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What is next?
MISMO’s standards are developed by individual work groups that concentrate on individual aspects of the mortgage-lending process. They cover the commercial and residential industries. For example, MISMO has a Commercial Originations Work Group and a separate residential one. The commercial-data-standards effort operates side by side with the residential one. Both use common data structures where possible but focus on solving each industry’s data-transfer needs.
MISMO also is the forum in which the mortgage industry is working collectively on the next big technical advance — the electronic mortgage. Initially, it could seem like a bit of an oxymoron that the mortgage document itself can be transformed into an electronic file. After all, a borrower needs to sign a mortgage in ink. That mortgage needs to be recorded in the local government’s property-records office so it can be tracked by any interested party.
But there are tremendous costs in a paper-based industry. These costs can be seen as inescapable fixed costs, unless there is a compelling and realistic alternative: electronic mortgages, or eMortgages. Since the passage of federal legislation in 2000, hundreds of eMortgages have closed through experimental pilot programs nationwide. Last summer, a few lenders opened these pilot programs to the broader industry, and they closed the first mainstream eMortgages. The day is coming when the choice at closing will not be “paper or plastic” but rather “paper or electronic.”
Ultimately, MISMO reduces costs, streamlines processes, improves accuracy, increases data transparency and boosts investor confidence in mortgages as an asset class. The current state of business processes in the commercial industry — using paper and the manual entry of data into systems — is stable but inefficient and costly. Turning to a set of e-commerce applications based on a common data-interchange framework will significantly alter these structural features of the industry.
In the past decade, technology has played a major role in revolutionizing the way industries throughout the nation remain profitable. The mortgage industry is undergoing a similar revolution. The data-standardization effort known as MISMO is at its center.
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