MISMO, a Timely Concept
By Charlie Elliott Jr., MAI, SRA

“Never heard of it.”

That is the response which many people have, when first asked about the emerging but not so new acronym MISMO. Mortgage Industry Standards Maintenance Organization may never become a household word, but it has made its debut in the mortgage industry and it is not likely to go away.

Depending upon the position that we each play in this game of lending money to those people purchasing or refinancing a home, we may or may not have any reason to understand the specifics of MISMO. However, in order to maintain our positions as professionals in the business, we, at a minimum, need to stay up to date on industry current events. That said, we have a responsibility to gain and maintain a general conversational knowledge of this less-than-everyday term and the benefits associated with it.

Let’s start at the beginning, some five years ago. Ever since there has been discussion about the paperless loan and how the computer and the Internet was to become the salvation to overhead-laden mortgage industry, there has been one major barrier. That has been the besiegement from within the industry of a litany of different information technology systems. This may have been necessary at the onset, to give all of the designers a free hand in demonstrating their input. Now that system design is a more mature issue within the industry, some have felt that the consolidation of these systems into one set of industry standards is necessary.

But who to lead the charge of such a political hot potato? Enter the Mortgage Bankers Association (MBA). It has taken this bull by the horns and is in the process of wrestling him to the ground. While the bull has not given up without a fight, he is down on one knee and is bellowing as a preamble gesture of concession. The MBA, in its wisdom, realized that this project was too large to tackle alone and solicited the involvement of all of the major industry players including Fannie Mae and Freddie Mac. It created a nonprofit corporation to take ownership of the project in an effort to insure focus on the mission and to take the issue away from any selfish interest that may have been lurking around. To date, in spite of the many obstacles MISMO is becoming a reality.

In an attempt to further define MISMO consider the following, which is taken from the organizations Web site.

• MISMO was developed to coordinate the development and maintenance of Internet based Extensible Markup Language (XML) real estate finance specifications.

• MISMO has published specifications that support mortgage insurance application, mortgage insurance loan boarding, secondary, bulk pricing, real estate services, credit reporting and process areas.

• MISMO has identified two deliverables, which will enable the mortgage industry to share among data trading partners:

  1. An XML architecture, which encompasses data origination, secondary market and service data.

  2. A data dictionary to provide business definitions and corresponding architecture data element tag names.
      

• A Governance Committee, elected from a cross section of the industry, provides oversight for MISMO’s administration and policy development.

• Currently MISMO has in over 1,000 participants and 130 subscribers.

What will all this mean for the future of the mortgage industry? In all honesty it will probably have far reaching effects and uses not even contemplated in today’s business environment. Furthermore, as MISMO is a work in progress, there will probably be some disagreement as to what will be derived from the new system in the future. A few of the more basic and obvious uses and benefits of the MISMO system that come to mind are as follows:

• Lenders will be able to order services from vendors electronically in such a way that the vendors system will be automatically populated with data and that no manual entry will be required.

• Any vendor, such as an appraiser, attorney or credit reporter, will be able to transmit product documents electronically to any client, such as a lender, without question as to software compatibility regardless of the software system supplier used by either party. The transmitted document will be embedded with tags, permitting the lender to accept the document into its system without any re-keying of data. The lender will also be able to massage, extract and store data from documents received from vendors with ease.

• Similar system benefits will follow the loan as it is passed on to servicers as well as secondary mortgage purchasers, as the loan is amortized. An example of the benefits may mean that the servicer and or purchaser of a portfolio of loans could extract information such as the mortgagors name and address for use in a database without manually handling such data.

In conclusion, it makes no sense for an industry which is becoming almost entirely technology driven, to be littered with a maze of electronic roadblocks each time a new customer, vendor and or lender develops a need to interact with another. While there will still be a need for a variety of software vendors, there is no reason that each system provider should not be encouraged to subscribe to a standard which works in concert with other system software already in use by the mortgage industry. Furthermore, with the use of the MISMO, standard players will be able to glean much more efficiency from their system, eliminating the need to re-key data and/or develop custom software only to properly use the systems which have already been developed.

Before anyone asks, yes, this is an appraisal column. I have included this article because it is, and will be, of vital importance to all of us in the mortgage industry, including those ordering, preparing and using appraisals. Those wanting more information on MISMO may go the horse’s mouth, and get all of the details at www.mismo.org for a thorough rundown of what has happened, what is happening and what is going to happen. You may want to join MISMO as a participant and you can information about that there, too.

Charlie W. Elliott, Jr., MAI, SRA, is President of ELLIOTT® & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889 or at charlie@elliottco.com or through the company’s Web site at www.appraisalsanywhere.com.