BigThink: Urban Institute "The Case for Uniform Servicing Data Standards"
Somewhat of a nothing-burger, the paper is the fourth installment on the industry's need to finish uniform servicing data standards. This brief focuses on the benefits that would "accrue to consumers and servicers if uniform data standards were adopted for exchanging mortgage servicing data."
Brief: Why we haven't we solved this already...?
In 2012, Fannie and Freddie announced an initiative to address the uniform servicing dataset (UMSD). Angels were heard... but those little detail devils reared their head. Once a little vetting started, the GSEs recognized the UMSD had blossomed to over 1500 fields, many of which were entirely new undefined fields. So they quickly put down that big pile of complication and turned to more slayable dragons.
"To appreciate how major this initiative was, the GSEs’ earlier effort to standardize loan delivery data included about 200 data points and took years to implement."
In 2014, FHFA thought they would pick up the torch on the UMSD and quickly set it down. The Servicing Data Technology Initiative engaged in lot of talking and meeting about the complexity of the UMSD, but little actual progress in adopting uniform standards.
Brief: Why is this a good idea...?
Bad data is expensive, good data is better and ultimately improves customer experience. Further, this problem doesn't age like fine wine... we need to address it sooner than later. Add in a few cool charts on servicing transfer volume and then the conclusion:
"Because most of the postcrisis regulatory overhaul is behind us, because delinquencies are low, and because the industry is no longer operating in turmoil, we believe now is the right time to implement uniform servicing data standards. Additionally, the present favorable economic environment will not last forever."
The tone is overtly "lookie here - we've done a lot of work and don't want it to fall off everyone's collective radar!!! Go UMSD!!!"
Unfortunately, I don't see the UMSD heating up any time soon. With the loosening regulatory environment, the champion of UMSD will be trade efficiency... one required by a stable market force, such as a centralized exchange. That might be in the offing as we speak - but I sense the urgency there will be defined by GSE reform.