Governance chairman, Mortgage Industry Standards Maintenance Organization Inc.

Darrick Meneken

As published in Scotsman Guide's Residential Edition, August 2010.

The Mortgage Industry Standards Maintenance Organization Inc. (MISMO) aims to establish data standards and help make electronic mortgages — aka, e-mortgages or paperless mortgages — secure, efficient and mainstream. Governance chairman Harry Gardner talks about MISMO’s recent work and what he sees as the inevitable growth of e-mortgages.

How does MISMO’s work benefit residential mortgage brokers? Standards make it easier for brokers and other industry participants to interface and communicate with customers and business partners.

In the case of mortgage brokers, MISMO standards might already be built into some of the off-the-shelf software they’re using. Or, if brokers need to create a specific interface, they can leverage MISMO data standards, as opposed to having to start from scratch.

MISMO standards guided development of Fannie Mae and Freddie Mac’s Uniform Mortgage Data Program (UMDP), which mandates that all Fannie and Freddie loan files must be delivered digitally by September 2011. What does the UMDP mean to MISMO? It’s the highest level of public recognition of the value of MISMO and the first time a regulator has publicly required the use of MISMO standards. It’s definitely a big win for MISMO.

How do Fannie and Freddie interact with MISMO? They have been working with MISMO directly for years and have provided extensive amounts of manpower to the standardization effort.

Why should brokers pay attention to e-mortgages? E-mortgages will become mainstream, eventually. The business efficiency and the cost savings are just too compelling. E-mortgages offer better execution speed, cost savings on loan delivery, faster post-closing quality-control and elimination of common issues like lost paper notes.

Will the Federal Housing Administration (FHA) start accepting e-mortgages? [FHA has] been somewhat cautious for years. But this past April, FHA announced that it will begin accepting electronic signatures on third-party documents. The next step would be for [it] to accept delivery of e-signed loan packages.

We met with FHA Commissioner David H. Stevens and his senior staff not too long after he came to FHA [in July 2009] and briefed them on the value of e-mortgages. He was very receptive. They’re just being careful about evaluating all the different aspects of it for their business model.

Darrick Meneken is an associate editor at Scotsman Guide. Reach him at (800) 297-6061 or darrickm@scotsmanguide.com.