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Dataset uniformity provide clarity for GSEs and lenders
The mortgage industry is on the path to solidifying a foundation for sustainable success. Part of this can be attributed to how the government-sponsored enterprises (GSEs) reconfigured the foundation on data. Tangible results have come out of creating a common protocol, approach and dataset for capturing electronic loan delivery and appraisal data. These processes have set the stage for similar initiatives over the next few years and ultimately setting a standard for the mortgage lifecycle.
This is what it means for lenders
At the minimum, lenders should consider preparing to adopt these policy changes and technology processes to line up with the new data delivery procedures. While implementing these new processes would involve much work, lenders may see significant operational efficiencies and market position improvement after taking on the ‘data makeover’ challenge.
Improving the consistency and accuracy of data, whether it’s that of the borrower, property or loan, would provide the GSE’s with more certainty regarding the eligibility of selling a loan in the secondary market. The process for increasing industry adoption is well underway as lenders writing FHA loans are required to use the web-based Electronic Appraisal Delivery (EAD).
The FHA EAD mandate came after the GSE’s successful implementation of the Uniform Collateral Data Portal (UCDP) in 2012, although EAD is not a part of the Uniform Mortgage Data Program (UMDP) and its three uniform components (UAD, ULDD and UCDP). More than 6,000 companies have registered with EAD and 34 million appraisals have been delivered through the portal.
Paul Prentice, Senior Managing Appraiser at PEMCO Limited, underlines the GSEs desire in gaining process efficiencies.
“In standardizing the data collection within the appraisal and lending environment, the GSE’s have provided a platform for consistent reporting with information that is both tangible and easily obtained. This has also brought with it increased speed without jeopardizing quality as less unnecessary questions are asked during the processes and new technology can be coupled with the results to give the lender a more visible asset for risk assessment. The utilization of a more standardized process with increased visibility should result in increased lender and consumer confidence leading to a healthy lending environment. Additionally, this allows for more consistent and concise updating over time as various regulations come into play or system flaws become apparent.”
Fannie Mae and Freddie Mac are preparing to launch the Uniform Closing Dataset (UCD), which is designed to be a step in standardizing future loan deliveries as a component of the Consumer Financial Protection Bureau’s (CFPB) closing disclosure. The UCD collection service is coming in September 2016, but its use will not be made mandatory until late 2017, giving lenders a little time to update their operations and processes.
Also, Fannie Mae and Freddie Mac are finalizing the redesign of the Uniform Residential Loan Application (URLA) and developing the Uniform Loan Application Dataset (ULAD), a corresponding standardized dataset, which will be available to lenders January 1, 2018. A timeline for mandatory use of the redesigned URLA and ULAD is forthcoming.
Fannie Mae. Uniform Closing Dataset (UCD)