Mortgage Industry has been traditionally a largely human driven process with little to no digitization. Lending process is dominated by the loan officer and a set of other processors. The borrower has little insight into the process and is only notified when they need to participate. Contrast this with other consumer facing businesses in this space like Fintech or other major digital disrupters like e-commerce. With large scale technology adoption, most people-facing businesses have set the bar very high in overall user experience.
Users now expect of similar experience from Mortgage industry. In Fannie Mae’s 2018 report What to Digitize First, According to Recent Homebuyers, 66 percent of home buyers surveyed expressed interest in a fully digital process for obtaining a mortgage. While user experience is important, digitization has other important aspects too. The human-centric processes in mortgage industry adds high fixed-cost and is not agile. There is dearth of interoperability mechanisms, and even the vocabulary and taxonomy is sometimes different across lenders. All these factors are now pushing lenders and in general the mortgage industry to consider adopting the modern, digital approach.
In this post, we look at the MISMO data standards, why it holds promise for digitization of mortgage industry and finally how cloud native approach can help lenders improve efficiency as they move to MISMO standards.
MISMO Data Standard
The Mortgage Industry Standards Maintenance Organization (MISMO) is a not-for-profit, wholly owned subsidiary of the Mortgage Bankers Association (MBA) responsible for developing standards for exchanging information and conducting business in the U.S. mortgage finance industry. MISMO has more than 175 member organizations representing a cross-section of the residential and commercial mortgage industries.
As mortgage industry moves to digitization, one of the key foundations for this movement is a uniform data standard across all the players in this ecosystem. This is where MISMO standards play a crucial role. From vocabulary to mortgage forms to standard communication mechanism between different lenders - MISMO facilitates a smooth interaction between all the players involved in the lending process.
As these data standards are adopted, it opens the doors for large scale automation and digitization of the lending process. Given the scale of mortgage industry, the cloud native platforms and techniques are well placed to build the mortgage platform for the next decades.
Cloud Native Principles
Modern, cloud-native software offers excellent mechanisms for data transfer, data analytics, automation and more. Lets take a look at few such possibilities and understand which tools can help with which use-cases.
Data Analytics Platforms for Intelligent Decisions
The latest implementation-agnostic data model from MISMO ensures compatible usage of JSON and XML, based on the organization's preference. JSON format opens up the opportunity to leverage modern analytics platforms like Spark, Presto and others in a scalable, high performance manner. Analytics can give data driven insights in borrower experience, cost, time to close and other key factors driving user experience. Additionally, analytics offers insights in overall user behavior, growing trends among lenders and borrowers and more.
Analytics brings a birds eye view of overall scenario, helping stakeholders make better decisions. MISMO interoperable json formats are a great first step in this direction.
Data Transfer Across Parties
With uniform data vocabulary and standard glossary, MISMO ensures a clear understanding of terms across different stakeholders in the lending process. This also ensures systems that serve as data transfer units can seamlessly interact. Platforms such as Apache Kafka or Apache Nifi can serve as the data pipelines to allow seamless flow of data among different stakeholders.
Data Transformation Across Formats
Different documents inevitably need to mapped to other formats for consumption by various systems. Again a standard format for document mapping and transformation allows automation to take over. Tools like Apache Nifi, Airflow etc can create data pipelines while applying transformations. For more involved, higher degree of transformation tasks Apache Spark can work as the transformation layer too.
Effective Storage Platforms
MISMO data files are on an average few KBs in size. This means modern storage systems are very well suited for such files at a high volume. Modernizing the storage platform will give unmatched scaling capacity and make the technical stack ready for future challenges.
In this post we saw why mortgage industry is looking at changes and how MISMO is a great first step in this direction. Only with a strong, fundamental data standard, the mortgage industry can build the new tools that cater to borrower's expectations. We at Developer.sh have been working closely with some of the stakeholders in this industry to build end-to-end MISMO compatible solutions that will take borrower experience to the next level (watch this space for the case study).
We have the unique advantage of deep expertise in MISMO standards and the cloud-native world. We leverage this experience to build modern, scalable, high performance platforms for mortgage industry. Talk to us to learn more!