MISMO 3.3 is not just a nice-to-do. It matters and more vendors need to embrace it. The results are unquestionable. If you look at the vendors that are embracing this new standard you’ll see the value. For example, International Document Systems (IDS), a nationwide provider of mortgage documents and compliance, and LendingQB, a loan origination software (LOS) solutions provider, are among the first mortgage vendors to successfully implement the MISMO 3.3 data standard for document compliance. The two companies emphasized the importance of utilizing the MISMO 3.3 data standard for TRID compliance and meeting the future needs of the mortgage industry.
The Mortgage Industry Standards Maintenance Organization (MISMO) was created to provide the mortgage industry with a common language to exchange information in order to streamline processes, improve accuracy and boost investor confidence in mortgages. Through utilization of MISMO standards, the industry has been able to improve access to data exchange between vendors, ultimately benefiting the borrower by lowering the cost to obtain a mortgage loan.
The MISMO 3.0 standard was originally released in 2009, but was updated to version 3.3 in 2014 in order to reflect federal mortgage regulations and reporting requirements implemented by the Consumer Financial Protection Bureau’s (CFPB) TILA RESPA Integrated Disclosure (TRID). The impact of MISMO 3.3 is by and large not visible to lenders, but it provides the framework and backbone for companies like IDS and LendingQB to operate efficiently in the TRID environment.
“Utilizing the latest MISMO standard makes it easier for lenders to produce accurate and compliant mortgage documents,” said Daniel Miller, Vice President of Business Development at IDS. “There is a tremendous amount of data that needs to be transferred between an LOS system and IDS in order to make sure lenders can render an accurate disclosure document. TRID introduced not only new fields, but an entirely different way of tracking fees.”
The previous Good Faith Estimate (GFE) was a document that provided a static list of fees, each with their own defined data element. MISMO 3.3 is fundamentally different because fees are created dynamically, effectively requiring an infinite number of data elements. Miller commented that many LOS vendors chose not to upgrade to the MISMO 3.3 standard and instead relied on awkward workarounds in order to generate closing documents.
“Many vendors claim they are MISMO 3.3 compliant when in actuality they’re just packaging TRID data inside their existing MISMO 2.6 transmissions,” Miller said. “It may work in the short term, but it will create a cascade effect when there are any changes in the future. It will require us to fix each instance of an LOS vendor’s workaround in order for us to accurately generate documents. This creates an added layer of complexity and is antithetical to the purpose of MISMO.”
LendingQB and IDS worked well in advance of TRID to ensure that the MISMO 3.3 standard was developed and tested, which resulted in a faster and more streamlined TRID implementation process. “MISMO 3.3 is critical for lenders to stay compliant because it allows their technology providers to respond to changes in the regulatory framework more quickly and cost effectively,” said Binh Dang, President of LendingQB. “LendingQB and our best-of-breed technology partners are dedicated to ensuring that our clients have access to the latest technology available.”
Miller revealed that LendingQB is the only non-proprietary LOS system that has successfully implemented the MISMO 3.3 standard with IDS, an achievement that reflects both company’s commitment to ensuring compliance and technology innovation. “LendingQB and IDS made significant investments to ensure that our clients are using the latest technology and data standards,” Miller said. “MISMO 3.3 is essential to TRID, Qualified Mortgage (QM) rules, and any future regulatory changes, such as the new 2018 HMDA reporting requirements. Our efforts are aimed at making it fast and easy for lenders to adapt to industry changes, now and in the future.”
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at firstname.lastname@example.org.