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May 10, 2007
- MBA NewsLink - Commercial/Multifamily Finance News
Bridger Commercial Funding, Mill Valley, Calif., and Midland Loan Services/PNC, Overland Park, Kan., completed their first loan transfer—from origination to servicing—using the MISMO XML (Extensible Markup Language) Commercial Servicing Standard, Version 1.0.
The transfer is a “proof of concept” that MISMO XML standards accelerate information exchange between commercial lenders and servicers, lower costs and provide greater data integrity for originators, servicers and investors, according to David Bodi, executive vice president at Midland Loan Services/PNC.
“This proof of concept was needed before other industry players would seriously join the efforts around these standards,” Bodi said. “With Bridger's success, the MISMO model will be used as the basic foundation for all new standard transactions going forward.”
Two or more parties could use the data dictionary and base reference model to exchange any information. The new transfers indicate efficiencies for other transaction standards, including an XML version of appraisals, inspections, environmental reports and operating statement data.
"This electronic transfer between originator and servicer is a significant event in the acceptance of data standards across the commercial mortgage industry," said Catherine Rodewald, chairman of the MISMO Board of Directors. "It is about one proprietary computer system in one company communicating directly with a totally disparate computer system at another company using a common language not native to either but understood by both. Simply by uploading a file, the efficiencies to be gained and the dollars to be saved through this type of electronic sharing of information by the various parties to a commercial real estate transaction are very substantial."
Without MISMO standards, originators and servicers manually key in data when they receive documents from originators or they would need to create "interfaces" for each company to transfer the data. Data transfers have primarily been from servicer-to-servicer, and the MISMO standard supports either servicer-to-servicer or originator-to-servicer transactions. The commercial servicing standard was released in February 2006.
MISMO XML standards can eliminate the time-consuming tasks of rekeying operating statements—income and expenses properties—if they were sent from borrowers and “consumed” by loan origination software (LOS) systems. Costs for data entry would also be eliminated as data transfers to different XML standard interfaces for the system “consume it,” according to according to Wendy Sadeh, vice president of information technology at Bridger Commercial Funding.
“We want to work with the [companies] providing the software that the borrowers are getting this data from and if they can give us an XML file, then we don’t have to pay someone to spread those numbers,” Sadeh said.
Despite clear advantages from an investment in MISMO's XML standards industrywide, companies still need to build a one-time interface to adopt the XML standards for their own systems.
"That will be—and always will be—a challenge for any standard organization or any standard that is produced,” Bodi said.
Bridger’s MISMO transfer uses Internet-based XML to exchange electronic real estate finance data and specifications. “Midland’s system knows how to read that data so no one is rekeying it into the system,” Sadeh said.
Bodi said a one-time interface from the Version 1.0 would need to be created. Interfaces need to match to not rekey the data, but creating each interface is a time-consuming and costly chore. As originators continue to export files of loan data electronically, servicers with MISMO XML can import any originator's file with the MISMO XML standard.
“It costs [companies] and their trading partners money every time they change [interfaces], and it is a whole lot more expensive to maintain it as it is today,” Bodi said. “At some point, with the initial investment, they have that going forward."
Bridger will use MISMO XML standards to send data to trading partners or receive data from vendors—including environmental reports when the standard becomes available—which would eliminate costs, time and potential errors in data entry. For example, it could take up to an hour to rekey appraisal data and comparables into the system.
“In addition to the report, if we were able to ‘datatize’ it with an XML file, then no one would have to key it into the system,” Sadeh said. “It takes out that data entry aspect to the system.”
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