Broad adoption of the standards of MISMO–which stands for Mortgage Industry Standards Maintenance Organization–can dramatically lower mortgage loan origination costs for lenders and borrowers, according to the results of an economic study commissioned by the Mortgage Bankers Association.
Direct costs can be lowered by as much as $249 per loan, the study showed. In addition, the surveys conducted showed that execution costs could be improved by as much as 15.38 basis points, a 25 percent to 50 percent pickup in retail lending margins or $450 for the average loan.
The economic study, conducted by CC Pace and The Stratmor Group, used a combination of practices, including interviews, onsite visits and surveys.
The study also demonstrated that while data standards are too often incorrectly perceived as a purely technological interest, some of the greatest values were seen in their ability to reduce manual activities, increase data accuracy, lower the costs of third-party services and improve a lender’s competitive positioning in the marketplace. Seamless internal and external interfaces act as enablers to process improvement and automation, as well as improved service levels. Data standards also help lenders measure performance distinct from the impact of poor data quality and improve accountability and transparency in financial reporting.
MISMO, as an organization, is committed to creating and maintaining industry standards, and fostering widespread adoption of those standards.
“We are very pleased with the results of this study,” said Regina Lowrie, chairwoman elect of the MBA, and past chairwoman of the Board of Directors Technology Committee. “We now have real results illustrating the business value of open, transparent standards implementation over proprietary formats.”
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