Data Integrity And MBI

Ever since the first lending automation systems hit the market in the 1980s, mortgage technology budgets have steadily expanded. Today, mortgage lenders spend more on technology than ever before. It’s therefore ironic that with all the money allocated for loan origination platforms and ancillary systems, little if any budget is directed toward data integrity. It would be easy to classify this as a shortcoming on the part of each individual company, but when cases of substandard data are evenly spread throughout a given industry, clearly something else is at play.

Those of us who have spent more than a few years in this industry can understand how this syndrome developed. For decades, mortgage firms have been focused on near term profits and seizing market share wherever possible to survive. This short term focus has eclipsed the ability of most to do effective long range strategic planning. The resulting negative effects on data quality are incontrovertible. Many lenders across the country now have bloated databases full of loan files that are incomplete, lack consistency, or both.

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The most fascinating aspect of this development is that for the most part, inferior data stores haven’t adversely affected lenders or their ability to do business. Lenders should actually be commended for their creativity and persistence in consistently coming up with intricate (albeit time consuming) workarounds to get the right data into their spreadsheets and traditional reports. But this era of shortsighted month-to-month, quarter-to-quarter focus is coming to an end.

The advent of the Consumer Financial Protection Bureau brought with it an industry-wide focus on data. This new but potent force in the market has brought lenders face to face with their data quality issues in earnest for the first time. It is now apparent that if lenders wish to optimize compliance and streamline audits, they need to finally own up to the fact that they are the stewards of their own data.

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Some may try to blame the source systems, but the fact remains that poor data quality is a result of inferior business processes. We’ve all seen this firsthand: databases polluted with duplicate loans, stale loans, or loans that contain missing or erroneous data. It’s accumulated over years, sometimes decades of rapid fire loan origination, and it’s no small task to it clean up.

I won’t presume to speak for the CFPB, but when it comes to MBI, there are two types of mortgage lenders in the marketplace. Those who have implemented MBI, and those who will. Those who have are in the enviable position of having clean data. Those who have not yet made the leap to embedded analytics have much to look forward to, because a good MBI vendor will be in a position to help you clean up your data. Just remember that this important task is best performed by a provider with extensive mortgage industry experience, and a solid track record of managing data for a long list of mortgage companies.

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