TheMReport

20 | TH E M R EP O RT FEATURE identify and correct errors earlier, which will give them confidence that their closing data aligns with the UCD standards well ahead of the September deadline. Across the industry, many are already taking steps to prepare for these changes. For instance, at Ellie Mae we've already integrated UCD into our product road map, and are working with both Fannie Mae and Freddie Mac so that lenders can deliver the UCD dataset and the embedded Closing Disclosure document without ever having to leave their origination system. Likewise, the Mortgage Industry Standards Maintenance Organization (MISMO) pro - vides great resources in terms of understanding what the GSEs will require of all lenders come September, and how you can integrate the necessary additional data points to your LOS or other systems of record that you may not be capturing today. Addressing Concerns T he GSEs have heard some lenders express concern about the new UCD mandate and the impact it could have on loan delivery. They have gone out of their way to work with lenders to try to head off potential issues to minimize this impact. However, this will be an iterative process. Over time, the expectations around data quality will continue to increase, and lenders will con - tinue to refine their processes and improve their data collection. The GSEs recognize there will be an adjustment period to this new process, and are willing to work with lenders to ensure loans are processed correctly. But at the same time, lenders are encouraged to proactively test out their loan origination systems that integrate with Fannie Mae's and Freddie Mac's UCD tools to make sure they seamlessly deliver UCD compliance well ahead of the September deadline. Potential Benefits T oday, the whole name of the game in the secondary market is transparency. Secondary buyers want greater assurance about the quality of the loans that are being sold and purchased. Transparency is significantly increased through the Closing Disclosure since it con- tains sensitive, critical information such as seller furnished data, and provides additional insight into the entire loan origination process. By improving the accuracy and consistency of the data concern- ing the borrower, the loan and the property, lenders will provide more certainty to the GSEs regarding a loan's eligibility for sale in the secondary market. Also, by leveraging technological advances, the industry will gain significant operational efficien- cies, and continue the process of building a sustainable future for the mortgage finance system. But to fully understand the potential transparency benefits of the UCD mandate, we need to start by looking back five years when Fannie Mae and Freddie Mac introduced the Uniform Appraisal Dataset (UAD) under the UMDP. Once the UAD went into effect, it not only standardized appraisals, but gave the GSEs a great deal of information about property values both in subject properties securing the mortgage loans, as well as other properties that were used in deter- mining value via appraisal reports. As a direct result of having this additional property data, both GSEs announced the introduc- tion of appraisal waivers —Fannie Mae's is known as the Property Inspection Waiver (PIW) and Freddie Mac's is the Automated Collateral Evaluation (ACE). Getting an appraisal waived is consequential for both the bor- rower and lender. Borrowers can save anywhere from $500 to $1,500, while lenders save a tremendous amount of time while still achieving their due diligence requirements. While it is un- known at this time how many transactions will gain the benefit of utilizing an appraisal waiver, it is clear that those who can will have a benefit in reduced closing costs and likely a reduced amount of time needed to close their loan. Additionally, back when "Know Before You Owe" was initially proposed, the rule had within it a concept that the Closing Disclosure had to be provided in a "machine-readable format." This triggered many questions about what that term specifically meant from a regulatory standpoint. Flash forward to when the GSEs shared their plans around UCD with the CFPB and how ultimate- ly the machine-readable format re- quirement was dropped from the published final rule; so in effect the idea of having this machine- readable format came off the table as a regulatory requirement and became an industry requirement leaving the industry with greater flexibility in determining how to solve the issue of being able to gather electronic data represent - ing the contents of the Closing Disclosure. Similarly, UCD will provide greater transparency into the loan closing data for all parties involved. As the UCD submission becomes mandatory, having solutions in place ahead of the required effective date allows lenders to have the proper time to transition and incorporate the new closing data submission into their loan origination process. By preparing for the upcoming UCD changes early, lenders will gain the operational efficiency benefits sooner and reduce the risk of disruption to their business. PIPER BEVERIDGE is VP of Government and Strategic Relationships at Ellie Mae, focusing on growing and managing the relationships with Fannie Mae, Freddie Mac, government agencies, and other regulatory bodies. She leads a number of key strategic initiatives that will further improve transparency and predictability through the loan process, from origination to delivery. Before joining Ellie Mae, Piper spent 13 years at Fannie Mae as Director of Strategic Initiatives, and led multiple industry initiatives including Uniform Collateral Data Portal (UCDP), Uniform Closing Dataset (UCD), Uniform Loan Application Dataset (ULAD), and eMortgage. JOHN HARING serves as the Director of Compliance Enablement for Ellie Mae, and is responsible for facilitating the implementation and maintenance of residential mortgage lending compliance and industry changes across Ellie Mae's various software applications, systems, and residential mortgage loan documents. Prior to joining Ellie Mae, he served as the VP of Compliance for Supreme Lending, and has spent the better part of the last decade supporting banks, lenders, and brokers in keeping up with significant regulatory changes impacting the mortgage industry. BEST IN ORIGINATION Waterstone Mortgage Corporation "By improving the accuracy and consistency of the data concerning the borrower, the loan and the property lenders will provide more certainty to the GSEs regarding a loan's eligibility for sale in the secondary market."

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