Old Data is dead, long live New Data.
That phrase, a riff on the historic saying “the King is dead, long live the King!” summarizes the changes in the use and management of mortgage loan servicing data that we have been seeing for some time.
And although the 15th century French monarch, King Charles VI, who inspired the classic phrase above didn’t die in a revolution, the old data of loan servicing has been replaced in a revolutionary way by the new data of servicing. This revolt has been led by the twin forces of an increased need for data and the need to increase the breadth of data.
What is the old data? Old data is familiar to many of us: formatted row and column reporting, summary pages and reporting formats that are older than most of you reading this. It’s something that servicers have long relied on to communicate with market participants.
What is the new data? It’s raw data that is formatted for universal use. New data is unedited, detailed and includes information from far more sources.
Requirements for loan delivery and appraisal data have been standardizing the expectations for new data. With the implementation of the Uniform Mortgage Servicing Dataset underway to include standardized definitions, formats and valid data values, data is evolving into one of a company’s most valuable assets to be managed, instead of a commodity to be handled.
What does this revolution mean for you? It means you need to have a broader understanding of data and be able to track its source, validate its accuracy and protect its integrity and its use.
Broaden your view of data
Lenders must understand all the places where data is found, which mean much more than just the data in your origination or servicing systems. You are surrounded by data, some of which is in places you’ve never considered.
Think of the data in your other systems: the data in your email servers, the data on your website, the data about you and your customers found on Facebook and Twitter, the data in your documents and the data found on your employees’ desktops. All of this data must be captured, analyzed and understood.
Become accountable as the owner of data
Most of you would say that the information technology function of an organization owns’ the data, but few would say that same group owns the business practice. One of the revolutionary thoughts about data is that business users should jointly own the data with technology staff. While the IT professionals in your organization can help, they may not always understand the impact of data relationships in your processes. Co-ownership is a vital component to building a good data practice or data governance program.
Consider all the places data enters your environment. Clearly your processing systems like LOS and servicing platforms are important, but data also comes in through documents and communication tools such as email and voicemail systems, borrower websites and social tools like Facebook and Twitter.
Validate, correct and guard your data
You must be able to trust the source of data and how that data enters your environment. By reviewing operational issues you have and tracing the data involved to the source, you can often discover a data quality issue. You should focus on fixing data quality issues at the source of entry. While sophisticated business process management tools and data analytics can help, even simple tools like postal service address validation can help reduce the costs and risks associated with keeping inaccurate addresses.
Get moving on data governance
Many of you may have learned this in business school; there is a higher probability of success if you start by focusing your data management efforts on a high-impact business process and a handful of critical attributes.
You don’t have to create a gargantuan data governance program and hire data management gurus. One savvy business person can map out the flow of data. This map will represent where data comes in and where it is used, who consumes it and who alters it. Once you have the data map, the governance issue is easier to tackle.
The quantity of new data facing lenders is growing every day. It’s best to address new data challenges now because the volume of data, types of data, places where data goes and who uses data will continue to grow and become even more complex down the road.
Joe Dombrowski is chief mortgage strategist at Brookfield, Wis.-based Fiserv.
