According to the mortgage industry’s nonprofit data standards group, there is currently no known universal standard for identifying particular loan documents that go with a specific loan. While lenders have their own individual methods of identifying loans, those practices lead to the same documents being catalogued differently when mortgages change hands.
“The idea is that any one instance of a document, that you ought to be able to create a unique ID based on data that’s within the document,” explained Rick Hill, associate vice president of industry technology at the Mortgage Bankers Association, which owns and manages MISMO.
Once MISMO’s new Development Workgroup establishes a formula for generating the document identifier, industry participants can either extract the identifier or utilize the logic to regenerate the same unique identifier for any document in a loan package.
The proposed process would help address problems that investors and servicers face requesting copies of loan documents from lenders—an increasing problem in the foreclosure process, where borrowers use “produce the note,” and other strategies to contest investors’ legal standing to foreclose.
“If I don’t have an original, but somebody several steps away does, I can take data in my system and, because I know what the standard algorithm is, I can create a unique ID from that data,” Hill said in an interview with Mortgage Technology. “Then theoretically, if I give that ID to a party upstream, they can pull the exact version of a document that I’ve requested.”
The idea was first presented at the MBA’s Residential Technology Steering Committee meeting during the MBA’s technology conference in April. Since then, the MISMO council of chairs was briefed on the proposal and later approved the workgroup’s creation. MISMO put out a call for volunteers to participate in the workgroup earlier this week.
The Mortgage Identification Number system developed by Merscorp Holdings is a similar industry resource already in place. Lenders use the MIN system to assign unique identifiers to specific loans that are registered on the MERS System after they’re originated. Electronic mortgages, which must be registered on the Merscorp-run eRegistry e-note system of record, are also assigned MINs.
But while MERS enjoys significant industry participation, many loans that never end up on the MERS System are assigned MINs. In addition, the MIN naming convention is assigned and not based entirely on loan-specific information, making it nearly impossible to recreate a loan’s MIN.
The proposed MISMO identifier is different in that it is intended to serve as an industrywide standard and rather than having one identifier for the entire loan package, provide finite identification of specific documents, like the loan application, promissory note, as well as the HUD-1, Good Faith Estimate and other disclosure documents.
“It’s around the documents, versus the loan,” Hill said. “Theoretically, it could exist for something that never became a loan.”
Hill said because the MISMO ID is for documents in a loan package, it would complement, not replace the MIN.
“Theoretically, a loan would have a MIN, and every document associated with that loan would have it’s own unique document ID,” he said.