“The industry needs education and training on the MISMO standards. Being MISMO-certified will be a differentiator to conduct business in the mortgage industry going forward.”
Mortgage Data Standards Propelling the Need for Education and Certification By Heather Kerns & Matt Seu The mortgage industry has been far from standardized throughout history. Before the government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—and the Federal Housing Administration (FHA) there
were no true standards. The industry evolved from a paper and formsbased business transaction process to an electronic version. Processes began to mature, however, organizations were still required to have an in-
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SEPTEMBER 2013 n New York Mortgage Professional Magazine n
NationalMortgageProfessional.com
We ar Califor e Premie nia’s r Private Direct Mon Lender ey
Residential n/o/o and investment SFR, condo, PUD (1-4 units) properties • Stated and no doc available • Refinances up to 65% LTV, min loan amount 50K to 5 million • Purchases up to 70% min. loan amount 50K to 5 million • Loan term, 1 year, 3 year, 5 year, interest only or fully amortized available • Programs with no PP available • Rates from 8.50% to 12.00% fixed • Loan costs from 1.50% to 4.00% depending on LTV term and prepayment penalty • We have 2nd position loans available for n/o/o and investment properties up to 55%-60% CLTV
Apartments and units (5+ residential units) • Up to 70% on refinance and purchases • Stated but verified rental income • Loan terms: 1 year, 3 year, 5 year, 7 year and 10 year; fixed IO or fully amortized • Rates from 8.00% to 12.00%, depending on LTV, prepayment and term • Programs with no PP available • Loan costs from1.50% to 4.00% depending on LTV, term and prepayment penalty • We have 2nd position loans available for our commercial products up to 60% CLTV
Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.) • Up to 55% on refinances • Up to 60%-65% on purchases • Term 1 to 5 years • Loan costs from 2.00% to 4.00% depending on LTV, term and prepayment penalty Land loan (max LTV 35%, refinance, 50% purchase) call for details
877-700-3703 Office 866-318-4471 Direct Fax
www.pbfinancialgrp.com • e-mail scenarios to: info@pbfinancialgrp.com PB Financial Group Corp. NMLS #357614/PB Financial Group Corp DRE01522495
Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums. This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614
“The mortgage industry organizations will have employees with MISMO certifications to ensure working with the vendors is more productive and ensure accuracy with the electronic transfer of data to support the lifecycle of a mortgage.” depth and specific knowledge of each investor/insurers policies to conduct business. Smaller lenders and servicers would choose one investor or maybe a handful. Doing business with many investors was simply too expensive in terms of manpower, training, education and technology solutions given the differences in processes and systems. Within the agencies, the standards have not been aligned, but things are shifting due to industry demands and regulations. The Federal Housing Finance Agency (FHFA), in coordination with the GSEs, has made advances to standardize practices, contract language, and associated data and systems required to perform the transactions existing in the life of a loan. One key decision was the choice to use Mortgage Industry Standards Maintenance Organization (MISMO) standards, its XML schema, and logical data dictionary, often referred to as the MISMO Reference Model, as the basis for the Uniform Mortgage Data Program (UMDP). MISMO has been in existence for years, and is mostly a volunteer organization instrumental in creating a robust and data schema covering the mortgage industry from application through securitization. Volunteers worked tirelessly to advance the cause, but MISMO did not have any real power to make people use the standards. Because of this, adoption was slow and only a few companies truly embraced the usage of the MISMO Reference Model. With the introduction of the UMDP, the landscape changed forever. FHFA, Fannie Mae and Freddie Mac decided that it was their mission to standardize data transfers among the primary markets and the GSEs. The theory was that this standardization would lead to process efficiency and data quality, reduced barriers to entry and lower switching costs. Enhanced usage of MISMO and a gaining of greater knowledge continues to evolve and be proven through the implementation of the Uniform Loan Delivery Dataset (ULDD) and the Uniform Appraisal Dataset (UAD). More UMDP standard
data sets are expected to enter the market related to servicing and closing later this year. While the UMDP began moving the industry forward, MISMO remains a volunteer army exposing a big problem. Few outside of a core set of volunteers really understands the MISMO Reference Model. Think about that for a moment. The industry is being directed to use a standard that many are still working to understand. MISMO acknowledges this shortfall and has put several efforts in motion. MISMO is attempting to promote the use a single common language across the industry, and that MISMO is that language. Not only are they working to develop the standards and to train industry, they are working closely with the government housing agencies (FHA, VA, USDA, and Ginnie Mae) as well as the regulatory community to educate them about the benefits of using the common MISMO standards. During 2012 and 2013, MISMO launched several efforts focused on increasing the number of subscribers (members) by nearly 50 percent. This first step brought some new resources to the volunteer groups and provided some additional band width to the key contributors who have been involved for years. The rest of this article will focus on two areas currently underway with MISMO that bridges the knowledge gap; educational training and certification. Why is training and certification so important? Look at the landscape. Currently there are thousands of lenders and servicers, title companies and mortgage insurers. Additionally, there are well over 100 software companies supporting the mortgage industry. These organizations will need to understand MISMO or rely on vendors who do in order to conduct business. There is no way around it. The GSEs are moving to a standard for transactions based on the MISMO Reference Model, and Ginnie Mae is not far behind. Work has also been done at the FHA as part of their transformation efforts. The industry needs education and training on the MISMO