t count on the CFPB extending much grace. Their mandate has made it clear that they will ensure that we have created an environment to foster fair lending.  

Interestingly, these changes mean that soon the CFPB will be able to look at and assess the parity in originations across swaths of the industry. HDMA will be the tip of the spear. Big data is approaching our very regimented origination world, and if we aren’t prepared to action our data, we can be assured the regulators will.  

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mba.org.)