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Tech Update: MBA Transfers Management of MISMO to MERS

by Michael L. Zevitz
South & Associates – USFN Member (MO, KS)

With the recent wave of loss mitigation efforts endorsed by the Obama Administration and promulgated by the GSEs, as well as many of the largest loan servicers, the industry is in a state of flux with respect to foreclosure “stops and starts.” Tracking transitory holds imposed by temporary moratoria could impact foreclosure timeline management and event tracking. It is all the more important to have in place a universal set of standardized hold/delay reasons for uniform reporting purposes.

It is fortuitous that the USFN Technology Committee, with at least a year and a half of research and planning under its belt, has created a formal proposal to standardize hold/delay reasons, which have proliferated attorney and servicer data reporting systems. A special subcommittee was tasked with finding ways to streamline and create efficiencies through industry standardization. When the project was birthed almost two years ago, the committee identified well over 600 different hold/delay reasons.

The goal was to create no more than 30 major “data classifications” in which to map the 400 hold/delay reasons currently in use by various parties. To achieve industry acceptance, it was decided that USFN, through its Technology Committee, would create, propagate, and maintain a set of data standards, which would be recognized industry-wide. In late 2008, to garner additional support, the subcommittee reached out to the Mortgage Industry Standards Maintenance Organization (MISMO), a not-for-profit subsidiary of the Mortgage Bankers Association (MBA). MISMO is the leading technology standards development body for both the residential and commercial industry segments.

Recently, the MBA announced that the day-to-day operations of MISMO will be transferred to Mortgage Electronic Registration Systems, Inc. (MERS). The MBA will retain ownership of MISMO, but daily operations will come from MERS. MBA President and CEO John Courson stated that “clearly the MBA was the proper venue [when MISMO was created]. We had the depth and breadth of the membership and we were the right group to establish standards. But we never imagined that we would manage MISMO on a day-to-day basis.”

"We're a big user of MISMO standards, so it made sense for us to take a bigger role," said R.K. Arnold, President and CEO of MERS. "On a tactical level, we want to do a good job with MISMO. On an operational level, we see MISMO being run for the members — not for MERS, not for MBA. The members are the ones who use the elbow grease, and we want to drive value for the members."

The intent of the management transfer is to expand and grow MISMO under the guidance and technical expertise already in place at MERS. The MBA will retain control of MISMO. The MISMO board is appointed by MBA, and MBA will retain all of the intellectual property rights. MERS’s function will be to manage and cultivate growth, essentially taking MISMO to the next level as the premier standards-setting entity for the entire mortgage banking industry.
The USFN Technology Committee is currently seeking MISMO’s endorsement of the hold/delay reasons and hopes to have formal acceptance in place before the end of the second quarter of 2009.

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April e-Update