Buzzwords, acronyms and initials or handles have become so commonplace in our business environment that many of us pay as little attention to them as possible. We only take them seriously after they raise their heads so many times in our reading and conversations that we are afraid that we will be embarrassed when communicating with colleagues or that we will be unable to properly perform our job. At that point we break down and research them in order to preserve whatever remaining professional integrity we have.

It is suggested that if you are not already familiar with the handle XLM, now may be a good time to become so. 

XML has nothing to do with how the appraisal is prepared or the value of the property, but it has everything to do with the future of how the appraisal is delivered to the client. We are not talking about UPS or FedEx, other handles of which we are very familiar; we are talking about electronic delivery. Nor are we talking about whether we transmit the appraisal via e-mail or our vender platform. We are talking about an interactive format or template of the appraisal product, which is received by the client. XML is about permitting any and all of the data to be stripped from the file for use as required by the lender without human involvement.  

In recent years we have grown to know another of these handles called the PDF or portable data format. While the PDF file has become very popular and a favorite of appraisers and lenders alike, it falls short of what many lenders are asking for today. It is, with little question, going to fall even shorter as we progress along the road of tomorrow’s low-overhead, paperless loan.

So what is the problem with the ever so popular PDF file, and what is it about XML that is better? One thing for sure, we will not find XML simpler or cheaper to implement, as the Adobe people have mastered the simplicity and cost of the PDF file. The difference is whether the lender wants a product that must be re-keyed into a Loan Origination Software (LOS) system or whether the product simply falls into our system finding the right fields for which to embed itself. In its natural state the PDF file is more like a faxed document, in that little can be done with it other than that of transcribing, copying and storing. It does not arrive in a data stream capable of populating the LOS. Conversely, the appraisal transmitted in XML technology reaches its destination broken down into a data stream and appropriately configured to populate the lender’s LOS avoiding the time, labor and cost of massaging and managing the data.                       

The next question we may be asking is: if XML is so much better why isn’t everyone using it? The short answer is that, today, a few forward-thinking lenders and appraisers are using XML, but very few.  There are a number of reasons that XML has not, at this point, gained the widespread acceptance, as has the PDF file. It all boils down to one issue, system compatibility.

The system technology within the mortgage-lending industry, if you haven’t noticed, is very fragmented. One only needs to attend one of the Mortgage Bankers Association’s (MBA) Technology Expos to observe hundreds of platforms, systems and software products to get a feel for the lack of conformity existing within this industry. This fragmentation is, from head to toe, covering almost every phase of mortgage technology. In our case, lenders subscribe to many different LOS platforms from many different software development companies. 

Appraisers also subscribe to a number of different appraisal-form software packages. No lender uses the same appraiser all of the time, nor do most appraisers do work exclusively for a single lender.

Herein lies the problem. Each of the lending and appraisal software providers aspires to offer a unique product, resisting and bucking any trend toward standardization. A few lenders who see the benefits are beginning to insist on XML technology from their appraisal providers. This will not be an easy task to accomplish, however, given the current environment. Those pushing for this higher level of service are doing so through vendor platforms and appraisal management companies. Such an initiative, by its very nature, excludes many appraisers who are not equipped to conform to the specific XML software requirements. This will be especially problematic for national lenders requiring appraisals nationwide. Lenders, who I know are currently pursuing such an objectives, are achieving less than 100% success due to compatibility issues.                       

The MBA is doing its part to address this highly inefficient condition in which the industry finds itself. It has introduced Mortgage Industry Standards Maintenance Organization (MISMO) in an effort to establish a single and comprehensive technology standard for the mortgage lending industry. Those with immediate interest in learning more about MISMO may visit the MISMO Web site at www.mismo.org.

 MISMO will not be a quick fix.  It has been in the planning stages for five years, and there is still much work to be done. Lots of MISMO planning has been done. We cannot expect a single standard for the industry for years to come. In the meantime, we must work on the pieces of the puzzle which involve us.

MISMO should not be thought of as an alternative to XML, but an extension of it. It serves as a host to XML by specifying certain templates and data fields for the data to flow into once the XML stream reaches the lenders LOS.  

If all of this borders on being too much to comprehend you are getting the message, however, it does not have to be this way. A few of the more insightful players are pushing ahead and making progress. XML acceptance will probably not reach critical mass until a significant percentage of the business is done in XML. At this point, those system providers on the sidelines will decide that they could be left at the train station. Then, and only then, will they step up and buy their ticket.

Anyone interested in learning more about sources of XML information, please email me at the address below.