Amid Rapid Change, MISMO Adapts
With mortgage technology changing in the blink of an eye, MISMO, the Mortgage Industry Standards Maintenance Organization, is changing as well.
“We are growing, working to be faster, working to provide more value and support for the industry,” said Rick Hill, Executive Vice President of MISMO and Vice President of Industry Technology with the Mortgage Bankers Association.
Founded in 2000 as a wholly owned subsidiary of the Mortgage Bankers Association, MISMO is the standards development body for the mortgage industry. MISMO developed a common language for exchanging information for the mortgage finance industry. Today, MISMO standards are accepted and deployed by every type of entity involved in creating mortgages, and they are required by most regulators, housing agencies and the GSEs that participate in the industry. Use of MISMO’s standards has been found to lower per loan costs, improve margins, reduce errors and speed up the loan process by reducing manual, paper-based processes while creating cost savings for the consumer.
Last March, MBA announced a $2 million investment in MISMO, designed to enable MISMO (https://www.mba.org/2019-press-releases/march/mba-announces-2-million-investment-in-mismo) to expand its resources in support of key initiatives, such as a uniform dataset for private label mortgage-backed securities; a standardized closing instructions template, harmonized remote online notary (RON) standards; common standards to encourage business-to-consumer communications on smartphones and tablets; and appraisal and rent roll standards for commercial and multifamily lenders.
“We hope that lenders, vendors and others across the mortgage industry will follow MBA’s lead by contributing additional funding and the human resources necessary to deliver the standards that will support innovation throughout the industry,” said Kurt Pfotenhauer, then-Chairman of the Board of Directors for MISMO.
That has indeed happened. Last fall, MISMO announced its MISMO Champions Program (http://www.mismo.org/get-involved/become-a-mismo-champion), which rewards companies that understand the critical role MISMO plays and wish to support the organization at a higher level than basic membership. In return, MISMO provides these organizations with additional benefits and opportunities, such as complimentary event registrations; exclusive briefings by MISMO Executive and Committee Leadership and MISMO staff; recognition on MISMO’s website and at industry conferences; and exclusive invitations to attend special MISMO events.
The Champions Program has three levels of participation; Chairman ($50,000); Executive ($15,000); and Associate ($5,000). Recently, CoreLogic, Irvine, Calif., became the first MISMO member to participate at the Chairman Champions level.
Pete Carroll, Executive in Public Policy and Industry Relations for CoreLogic and a MISMO Board member, said the company’s decision to become a Chairman Champions supporter was both logical and strategic. Thanks in part to MISMO, he said, the mortgage industry has “undergone extensive transformation in recent years, including marked improvements in loan underwriting practices, loan data quality, and origination process automation. The results are starting to pay dividends in the form of driving down origination costs and reducing cycle time, particularly for GSE loan executions. Perhaps most critically, these efforts have increased clarity and confidence for counterparties to GSE loan transactions.”
MISMO has played a critical role in this transformation, Carroll said, serving as a neutral, trusted third-party standard for defining and transmitting mortgage loan information. “As one of the largest suppliers of mortgage loan, property and borrower information, CoreLogic has a vested interest in accelerating and expanding this success,” he said. “Our commitment to the Chairman Champions program is a reflection of our confidence in the invaluable role of MISMO plays in these successes.”
Carroll said CoreLogic supports MISMO’s efforts in replicating the benefits proven in GSE transactions to the non-agency and government mortgage market segments. “MISMO is busily working to identify the data standards and related products and services that will ensure consistent and accurate adoption in these segments,” he said. “For CoreLogic, it is critical that our clients have confidence that we’re delivering our services to the standard so that our clients can attain these benefits. Our clients’ success is our success.”
Over the past year, MISMO has achieved several milestones, including:
—Taxpayer Consent Language. This past November, MISMO issued its Taxpayer Consent Language (https://www.mba.org/2019-press-releases/november/mismo%C2%AE-issues-taxpayer-consent-language-as-solution-for-new-irs-requirement-on-sharing-tax-transcripts), which permits lenders to share tax information received from the Internal Revenue Service with other parties involved in a mortgage transaction.
The Taxpayer Consent Language was created to provide a consistent way for the mortgage industry to comply with the Taxpayer First Act, which passed Congress last year and went into effect in December. It requires the taxpayer to provide consent for the express purpose for which their tax information will be used. Additionally, the taxpayer must also provide consent for their tax information to be shared with other parties.
In August, MISMO sought industry collaboration to draft consent language, which was then released for a 30-day public comment period. The feedback enabled the consent language to be in place in November, well ahead of the law’s effective date.
Suzanne Garwood, Assistant General Counsel with JPMorgan Chase, commended MISMO for collaborating on the consent language, which “was instrumental in ensuring that model language was finalized ahead of the law’s December 28 implementation date.”
—Remote Online Notarization Standards. In September, MISMO released its finalized Remote Online Notarization standards. The RON standards allow use of audio-visual communication devices to notarize documents in a virtual online environment.
“MISMO’s RON standards allow for a fast and convenient closing experience for digital mortgage closings, while ensuring consistent implementation of RON laws across all 50 states,” Hill said.
MISMO created RON standards, in collaboration with the American Land Title Association, to promote consistency across mortgage industry practices and state regulations. In the interest of furthering adoption of RON and to encourage consistency in related state regulation, the standards are free to the public and do not require a license fee to use them. The standards include credential analysis, borrower identification, capturing and maintaining a recording of the notary process electronically, audio and video requirements, record storage and audit trails.
—Commercial Rent Roll Dataset. In June, MISMO released it Commercial Rent Roll Dataset, which provides a consistent set of data points that can be used when exchanging information across many different multifamily and commercial transactions. The dataset supports multiple property types, including multifamily residential, retail, office and hotel properties. The new dataset provides a consistent set of data points for a wider number of circumstances than ever, which will greatly reduce errors, time and extra costs when financing commercial transactions.
—ILAD: Industry Loan Application Dataset. In September, MISMO released its new Industry Loan Application Dataset (iLAD), a compendium of data points included in the new Uniform Residential Loan Application, the Government-Sponsored Enterprises’ new Automated Underwriting System interfaces, as well as the existing Fannie Mae 3.2 file.
iLAD is expected to replace the many peer-to-peer data exchanges that currently utilize the Fannie Mae 3.2 file as a de facto data exchange standard. Adoption of iLAD is expected to be evolutionary, as businesses collaborate with business partners to determine the best time to implement. MISMO is issuing the specifications to provide time for companies to evaluate how and when to adopt iLAD.
—Closing Instruction Templates. In late November, MISMO released its new closing instructions templates for public comment. The templates focus on the format and organization of closing instructions, rather than legal language a lender might include in instructions. Templates were developed through a collaborative effort across many sectors of the mortgage ecosystem. National and regional lenders, title and settlement services companies, escrow companies, LOS vendors and document preparation vendors worked together to develop templates that work for all parties involved in the closing process. The results of this collaborative process are expected to contribute to improved communications between parties, reduced errors and a better consumer experience.
For more information about MISMO, visit www.mismo.org.