The Mortgage Industry Standards Maintenance Organization (MISMO), a subsidiary of the Mortgage Bankers Association (MBA), has been developing a series of uniform technology standards that will ideally allow for the somewhat siloed reverse mortgage industry to more easily collaborate with others in the mortgage finance ecosystem.
Jonathan Kearns, vice president of technology at MISMO, sat down with HousingWire’s Reverse Mortgage Daily (RMD) at the MBA Annual Convention & Expo in Denver this week to discuss the work of the group.
Chris Clow/RMD: What can you tell me about the work that is progressing in terms of the scope of the reverse development work group, and what does it potentially mean for MISMO?
Jonathan Kearns: Today, the reverse mortgage is a very cocooned, proprietary dataset in how it’s done. Lenders are very specialized in that space. So, the goal here is to open up and create standardized datasets for reverse mortgages, but also to base it on traditional mortgage data.
That way, when a loan officer is looking at a solution for a customer, they can look at both a traditional mortgage and a reverse mortgage together. Today, that’s not possible unless systems are integrated, but usually, it’s two distinct, separate systems. Integrating the data between the two can’t happen today because reverse mortgage data is completely proprietary and non-standardized.
Clow: What exactly has this entailed from a technology perspective?
Kearns: The first step was to create the data points and information needed that’s not in the MISMO model today. There are probably about 100 data points collected in reverse mortgages that aren’t collected in traditional mortgages, so we added those. Now, they’re looking at creating a dataset based on what’s called iLAD, or the industry loan application dataset.
They’re defining certain use cases for reverse mortgages, as there are many different platforms or use cases within traditional mortgages as well. The key goal is to create a standardized dataset using the MISMO model, which would also give it the ability to be combined with a traditional mortgage.
Clow: You said that reverse mortgages have often been siloed. Does that present any unique challenges compared to some of the other work MISMO has done, just because reverse mortgages often have their own platforms and terminology?
Kearns: Yeah, I think the biggest challenge is getting the stakeholders together in a room because they’re used to working in silos. MISMO, as an organization, does a great job of bringing together people who typically don’t work on standardization and getting it done — but adoption is key. Everyone has to see the value, especially the platforms.
The good news is that two of the largest platforms in the reverse mortgage space had the idea to come to MISMO and work on this because they saw the need for it in the industry. Reverse mortgages are a small percentage of the industry today, and they do have a bit of a stigma because of those commercials back in the day with Robert Wagner and so on.
Clow: Does that crystallize the reputational challenges that reverse mortgages have in the work of MISMO?
Kearns: People don’t always think of them in the same way as a traditional mortgage, but if you really look at them, they provide a unique opportunity for our aging population to tap into their equity.
I think the key is going to be adoption — getting people in the traditional mortgage space to consider reverse mortgages as another product. We’re seeing this already with Movement Mortgage, which has gotten into the space and is doing a lot with reverse mortgages because it’s a great product, especially with interest rates where they are today. A refi or cash-out refi isn’t always the best option.
Clow: In terms of bringing reverse mortgage professionals into the fold, what has the collaborative process been like as the group’s work progresses? There could be some misunderstandings between forward and reverse professionals. What’s it like finding that middle ground?
Kearns: We’re just now starting on the education and adoption piece. What we’ve done so far is to bring reverse mortgage platforms into the group and communicate with the iLAD group about the uniform residential loan application dataset, or URLA, with the GSEs and lenders involved, so they’re aware of what’s going on.
In addition, we’ve partnered with the National Reverse Mortgage Lenders Association (NRMLA), which is also part of the group. They’ve done a lot to promote the initiative within their industry. So once we have a dataset — right now, we’ve just finished getting it into the model — then our next step will be working with lenders, attending loan production committee meetings, and starting to educate and evangelize about it.
Clow: The most recent timeline mentioned had a milestone date scheduled for January. Is that still on track or could it change?
Kearns: Right now, they’re hoping to finish one of the use case datasets by the end of this year. After that, it’ll go through the approval process and similar steps, which takes about another 90 days. So, by that point, they should be complete and ready for the approval process.
