Magazine article Mortgage Banking

Technology

Magazine article Mortgage Banking

Technology

Article excerpt

The looming threat of government-sponsored enterprise (GSE) legislation has caused the mortgage banking industry to take a sharp look at current operations. Particularly as it relates to data collection by mortgage bankers, the proposed regulations would further complicate a machine whose gears are already grinding from manual processes.

One aspect of the pending GSE legislation (the Federal Housing Enterprises Regulatory Reform Act of 1992) would require Fannie Mae and Freddie Mac to report many data items about the loans they purchase. These proposed data elements are not supplied in the current delivery cycle, and several are not even collected in the origination, interim or servicing phases of a loan. New data fields such as first-time homeownership status, family size, room count and rental income have been among those proposed. Unfortunately, these types of data cannot be extracted from other data that are already reported, and they do not appear on any delivery document. Other fields, such as stable monthly income, require calculation prior to reporting. And while, this extra step of interpretation causes raw data to be transformed into actual information--it comes with a large cost. Mortgage bankers already spend a lot of money on underwriting, and if this proposed reporting legislation is passed, we will probably see further increases in these costs.

To accomplish the technological reporting, of these additional data items to the agencies, the industry will need to develop changes in its paper-based data collection. Technology managers will be pushing for increased paper dependence to recount the necessary information. While at first this may seem surprising, it is easy to understand that computers cannot transmit information that, prior to its electronic appearance, has never been collected, derived or complied on paper. When technology managers push for a change in paper forms, it is because the data was lacking from the process to begin with.

Most industries that handle a dramatic volume of data entry use forms that are designed to list data in ordered, delineated and evenly spaced fields. This not only assists the keypuncher, but allows those requesting the data entry to more easily check their work for completeness, field size and coding. Mortgage bankers have put their data-entry personnel to the test, by making them derive information from various forms and make the data conform to the available space. …

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