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 registry do?

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 anyway?

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!