There's a growing list of tech companies that hope mortgage lenders will look for the MISMO label when searching for vendors, as firms which sell hardware, software and platforms fight for position in the paperless home loan finance market.
The eMortgage Alliance, a consortium of companies that is promoting standards along the different stops on the paperless mortgage trail, has added U.S. Recordings and Hyland Software to its roster of vendors, a list that already includes DocuTech, Wave Systems, VirPack, SwiftView, Rekon Technologies and about a half dozen others. The alliance grew out of the Mortgage Industry Standards Maintenance Organization (MISMO), which itself is a product of the Mortgage Bankers Association's wish to coordinate the spread of Web-based XML real estate finance specifications.
As for the addition of Hyland to the eMortgage Alliance, alliance vice chair Tom Litke says it allows the alliance to meet a goal of adding "depth" for lenders looking to upgrade their origination tech benches. "If a lender goes to the MBA and wants to know where to go to find vendors that are involved in parts of e-mortgage lending, they have a number of choices," he says. "We want to have multiple vendors for every step."
The alliance's members specialize in different steps of the mortgage process, such as the creating of electronic documents, electronic signing, packaging, messaging, recording and electronic vaulting. For example, Hyland has developed a product called OnBase for Mortgage Lending, a configurable, scalable enterprise content management solution that can be deployed to meet a lender's current and future information processing requirements. OnBase allows for instant and secure access to all mortgage loan documents, ensures that processes are manageable and measurable and increases operational efficiencies.
In addition to his duties as vice chair of the alliance, Litke is an evp at WellFound Decade Corporation, which provides the integration platform. Other firms such as DocuTech does document preparation, SwiftView handles electronic delivery of mortgage document packages, VirPack sells e-packaging, Rekon offers a platform solution for electronic county recordings of releases and satisfactions, and Wave Systems does signatures. "They themselves could not solve the end to end e-mortgage process," Litke says.
The technology standards come via guidelines and recommendations that MISMO issues that intend to form a clear starting point and foundation for the development of electronic mortgage processes, technology and implementation. MISMO utilizes an open and democratic vendor neutral approach to the development and maintenance of a single real estate finance XML DTD transaction repository. It's also published specifications that support mortgage insurance application, mortgage insurance loan boarding, secondary, bulk pricing, real estate services, credit reporting and underwriting process. It works via its Web site, electronic balloting, listservs, conference calls and periodic meetings.
MISMO's eMortgage Workgroup builds on MISMO's standards, adding data elements and electronic signatures to create the infrastructure for paperless mortgages. The infrastructure is built around the idea of a "SMART (Securable, Manageable, Archivable, Retrievable and Transferable) document," or an electronic document that binds together the data, page view and signature into a single electronic file. The SMART Doc specification is a general purpose, flexible technology that can be used to implement any paper document or form in an electronic format.
MISMO has an extensive list of subscribers to its periodic issuance of new standards, including mortgage lenders such as ABN AMRO Mortgage Group, Countrywide Financial Corporation, Delta Funding, LaSalle Bank and CitiMortgage. When a lender sees that a vendor is a member of the alliance it knows that the firm is adhering to the MISMO standards; it is thus compatible with other alliance vendors that sell software to automate other parts of the lending process.
All of the technology comes together to provide an electronic trail for mortgage loans, unencumbered by different processes or incompatible software. "The main purpose is to standardize documents, so there's no rekeying of information," says Jason King, manager of the lending vertical at Hyland. "You can transfer documents, do digital signing, print them and do all of that stuff, and the content can be transferred."
Membership is open to firms that subscribe to and follow MISMO guidelines, with the goal of having each step of the lending process covered by one or more firms. In the past year, the alliance opened its membership to multiple firms for each vertical-as opposed to a single firm for each function-since a broader coalition of vendors removes the potential impression that MISMO and the MBA may be tacitly endorsing the technology of a specific company, Litke says. "We promote MISMO standards. It's not necessary to integrate all of our members into one cohesive solution. What we do is offer the industry a list of companies that are committed to the standards. "It's an open consortium, with restrictions. But we don't restrict members. If we already have an e-vault member, we don't mind having 10 others."
One of two missing niches is a loan origination system, following the departure of Framework, which was acquired in the fall by Bank of America. Litke says the alliance is in talks with other firms to bring in a loan origination piece, though he would not identify those firms. The alliance is also missing a notarization piece, which Litke says it is pursuing via discussions with the National Notary Association.
Electronic mortgages have the potential to lower operational costs, reduce errors and omissions, provide greater control over lending, increase accuracy via e-validation, secure the transfer of data and documents, and heighten the speed of loan closings. "Shipping costs can be hundreds of thousands of dollars per month, and you can elimin-ate that through electronic documents," King says. "And you can get funded about 30 percent quicker."
But thus far, fully electronic mortgages have proven elusive and the growth of Web-based functions in mortgage lending have lagged behind other financial services, in part due to complex laws and in part due to the complicated nature of the mortgage loan itself. "I'm a believer that SMART documents will never be 100 percent," King says. "There will always be PDFs involved."
An increased stress on operational efficiency, accuracy and the growth of image capture technology are giving hope to those who have an interest in seeing e-mortgage adoption take off-and tech companies are starting to line up with new product rollouts. Even within the eMortgage Alliance, Litke says there are firms that are forming unaffiliated suballiances to pool product offerings.
So far, it's unclear whether the alliance has helped the vendors that are participating. Litke would not say how many financial services firms were using technology provided by members of the alliance, nor were there numbers available on an increase in business at the tech firms that was attributable to the alliance-the only of its kind in the mortgage technology business.
King expresses confidence, citing an MBA survey that found that at least nine of the market's 20 largest mortgage lenders have e-mortgage projects on the agenda for 2005.
