The reverse mortgage loan origination business has matured to the point to where it needs a standardized loan data file format, said an executive with RMS, Houston.
Mike Kent wants to see “something similar to the Fannie 3.2 format used in the forward business, so that mortgage brokers could originate on whatever software product they use in their operations.”
The goal, he continued, is for them to be able to export data into a standardized file that can then be delivered to the reverse mortgage lender.
Kent admitted this is a challenge as lenders would have to build interfaces. This could be complicated by the fact that some reverse mortgage lenders require brokers to use proprietary software to submit loans.
But this current way of doing things requires the broker to redundantly enter the same information they put into their own systems into the lender's system in order to submit the loan.
“I think it would be a great step for us if we could get together as an industry and come up with a standardized format,” Kent said.
Using the current forward file format might be a starting point for developing a reverse format. The problem is the need to generate loan-proceed calculations for the upfront disclosures and those calculations are different than what is seen in a forward mortgage.
The reverse mortgage calculations take into account the borrower's age as well as the property value. The nature of the reverse mortgage means taking a more actuarial approach to determining proceeds.
Still, he admits he was not sure if it would be easier to tweak the Fannie 3.2 format or to create a new one from scratch.
There are three or four reverse mortgage loan origination systems out there, the market share leader being ReverseVersion, Kent said. The others include MetLife's Tango and RMS's own RM Compass.
Most of his mortgage lending experience has been on the forward side of the business. In coming to the reverse side, he has begun to wonder what can be done to make the process more efficient and one way to do that is to create a standard data set that could be generated out of any one of these LOS systems.
Kent said he is not sure how many people are talking about creating such a data set, but it is a conversation that is worth having in the reverse mortgage industry.
This conversation would need to be held at the trade group or lenders working together level. “My belief is that any time you can offer your customers more choices, such as what front end system they want to use and they can choose that system that best fits their needs. If you give them more choice, you give them more competition, and more competition builds better markets and matures markets,” he said.
Right now, to submit a loan to RMS, the originator has to either submit a scan through a FTP site or even send a hard file. Most of what is being sent is needed to complete the input of the loan into the RMS system and this is very inefficient, Kent said.
Furthermore, being a manual process, it means more people have to be used to do the work and increase expenses, plus increase the possibility of error.
