Time to Standardize: Why Lenders and Vendors Need to Adopt MISMO 3.x
(Mark Mackey is CEO of International Document Services, Draper, Utah, a mortgage document preparation vendor for initial disclosures and closing documents. He contributes frequently to MBA NewsLink. He can be reached at email@example.com.)
Now that TRID implementation is in the industry's rearview mirror, mortgage technology innovation initiatives are getting back on track.
New technologies were in abundance at the MBA Technology in Mortgage Banking Conference & Expo back in April, with borrower-facing functionality emerging as a common theme amongst many of the exhibitors and attendees. That is unsurprising given the Consumer Financial Protection Bureau's emphasis on improving the consumer experience. Not only are vendors developing new borrower-facing applications, but they are also thinking about how existing innovations, for example eSign, could be adapted for borrower use.
While always a worthy endeavor, in a heavily regulated, data-driven industry like ours innovation must be built in accordance with standards. Case in point, the Mortgage Industry Standards Maintenance Organization® has long been the torchbearer for data standardization in this industry. With new "uniform data" regulations and initiatives being so closely tied to advanced MISMO standards, it is critical that lenders adopt these advanced data standards and verify that their vendors are capable of accepting and actually using them.
One illustration of this relates to when TRID became effective in October 2015, when most vendors were still operating on the MISMO 2.6 standard. Although several vendors publicly stated that they were using the MISMO v3.3.x standard, in reality, these vendors were asking their clients to send a file extension using v2.6. From there, the vendor simply extracted the necessary data from the v2.6 extension, ignoring the v3.3.x file altogether.
The link between TRID and advanced MISMO standards, specifically version 3.3.x, cannot be overstated. In fact, the 3.3.x standard was built specifically with TRID, as well as other initiatives, in mind. For a vendor to not include conversion to MISMO v3.3.x in its TRID implementation plan represents a serious oversight in planning and should give lenders pause as to that vendor's ability to adequately plan for future changes.
Take, for example, the Uniform Closing Dataset, which is expected to become mandatory sometime in Q3 2017. Lenders will be required to use the MISMO v3.3.0 standard to submit their data. Portal testing for UCD is slated to begin later this year. Thus, lenders (and their vendors) need to be operating on MISMO v3.3.x as soon as possible so as to adequately test their UCD file submissions before it becomes mandatory.
As the industry is well aware, there is always a new regulatory change on the horizon, and these coming initiatives, like the 2018 changes to Home Mortgage Disclosure Act reporting, are also going to be predicated upon advanced MISMO standards. Therefore, now is the time for lenders to get serious about adopting MISMO v3.3.x standards and ensuring their vendors are prepared to do so as well.
(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 firstname.lastname@example.org.)