While I applaud the recent decision of Bank of New York to leverage MERS eRegistry and eVaulting technology to support their warehouse
lending business, I am compelled to ask – what took so long??? The technology to register every mortgage loan in the country has been
commercially available for over 13 years on MERS.
I don’t mean to suggest that BoNY has acted irresponsibly up to this
point, not at all, but rather the mortgage industry in general has been
far too casual for far too long in adopting technology and processes to
ensure “built in loan quality” vs. “inspected loan quality”.
What does this
It tells you who owns and services your loan, something that could have been helpful during the housing crises, right?!?! eVaulting
is a fancy way of saying “secure database and server”.
What good is an eVault
Imagine being able to inspect and audit every file before you
bought it, or before you bought a security being able to log into a
system and look at the underlying mortgage collateral – appraisal,
income valuation, credit, etc.? Now imagine that you could audit the
quality of the information used to qualify the mortgage, and whether or
not the loan is even eligible for sale to a targeted investor, or any
investor for that matter. That requires XML data and data standards
(MISMO) which have been around for many years.
Nirvana is achieved when
the industry can settle on using a – one - universal mortgage loan
number so investors, borrowers, auditors, etc. can find the loan they
want to audit in the first place!
I remember eighteen months ago, while I was at Ginnie Mae, we spent
countless hours working with industry leaders, Treasury officials and
lenders trying to encourage all parties to adopt the means to a more
efficient and effective warehouse lending facility. This technology was
available then. It is hard to understand why it has taken so long for
the industry to recognize the opportunity.
Private capital will return to the residential housing finance market
when trust, transparency, and auditablity are restored or established.
The truth be told we have had this ability for quite a while with the
industry utility, MERS. Instead our industry is pushed to the brink of
catastrophe before it acts, or worse legislated. I guess it is better to be late than never!