MISMO tech VP on what the reverse mortgage working group brings to the table

The Mortgage Industry Standards Maintenance Organization (MISMO), a subsidiary of the Association of Mortgage Bankers (MBA), has developed a set of unified technology standards that ideally allow the somewhat siled reverse mortgage industry to more easily collaborate with others in the mortgage financing ecosystem.

Jonathan Kearns, vice president of technology at MISMO, sat down with us HousingWire‘s Reverse Mortgage Daily (RMD) at the MBA Annual Convention & Expo in Denver this week to discuss the group’s work.

Chris Clow/RMD: What can you tell me about the work moving forward in terms of the scope of the reverse development working group, and what does this potentially mean for MISMO?

Jonathan Kearns: Today, the reverse mortgage is a very private, proprietary data set in the way it’s run. Lenders are highly specialized in that area. So the goal here is to unlock and create standardized data sets for reverse mortgages, but also to base them on traditional mortgage data.

That way, when a loan officer is looking at a solution for a client, they can look at either a traditional mortgage or a reverse mortgage. Today that’s not possible unless systems are integrated, but usually they are two separate, distinct systems. Integrating the data between the two is not possible today because reverse mortgage data is completely proprietary and non-standardized.

Clow: What exactly does this mean from a technology perspective?

Kearns: The first step was to create the necessary data points and information that are not currently in the MISMO model. 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 data set based on what’s called iLAD, or the industrial loan application data set.

They define certain use cases for reverse mortgages because there are many different platforms or use cases within traditional mortgages as well. The main goal is to create a standardized data set using the MISMO model, allowing it to also be combined with a traditional mortgage.

Clow: You mentioned that reverse mortgages often exist in silos. Does this present unique challenges compared to 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 making it happen, but adoption is critical. Everyone needs to see the value, especially the platforms.

The good news is that two of the largest platforms in reverse mortgages had the idea to come to MISMO and work on this because they saw the need for it in the industry. Reverse mortgages make up a small percentage of the industry today, and there is a bit of a stigma attached to them due to the commercials of the past with Robert Wagner and so forth.

Clow: Does this materialize the reputational problems that reverse mortgages bring to MISMO’s work?

Kearns: People don’t always think of them in the same way as a traditional mortgage, but when you really look at them, they offer our aging population a unique opportunity to tap into their equity.

I think the key will be adoption: getting people in the traditional mortgage world to think of reverse mortgages as a different product. We already see this Movement Mortgagethat has come into the space and is doing a lot with reverse mortgages because it’s a great product, especially with interest rates where they are right now. Refinancing or cashing out is not always the best option.

Clow: In terms of involving reverse mortgage lending professionals, what has the collaborative process been like as the group’s work has progressed? There can be misunderstandings between forward and reverse professionals. What is it like to find that middle ground?

Kearns: We’re just now getting into 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 Home Loan Application Dataset, or URLA, with the GSEs and lenders involved so that they are aware of what is going on.

We have also entered into a partnership with the National Association of Reverse Mortgage Lenders (NRMLA), which is also part of the group. They have done a lot to promote the initiative within their industry. So once we have a data set – right now we’re just finishing putting it into the model – our next step will be to work with lenders, attend loan production committee meetings, and start educating and evangelism about it.

Clow: The most recent timeline mentioned had a milestone date scheduled for January. Is this still on track or could this change?

Kearns: Right now they’re hoping to complete one of the use case datasets by the end of this year. Then it goes through the approval process and similar steps, which takes another 90 days. So by then they should be complete and ready for the approval process.