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CommonGround:TheNeedforaUniversalMortgageLoanIdentifier
MatthewMcCormick1andLynnCalahan2
1OfficeofFinancialResearch,[email protected],[email protected]
AbstractTheU.S.mortgagefinancesystemisacriticalpartofournation’sfinancialsystem,representing70percentofU.S.householdliabilities.Itisalsohighlycomplex,withmanyfinancechannels,participants,andregulators.Thedataproducedbythissystemreflectthatcomplexity;unfortunately,nosingleidentifierexiststolinkthemajorloan‐levelmortgagedatasets.Theestablishmentofasingle,cradle‐to‐grave,universalmortgageidentifierthatcannotbelinkedtoindividualsusingpublicly‐availabledatawouldsignificantlybenefitregulatorsandresearchersbyenablingbetterintegrationofthefragmenteddataproducedbytheU.S.mortgagefinancesystem.Suchanidentifiercouldadditionallyserveasthefoundationofasystemthatcouldbenefitprivatemarketparticipants,aslongassuchasystemprotectedindividualprivacy.
TheauthorsgratefullyacknowledgehelpfulcommentsfromanddiscussionwithCorneliusCrowley,WilliamNichols,andLindaPowelloftheOfficeofFinancialResearch(OFR);RenEsseneandRonBorzekowskioftheConsumerFinancialProtectionBureau;TheresaDiVenti,WilliamDoerner,RobinSeiler,andValerieSmithoftheFederalHousingFinanceAgency;ThereseScharlemannoftheDepartmentoftheTreasury;MarcRodriguezoftheBoardofGovernorsoftheFederalReserveSystem;MichaelNixon,KurtUsowski,WilliamReeder,andEdwardSzymanoskioftheDepartmentofHousingandUrbanDevelopment;ThomasMayockoftheOfficeoftheComptrolleroftheCurrency;HarrietNewburgeroftheFederalDepositInsuranceCorporation;RolaineBancroftandRobertErrettoftheSecuritiesandExchangeCommission;andothers.Anyerrorsoromissionsaretheresponsibilityoftheauthorsalone.
ViewsandopinionsexpressedarethoseoftheauthorsanddonotnecessarilyrepresentthepositionsorpolicyofOFR,Treasury,oranyoftheagenciesrepresentedbycontributors.Commentsandsuggestionsarewelcomeandshouldbedirectedtotheauthors.
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1.IntroductionTherecenthousingcrisisexposedanumberofdatagaps,risk‐managementfailures,andshortcomingsinoperationalcontrolsthroughoutthemortgagefinancesystem,includingproblemsconnectingoriginationdatatoperformancedata,trackingloanmodifications,andverifyingloanunderwritingpractices.Mitigatingtheseproblemsisanimportantsteptowardreturningthemortgagefinancesystemtoahealthystate.ThispaperexaminesthepotentialoftheuniversaladoptionofasinglemortgageidentificationstandardtohelpaddresstheseproblemsbyenablingbetterintegrationofthefragmenteddatathatisproducedbytheU.S.mortgagefinancesystem.
Thesize($9.4trillionoutstandingasofQ12013),complexity,andfragmentednatureofthissystemanditsregulationaresignificant.1Giventhesefactors,itisdifficulttoaccuratelyidentifypatternswhenidentificationrequiresconnectingvarioussourcesofdatawithoutclear,consistent,andunambiguousidentificationofthekeycomponent:themortgageitself.However,althoughanumberofidentificationsystemsexist,nosingleuniversalidentifierissharedacrossallgovernmentagenciesoracrossallmajorprivateentities.2Althoughmarketparticipantscross‐referencetheiridentifiersasamatterofnecessity,ambiguitiesandinconsistenciesindefinitionsoftenmakecross‐referencingdifficultandinaccurate.Aswithlegalentityidentifiers,“Simplyput,havingamultitudeofidentifiersaddslayersofcomplexity,increasesthepotentialforerrors,andresultsinredundantefforts.”3
Sharedidentifiersareapublicgoodthatbenefitmarketparticipants,regulators,andresearchers.Wereauniversalmortgageidentifieradopted,researchersandregulatorswouldbebetterabletounderstandthemortgagefinancesystemfromasystemicriskperspective,andregulatorswouldhaveabetterunderstandingofthemortgagefinancesystemfromtheperspectiveofcomplianceandprudentialsupervision.Thisimprovedunderstandingcouldyieldbetterpolicyresearch,whichcouldinturndrivebetterpolicymaking,therebybenefittingthepublic.Additionally,firmswouldbenefitfromimprovedriskmanagement,lowercostsofintegrationamongtradingpartnersandwithinlargelendingfacilities,andlowercomplianceburdensfromreportingrequirements.Finally,contingentonthedevelopmentofappropriateprotectionsforindividualprivacy,purchasersofmortgagesecuritiescouldpotentiallybenefitfromgreatertransparency.
Themortgageindustryhasbeenexploringtheissueofuniqueloanidentification,inpartwithinvoluntaryconsensusstandardsbodies,asdefinedunderOfficeofManagementandBudget(OMB)CircularA‐119.4OnesuchorganizationistheMortgageIndustryStandardsMaintenanceOrganization(MISMO),astandards‐settingorganizationcurrentlyadministeredbytheMortgageBankersAssociation.ManyparticipantsinMISMOhavenotedthatalackofaclear,open,andunifyingsystemofidentification,independentofanyoneprivateentity,hascreatedproblemsforconsumers,lenders,andothers.5,6TheeffortsofaMISMOworkinggrouphaverecentlyculminated
1BoardofGovernorsoftheFederalReserveSystem,Z.1FlowofFundsAccounts,June6,2013.2Anoverviewofexistingandproposedmortgageidentificationregimesisprovidedintheappendix.3BottegaandPowell(2011).4 OfficeofManagementandBudget.CircularNo.A‐119Revised.February10,1998. 5Sokolowski(2012).
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inthereleaseofawhitepaperthatdiscussestheutilityofauniqueloanidentifierfromtheperspectiveofindustry.7Ideally,astandarddevelopedbyavoluntaryconsensusstandardsbodywouldalsomeettheneedsofgovernment,includingprivacyrequirements,whichwouldallowforitsadoptionperOMBCircularA‐119.Similarly,otherprivate‐sectoreffortstocreateidentifiers,suchastheAmericanSecuritizationForum’sLoanIdentificationNumberCode(ASFLINC),havegrownoutofaperceivedneedto“improveinformationflowstoinvestors”inthewakeoftherecenthousingcrisis.8
Alsosincethecrisis,thepublicsectorandexpertshavenotedtheneedforauniquemortgageloanidentifiertoenablecradle‐to‐gravemonitoringofmortgagesforfinancialstabilitypurposes.9CongressintheDodd‐FrankWallStreetReformandConsumerProtectionAct(Dodd‐FrankAct)requiredregulatorstowriterulesthatinvolveidentificationofdifferenttypesofentitiesandproducts,includingmortgageloans.Specifically,Section1094ofDodd‐FrankamendedtheHomeMortgageDisclosureAct(HMDA)toallowthenewlycreatedConsumerFinancialProtectionBureau(CFPB)tomandate,“as[it]maydeterminetobeappropriate,auniversalloanidentifier.”10,11
Thetaskofdesigningauniversalidentifierwillbeadifficultone.Carefulconsiderationmustbegiventoprivacyconcerns.Asnotedbelow,amortgageidentifierwouldhavetobedesignedtopreventmarketparticipantsfromre‐identifyingindividuals.Nolinksfrompublicdocumentstomortgageidentifiersshouldbeallowed.Otherwisetheidentifiercouldbeusedtoidentifyindividuals,renderingalldatasetscontainingtheidentifierpersonally‐identifiableinformation.Suchadesignationwouldcreateconcernsabouttheuseofindividualdataintheprivatesectorandtriggerburdensomerequirementsforgovernmentresearchersusingthedata.
Thecreationofauniversalidentifieralsoraisestacticalquestions,suchasthetimingofassignment,andthestructureandgovernanceofanyentitiesissuingidentifiersorcoordinatingthem.Otherimportantissuesincludedeterminingthepartiesthatshouldhaveaccesstotheidentifier;thedocuments(ifany)thatmustorshouldbeallowedtocarrytheidentifier;howtoensureuseoftheidentifierateachstepofthemortgagelifecycle;howtoensureidentifierintegrity;andhowtodevelopmechanismstoconnectsimultaneousorsequentiallienstakenoutbyaborroweronaparticularproperty.
Thenextsectionofthispaperprovidesastylizedoverviewofthemortgagefinancesystemandthefragmentednatureofitsregulation,anddiscussesthemajorfederalloan‐levelmortgagedatacollectioneffortsanddisclosurerequirements.Section3describesthegoalsthatregulatorsandothershopetoachievebyadoptingasinglecommonmortgageidentifier.Section4describesthe
6Panchuk(2012).7 MISMO (2013). 8ASF(2009).9Wachter(2010).10Codifiedat12USC§2803(b)(6)(G).11TheDodd‐FrankActadditionallyprovidesforotheruniqueidentifiers,suchasaSAFEActidentifier(Section1094)anduniqueidentifiersrelatingtoloanbrokersororiginators(Section942).
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implicationsthosegoalshaveforthestructureofanidentifierandidentificationsystem,andSection5concludes.
2.TheSupplyChain:TheResidentialMortgageLifeCycleandMortgageData
ThecurrentstateofresidentialmortgagefinanceintheUnitedStatesisaresultofanaccretionofstructuresandregulations,designedtoaddressdifferentsetsofproblems,datingbacktotheGreatDepression.12Asaresult,legalandregulatoryauthorityisdistributedamongagenciesatlocal,state,andfederallevels,andthereexistfourmajorfundingchannels(bankportfoliosandthreesecuritizationchannels,discussedbelow),eachwithitsownsetofregulators.Thisfragmentationisreflectedinthedataproducedbythiscollectionofentities.
TheMortgageLifeCycleTomakeclearthescopeoftheproblemfacedbyregulators,academics,andmarketparticipantsindevelopingandmaintaininghigh‐qualitydata,webeginwithastylizedoverviewofthemortgagefinancesystemanditsmanydata‐generationprocessesthatarenotlinkedbyacommonidentifier.
ApplicationtoacceptanceForpurchaseloans,themortgagesupplychainbeginswithahomebeingmadeavailableforsale,typicallythroughastate‐licensedrealtor,whomaymakethelistingavailableonaregionalMultipleListingService.Apotentialbuyerthenappliesforamortgageloaneitherthroughamortgagebrokerordirectlyfromalender,bothofwhicharelicensedandregulatedatthestatelevel.Since2008,thelicensingofstate‐regulatedentitieshasbeencoordinatedbytheConferenceofStateBankSupervisors’NationwideMortgageLicensingSystem(NMLS).
Bank‐charteredmortgageloanoriginatorsareadditionallyregulatedbyfederalbankregulatorsandtheCFPBandmustberegisteredintheNationalMortgageLicensingSystemandRegistry,amodifiedversionofNMLS,whichCongressrequiredtobecreatedin2008toserveasafederalregistryformortgageloanoriginators,includingstate‐regulatedentities.TheDodd‐FrankActrevisedHMDAtorequireloanoriginatorstosubmitinformationaboutmortgageapplicationstotheCFPBortheirprimaryfederalregulator.Currently,theFederalFinancialInstitutionsExaminationCouncilcollectsthisinformationonbehalfofthefederalregulatoryagenciesandcontractswiththeFederalReserveBoard(FRB)fortheHMDAdatacollection.
Whenapotentialborrowerappliesforaloan,thelendercheckstheapplicant’screditwithoneormoreconsumercreditreportingagencies,whichareprimarilyregulatedbytheCFPBandtheFederalTradeCommission.Anindependentappraisalofthepropertyistypicallyperformedbyastate‐licensedappraiser,althoughautomatedvaluationmodelsareusedinsomecases,andanotherpartyperformsthepropertyinspection.13Atdifferentstagesduringthisprocess,the
12U.S.DepartmentofHousingandUrbanDevelopment(2006).13The2010InteragencyAppraisalandEvaluationGuidelinesstatethat“anautomatedvaluationmodel(AVM),inandofitselfdoesnotmeettheAgencies'minimumappraisalstandards”(FederalRegister,Vol.75,No.237,p.77453).AnAVMcan,however,beusedasapartofanevaluation,whichservesasasubstituteforanappraisal,providedthetransactionsatisfiescertainappraisalexemptionrequirements.
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borrowerisprovidedwithrequireddisclosures,includingdisclosuresrequiredundertheTruthinLendingAct(TILA)andRealEstateSettlementProceduresAct(RESPA),whichdetailthetermsofthemortgageandagood‐faithestimateofclosingcosts.
AcceptancetooriginationPartiestoamortgageofficiallyenterintothecontractatclosing.Atthistimethetitletothepropertyistransferredviaadeed,andtwoimportantdocumentsaregenerated:thepromissorynotesignedbytheborrowerandthemortgage.Themortgage,aninstrumentthatvariesinformandnamefromstatetostate,transfersaninterestinthepropertytothelender.Thetitleisacollectionofrightstothepropertyandthedeedisadocumentdescribingthelandandestablishingthetransferoftitle.
WiththeexceptionofHongKongandpartsofIreland,theUnitedStatesisaloneamongindustrializednationsinnotrelyingonpropertyregistrationtoestablishownership.Instead,thiscountryusesacommon‐lawsystemofchainoftitleandrecordationoflegalinstrumentsaffectingtitle.14Asaresult,dataontheownershipofrealpropertyandassociatedliensaremaintainedinlocalrecorderoffices.Thedifficultiesthatcanariseinestablishingaclearchainoftitlehaveresultedinthedevelopmentofthetitleinsuranceindustry,whichdoesnotexistinmostofthedevelopedworld.
Beyondthemortgage,note,andtitleinsurance,otherdocumentsareoftengenerated:thepropertyormortgagemayadditionallybecoveredbyfloodinsurance(providedthroughtheFederalEmergencyManagementAgency’sNationalFloodInsuranceProgram),privatemortgageinsurance,homeowner’s(hazard)insurance,andmortgagelifeinsurance.Eachofthelatterthreeinsurersissubjecttostateregulation.Atclosing,alltheseoriginationdocumentsarecollectedandcollatedbyaclosingagent,whoensuresthatthedocumentsareinproperorderandlegallysigned,andthatfundingandproceedsaredistributedaccordingtothetermswithinthedocuments.
ServicingAfteroriginationandclosing,theborrower’sprimarycontactiswiththemortgageservicer,whichisresponsibleforcollectingpaymentsfromborrowers,addressingdelinquenciesandloanmodifications,andinsomecases,conductingforeclosures.Mortgageservicingcanbeperformedbytheloanoriginator,butmortgageservicingrightsandtheirassociatedcashflowsarealsooftensoldtootherparties.Servicersareregulatedatthestateandfederallevels,withadditionalmonitoringoftenperformedbyentitiesthatholdorguaranteethemortgagestheyservice.15
Severaltypesofservicersmaybeinvolved.Thereisgenerallyaprimaryservicer,whoisusuallyresponsibleforcollectingpaymentfromtheborrowerandremittingtheproceedstotheappropriateparties(suchastaxpayments,orinterestandprincipaliftheservicerisnotalsothelender),andforconductingtheforeclosureprocesswhennecessary.Inmanycases,these
14Irelandistransitioningtoapropertyregistrationsystem.15ServicersareregulatedatthefederallevelbyprudentialregulatorsortheCFPB,dependingontheinstitution’ssizeandcharter.
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activitiesarecontractedouttosub‐servicers.Also,amasterserviceroftenservesasanintermediarybetweenprimaryservicers,andthetrusteeandissuer.
LoandispositionMortgagesintheUnitedStatescaneitherbeheldinportfoliobyabank,orsecuritizedandsoldthroughoneofthreemajorsecuritizationchannels.
BanksoftenusemortgagesintheirportfoliosascollateralinordertoborrowfromoneoftheFederalHomeLoanBanks.16Informationaboutloansinabankportfolioisofinteresttobankexaminers.17
However,onlyabout10percentofmortgageswereheldinbankportfoliosin2012.18Mostmortgageswereinsteadsoldaswholeloansorsecuritizedthroughoneofthefollowingthreechannels:
LoansinsuredbytheDepartmentofVeteransAffairs,FederalHousingAdministration,andUnitedStatesDepartmentofAgricultureareeligibletobepooledandsoldassecuritiesbyprivateissuerswithaguaranteefromtheGovernmentNationalMortgageAssociation(GinnieMae),agovernmentcorporationintheDepartmentofHousingandUrbanDevelopment.Theseloansaccountedfor20percentoforiginationsin2012.19
LoansthatmeetconformingloanlimitsandotherrequirementsareeligibletobesoldtotheFederalNationalMortgageAssociationorFederalHomeLoanMortgageCorporation(FannieMaeandFreddieMac,respectively).FannieandFreddiepoolmortgages,guaranteepoolsforafee,andsellsecuritiesrepresentingvariousaspectsofthosepoolsonthesecondarymarket.TheyareregulatedbytheFederalHousingFinanceAgency(FHFA).Theseloansaccountedfor69percentoforiginationsin2012.20
Loanscanalsobebundledandsoldbyprivateissuerswithoutanygovernmentoragencyguarantee.Thesesecuritiesaretypicallycalledprivatelabelsecurities(PLS).In2012,PLSmadeuplessthan1percentofresidentialmortgage‐backedsecuritiesissuances,comparedtoalmost36percentin2005and2006.21
Inanyofthesethreeformsofsecuritization,loansaregroupedintopools,whichareheldbytruststhatinturnissuesecurities.Theformofthesetrustscanvarysignificantly.Some,usuallythoseguaranteedbyGinnieMae,FannieMae,andFreddieMac(together,theAgencies),thoughalsosomePLS,aresimplepass‐throughstructureswhereinpaymentsfromthepoolsaresimply
16 The FHLBsprovideliquiditytotheprimarymortgagemarketandareoverseenbytheFederalHousingFinanceAgency. 17 Regulation of banksandcreditunionsdependsontheircharter;theymayberegulatedbytheFederalDepositInsuranceCorporation,theFederalReserveSystem,theOfficeoftheComptrollerofCurrency,theNationalCreditUnionAdministration,andstatebankregulators. 18 InsideMortgageFinance,Issue2013‐4,February1,2013,p.4. 19 Ibid. 20Ibid.21Ibid.
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distributedpro‐ratatotheshareholders.Morecomplicatedstructuresenabletheissuanceofmultiplesecuritieswithdifferentexposurestoriskfromprepayment,andinthecaseofPLS,default.TheAgenciesandPLSissuersallhaverequirements(underwriting,operational,documentation,andreporting)ofthelendersthatsellmortgagestothemorwhoseloanstheyguarantee.
TheactivitiesoftheAgenciesaredeterminedbyCongressintheircharters,whichlimitthetypesandcharacteristicsofloansthattheycanpurchase(inthecaseofFannieMaeandFreddieMac)andguarantee.Asaresult,secondarymarketfundingformortgagesthatdonotmeetthecriteriaestablishedforAgencyloanscanonlybeprovidedthroughissuanceofPLS;PLSmayalsobeissuedwhenpricinginthemarketfavorsprivate‐labelexecutionoverAgencyexecution.AlthoughthemarketfornewissuancesnotguaranteedbytheAgencieshascollapsedsincethecrisis,activityinthismarketmayreboundinthefuture.AllpublicofferingsofPLSmustberegisteredwiththeSecuritiesandExchangeCommission(SEC),unlessotherwiseexemptfromregistration.Iftheofferingisregistered,theprospectususedtoofferthePLSmustcomplywiththeSEC’sinitialandongoingdisclosurerequirements,knownasRegulationAB.RegulationABcontainstheSEC’sdisclosurerequirementsforpubliclyofferedasset‐backedsecurities,includingrequirementsfordisclosureaboutthemortgagesandotherunderlyingassets.Additionally,ongoingdisclosuresforsuchpubliclyofferedPLS,includingtheperformanceoftheunderlyingassets,arerequiredtobefiledwiththeSEC.22In2010,theSECproposedadditionalrequirementstoRegulationABthatwould,amongotherthings,requireissuerstodiscloseasset‐levelinformationatthetimeofsecuritizationandonanongoingbasis.23
LoanterminationandmodificationThoughsomemortgageloansarepaiddownovertheoriginalterm,mostterminateeitherasavoluntaryorinvoluntaryprepayment,andloansaresometimesmodifiedwiththeintentionofpreventingthelatter.24
Thetwomostsignificantcausesofvoluntaryprepaymentsarerefinances,whentheborrowertakesoutanewmortgageloanonthesamepropertyandusesittopayofftheoutstandingloan,andthesaleofahome.25Whenarefinanceloanisoriginated,theidentityoftheloanbeingrefinancedisnotcurrentlycaptured.Involuntaryprepayments,incontrast,aregenerallytheresultofforeclosureorhome‐forfeitureactions,suchasashortsaleordeed‐in‐lieuofforeclosure. 22 Such disclosures must now be filed generally for the life of the security. See “Suspension of the Duty To File Reports for Classes of Asset-Backed Securities Under Section 15(d) of the Securities Exchange Act of 1934” SEC Release No. 34-65148 (August 27, 2011) [76 FR 52549]. Irrespective of the SEC disclosure requirements, some individual loan performance information may be available from private data vendors for a fee. 23 In addition to asset-level disclosure requirements, the SEC also proposed significant revisions to the disclosure, offering process, and reporting requirements for ABS issuers. See "Asset-Backed Securities", SEC Release No. 33-9117 (April 7, 2010) [75 FR 23328]. 24Forexample,theSecuritiesIndustryandFinancialMarketsAssociation’sMortgagePrepaymentProjectionTablesasofDecember3,2012,implythathalfofapoolofconventional30‐yearfixed‐ratemortgagesoriginatedin2011withacouponof3.5percentwouldbeexpectedtoprepaywithin35monthsgiventheyieldcurveasofthatdate.Alternatively,thehistoricalassumptionusedbyFHFAastotheaveragelifeofamortgageloanis10years.25Othercauses,suchasthedeathofanoccupantcoveredbymortgagelifeinsurance,ortheborrowersimplyacceleratingpayments,arelesscommon.
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Mortgagemodificationsarechangestotheoriginaltermsofamortgage,typicallytokeepaloanin“current”statusorrestoreittothatstatus.Althoughrarebeforethefinancialcrisis,mortgagemodificationshavebecomerelativelycommonfordistressedproperties.26
JuniorliensJunior,orsubordinate,liensareplacedonpropertieswhenconsumersborrowagainstadditionalequityintheirhomeswithoutrefinancingtheexistingmortgage.Theseliensaretypicallyhomeequityloans,alsoknownas“secondmortgages,”whichhaveamortizationstructuresmuchliketraditionalfirstmortgages,orhomeequitylinesofcredit,whicharerevolvinglinesofcreditsecuredbyhomes.Theexistenceofsecondlienscanbesignificantbothforriskmanagementpurposesandwhenhandlingmodificationstofirstliens.
26Forexample,amongloanscoveredbytheOCCMortgageMetricsreportforthefourthquarterof2012,164,676modificationsandtrialsplanswereinitiated,comparedto156,773foreclosures.
IllustratInFigure1process,nueachwiththedatageidentificatremainingresult,anyoriginationstymied.
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10
MortgageDatasetsGovernmentagenciesengageinanumberofongoingloan‐levelcollectionsofmortgagedata.Alistofthesedatasetsisintheappendix.Thesedatasetsareusedforprudentialsupervisionofregulatedentities;toensurecompliancewithregulationsrelatedtoconsumerprotection,antidiscrimination,andaffordablehousing;tosupportthedevelopmentandevaluationofhousingpolicies;andtoenableresearchersandmarketparticipantstobetterunderstandthehousingfinancemarket.
Thesedatasetscontainsignificantoverlap.Asinglemortgagecouldpotentiallyappearinmorethanhalfthedatasetslistedintheappendix.Despitethisoverlap,nosinglemortgageidentifiercanlinkallofthesedatasets.Asaresult,informationsuchasthepropertyaddressorotherborrower‐specificinformationmustbeusedinmergingdatasets.Evenwiththisadditionalinformation,matchingdatasetsisslowerandmoreresource‐intensivethanitwouldbewithacommonidentifier.
Asidefromdatasetsmaintainedbythefederalgovernmentandbyprivateindustryforinternalbusinesspurposes(suchastheportfolioinformationofbanksandmortgageinsurers),threeadditionalsourcesofloan‐levelmortgageinformationareaggregatedandusedbyprivateindustry:
1. publicrecords,includingrecordsofdeeds,titles,mortgages,liens,andcourtfilings;2. servicingdata,includingdetailsaboutmortgageoriginationandongoingperformance;
and3. credithistories,includinginformationaboutborrowers’creditlinesandmortgages,but
lackingindetailaboutpropertiesandmortgageterms.
3.ObjectivesofaUniversalMortgageIDTheestablishmentofauniversalmortgageidentifier(UMID)wouldhaveseveralmajorbenefits.First,itwouldenablemoreeffectivesupervisionbyregulators(prudential,consumerprotection,andfinancialstability)throughreliabledatasetmatching.Second,itwouldassistmarketparticipantswithanindustry‐widebasisforworkflowmanagementanddatatransferbetweenfirms,whichcouldhelpinturntoimproveriskmanagementpractices.ThisbenefitwouldbeparticularlypowerfuliftheindustryestablishedtheUMIDthroughaconsensusstandardsbody.Third,itwouldimproveinformationflowstotheinvestingpublic.
However,thesegoalsmustbebalancedagainstastrongcommitmenttoprotectindividualprivacyandupholdrelevantprivacylaws,whichmusttakeprecedenceoverrealizinganyparticularbenefit.Forthatreason,theimplementationofaUMIDmustbehandledwithmorecarethaninthecaseofidentifiersdesignedtoaddressnon‐personalinformation,liketheLegalEntityIdentifier(LEI).
Enablingmoreeffectiveregulation,supervision,andpolicyresearchRegulatorswouldbenefitfromtheabilitytomergedatasetsfasterandmoreaccuratelybyaligningregulatoryreportingIDsbetweenagenciesandwithgovernment‐sponsoredsecuritization
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entities.Inadditiontothecostbenefitsoflessresource‐intensivedatasetmatchingandthedataqualityimprovementsfrommoreaccuratematches,fastermatchescanbeviewedasanotherpotentialimprovementtodataquality,becausetheyprovideresearchersandpolicymakerswithabetterunderstandingofcurrentmarketconditions.
Consumercomplianceregulatorswouldbeabletolinkoriginationtoservicingandperformancedata,allowingthemtobetterunderstandindustrypractices,fairlending,theimpactofdisclosuresonmortgageperformance,andotherareas.Further,iftheUMIDwereassociatedwithloandocuments,consumerprotectionregulatorswouldhaveaneasiertimeassessingcompliancewiththeTruthinLendingActandtheRealEstateSettlementProceduresAct.
Fromasystemicriskperspective,aUMIDwouldbeusefulintrackingthepropagationofrisksthroughthefinancialsystembyhelpinglinkoutstandingdebttotheentitiesbearingpotentiallossesduetorisksrelatedtocredit,interestrates,andservicing.Furthermore,bybetterlinkingoriginationpracticesandpartiestolateroutcomes,researcherscouldachieveabetterunderstandingofhowrisksarecreated.Finally,theabilitytoeasilyidentifyandremoveduplicationindatasetsthatpartiallyoverlapwouldgiveregulatorsabetteroverallviewofthehealthofthemortgagemarket.
AUMIDwouldalsoprovidesignificantbenefitstopolicyresearchers,byquicklyandaccuratelylinkingthemanydatasetscurrentlyinuse.Bybringingoriginationdatatogetherwithdataonloanperformance,refinancesandmodifications,anddisposition,researcherswillbetterunderstandthecurrentandpotentialimpactsofpoliciesonborrowersandinvestors.
Finally,aUMIDcouldpotentiallyassistinotherimportantissues,likematchingfirstandsecondliensorlinkingpurchaseloanstolaterrefinancestoobtainaholisticviewofpatternsinborrowing,ifaugmentedbyappropriatereportingstructures.However,aUMIDbyitselfcannotprovideadefinitivesolutiontoallidentificationissuesinmortgagefinance.Forexample,asliensarefundamentallyrelatedtorealproperty,taskssuchaslienmatchingmaybemoreeffectivelyaddressedbyconsideringthestandardizationofparcelidentification,amatteroutsidethescopeofthispaper.
ProvidingabasisfordocumentmanagementandimprovedriskmanagementAsillustratedinSection2,thelifecycleofamortgageloanproducessignificantvolumesofdocumentationanddata.Managingthisdocumentationcanbeachallenge,onemadeonlymoredifficultwhendocumentsaretransferredfromanentityusingoneidentificationschemetoanotherentitywithitsownidentificationscheme.ByassociatingalldocumentsanddatarelevanttoaloanwithaUMID,documentmanagementandinformationinterchangebetweenfirmsandbusinessunitscanbesimplified,makingregulatorycomplianceeasierandloweringcostsformarketparticipants.Bettermanagementofdataanddocumentsalsodecreasesoperationalriskbyreducingthepotentialforerror.Further,aUMIDwouldpresenttheopportunitytoestablishasystemthatsupportsdocumentversioning,revisionsinkeydocuments,andtherecordingofeventssuchasmortgagemodifications.
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Toimproveinformationinterchangebetweenfirmsandtoimproveriskmanagement,aUMIDshouldbestructuredasatruepublicgoodthatbecomescommonlyusedbymarketparticipantsandavailabletoallwithnoencumbrancesonitsuseotherthanthosenecessarytoprotectborrowerprivacy.Inthiscontext,aUMIDwouldbecomeabuildingblockofamoreefficienthousingfinancesystem.
ProtectingprivacySignificantconsiderationmustbegiventoindividualprivacy,giventheinherentrisksofre‐identificationassociatedwithanyuniversalidentifiersystem.Theserisksplacecriticalconstraintsonthestructure,governance,anduseofauniversalmortgageidentifiersystem.Manydefinitionsofprivacyexist,mostnotablyBrandeis’sdefinitionofitas“therighttobeletalone”andWestin’sdefinitionofitas“theclaimofanindividualtodeterminewhatinformationabouthimselforherselfshouldbeknowntoothers.”27,28Thelatterdefinitionisofparticularimportance,asWestin’sworkinthisarenainfluencedthepassageofthePrivacyActof1974,which,alongwiththeFairCreditReportingAct,affordsthemostsignificantindividualprotectionssurroundingthecollection,use,andtransmissionofpersonalinformationinthemortgagefinancearena.
Mortgagetransactionsposeapotentialprivacyproblembecauseinvestorsinthesecondarymarkethavealegitimatereasontowanttoknowprivatecharacteristicsofborrowers,suchascreditscores,butbecausetheuniverseofpotentialinvestorsconsistseffectivelyofthegeneralpublic,itisessentialthattheindividualborrowersnotbeidentifiable.Thisproblemalignswiththefederalgovernmentconceptof“personally‐identifiableinformation”(PII),definedas“informationwhichcanbeusedtodistinguishortraceanindividual'sidentity,suchastheirname,socialsecuritynumber,biometricrecords,etc.alone,orwhencombinedwithotherpersonaloridentifyinginformationwhichislinkedorlinkabletoaspecificindividual,suchasdateandplaceofbirth,mother’smaidenname,etc.”29
TheexistenceofaUMIDcanworkeithertoprotectpersonalprivacy,byallowingdirectmatchingofdatasetsforresearchandsupervisionwithoutrequiringthattheindividualbeidentifiedinanintermediatestep,ortodegradeprivacyprotections,ifaUMIDappearedbothonapubliclyfiledmortgagenote,ascurrentlyoccurswithsomecommonidentifiers,andincommerciallyavailableservicingdata.Additionally,ifassociatedwithanindividual,auniversalidentifierwouldallowadditionalinformationtobeassociatedwithanindividualthanwouldotherwisebeavailable,totheextentthatanyotherinformationassociatedwiththatidentifierwerebothavailableandnotalreadylinkedwithPII.
Toaddressthisissue,anypotentialUMIDsystemmustbedesignedtopreventthere‐identificationofindividuals,particularlybypreventingpublicdisclosureofinformationlinkingtheidentifiertodocumentsordatasetsthatidentifyborrowersbynameorotheridentifyingfeatures,orthatcouldbeusedincombinationwithotherinformationtore‐identifyborrowers.Additionally,anyreferencedataassociatedwiththeUMIDwouldhavetopertainonlytotheloanandnotcontainPII. 27WarrenandBrandeis(1890).28Westin(2003).29OfficeofManagementandBudgetMemorandumM‐07‐1616.
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Further,anyconnectionbetweenapublicdocumentandamortgageidentifierwouldbeunacceptable,becausetheidentifiercouldbedirectlytracedtoanindividual’sidentity,makingalldatasetscontainingtheidentifierPII.Giventhatsuchaconnectionwouldplaceasignificantadditionalburdenonregulatorsandresearchersinthefederalgovernment,protectingprivacyisimportantinbothitsownrightandasamatterofthepracticalutilityofaUMID.
4.PropertiesofaUniversalMortgageIDAuniversalmortgageIDshouldfollowthebestpracticesthathavebeendevelopedintheestablishmentofotheridentifiersystems.Althoughsomespecificissuessurroundingamortgageidentifierdifferfrompreviousefforts,suchastheLEI,manyofthecoreissuesremainthesame:30
1. ScopeofCoverageTheidentifiershouldideallycoverallsingle‐familyandmultifamilyresidentialmortgages.Tobeofthegreatestuse,itshouldbeassignedasearlyaspossibleintheprocess,i.e.,atapplication,regardlessofwhethertheloanisapproved.
2. StructureoftheIdentifiera. One‐to‐onerelationshiptomortgages
Theidentifiershouldbeunique:one,andonlyone,mortgageshouldbeassignedtoanyparticularidentifier.Theconversealsoholds:one,andonlyone,identifiershouldbeassignedtoanyparticularmortgage.Thisproperty,aone‐to‐onemappingbetweenidentifiersandmortgages,allowsforunambiguousidentificationofaparticularmortgage.
b. PersistenceTheidentifiershouldremainwiththemortgageuntiltheloanisterminated.Thus,itmustpersistovertimeregardlessoftheholderoftheloanoranymodificationsmadetoit.
c. ExtensibilityForanidentifiertobeusefulindefinitely,itmustallowforgrowthinthenumberofidentifiersissued,withouthavingtoreuseidentifiers,whichwouldviolatetheuniquenesscriterion.
d. NeutralityIdentifiersshouldbeneutral:noinformationshouldbeencodedintheidentifieritself.Thisisimportantforpersistence,extensibility,andinthecaseofmortgages,privacy.Anidentifiercontainingembeddedinformationcanbevulnerabletochangesovertimeifthatinformationchanges(forexample,anidentifierthatembedsaborrower’sname),underminingpersistence.Similarly,embeddinginformationcanlimitthenumberofbitsofinformationpracticallyavailable,limitingextensibility—anidentifierthatembeddedaZIPcode,forexample,wouldonlybeusefulsolongastheZIPcodewiththegreatestnumberofmortgagesover
30ThepropertiesnotedhereareinfluencedsignificantlybyBottegaandPowell(previouslyreferenced),aswellastheCPSS‐IOSCO“ReportonOTCDerivativesDataReportingandAggregationRequirements”ofJanuary2012,andtheCommodityFuturesTradingCommission’sfinalrule,“SwapDataRecordkeepingandReportingRequirements,”publishedJanuary13,2012.
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timedidnotrunoutofidentifiers.Inaddition,anidentifierwithembeddedpersonalinformation,orotherembeddedinformationthatcouldbeusedtore‐identifyindividuals,wouldposeathreattoprivacy.
e. ReliabilityForauniversalmortgageidentifiertobeadoptedbymarketparticipants,itsreliabilitywouldhavetobeensured.Theassignmentmechanismmustberobust,theidentifiershouldnotconflictwithothersystemsthatmaybeinuse,andtheassignmentmechanismandanyreferencedatabasesmustbeindependentofanyentitythatcouldfailinthefuture.
f. OpenStandardTheidentifiershouldbebasedonanopen,voluntaryconsensusstandard.31
3. PublicAvailabilityTheuseoftheidentifiermustbefreeofanycontractualrestrictions.Allpartiesinthemortgagemarket,regulatoryagencies,andtheresearchcommunityshouldbeabletousetheidentifiersystemfreely.Thisdoesnotimplythatregistrationofanidentifiermustbefree,orthatinformationotherthanbasicreferenceinformationmustbefreelyavailable;itmeansonlythatregistrationofidentifiersmustbeopenlyavailableandthatuseoftheidentifiersystemmustbefreelyavailable,withoutlicensingcostsorrestrictions.
4. PrivacyProtectionBeyondsimplynotembeddinginformationintheidentifieritself,theidentifiersystemmustbedesignedtopreventre‐identification,asdiscussedearlier.
5. IncentiveCompatibilityTohelpensurethatmarketparticipantshaveanincentivetoinvestinmaintainingarobustsystemofidentification,theyshouldbenefitfromusingtheidentifierintheirregularcourseofbusiness.Agreementamongregulatorsaboutusingasingleidentifierforreportingcanhelpencouragecoordinationamongparticipantsinthemarket.
6. RegistrationProcessTopreventdisruptiontomarketparticipants,theassignmentprocesswillneedtoworkwithinthetimelinesassociatedwiththemortgageapplicationprocess.
7. QualityAssuranceErrorsareoftenintroducedindatainthenormalcourseofbusiness.Toprotecttheintegrityofauniversalmortgageidentifier,qualitycontrolpractices,includingbestpracticessuchaschecksumsandgoodgovernancepractices,mustbeadopted,andclearresponsibilityforacquiringeachnewidentifiermustbeestablished.
5.ConclusionTheU.S.mortgagefinancesystemisacriticalpartofournation’sfinancialsystem,representing70percentofU.S.householdliabilities.32Itisalsohighlycomplex,withmanyfinancechannels,participants,andregulators.Thedataproducedbythissystemreflectthatcomplexity;unfortunately,nosingleidentifierexiststolinkthemajorloan‐levelmortgagedatasets.The
31OfficeofManagementandBudget.CircularNo.A‐119Revised.February10,1998.32 BoardofGovernorsoftheFederalReserveSystem,Z.1FlowofFundsAccounts,June6,2013.
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establishmentofasingle,cradle‐to‐grave,universalmortgageidentifierdesignedtopreventidentificationofindividualswouldsignificantlybenefitregulatorsandresearchers.Suchanidentifiercouldalsoserveasthefoundationofasystemthatcouldbenefitprivatemarketparticipants,aslongassuchasystemprotectedindividualprivacy.Theestablishmentofsuchanidentifierwillbedifficult.Itwillnotbeeasytobalancecompetingdemandsforprotectingprivacy,whileenablingbettermanagementofdataanddocumentswithoutgeneratingunnecessarycostsandburdens.However,itisachallengeworthmeeting.
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Appendix:FederalDatasetsandExistingLoanIdentifierRegimes
FederalDatasetsThemajorongoingloan‐levelmortgagedatasetsmaintainedbyfederalagenciesarelistedbelow.
Agency Dataset Source Description
CFPB(FFIEC)
HMDA Originators TheHMDAdatasetcontainsinformationonmortgageapplicants'race,ethnicity,gender,andincome;loanpurpose,rate,lienstatus,andacceptanceordenial;andpropertytype,location,andoccupancy.
FHA FHA‐GuaranteedMortgagePortfolio
Includespropertyaddress,type,andvalue;loanpurpose,UPBandterms;borrowerincome,DTI,andcreditscore;mortgageinsurancestatus;andotherdata.
FHFA EnterpriseAffordableHousingGoalsDataset
Enterpriseadministrativedata
ThisdatasetcontainsloannumbersandcensustractgeographiesforloansfinancedbyFannieMaeandFreddieMac.
FHFA DataforHPICalculation
AdministrativedatafromtheEnterprises,FHA,andtheFederalHomeLoanBankofNewYork
DatafromallloansheldinportfolioorsecuritizedbyFannieMaeorFreddieMac,includingproperty‐leveladdressinformation,loanpurpose,loanamount,loan‐to‐valueratio,andappraisalvalue.DatafromFHAincludingpropertystreetaddress,loantype,andsalespriceinformation.DatafromtheFederalHomeLoanBankofNewYorkincludingpropertystreetaddress,appraisalvalues,andsalespriceinformationforallactiveloansandcertainhistoricalloansthathavecollateralizedFHLBankofNYadvances.
FHFA Enterprise‐OwnedandGuaranteedMortgagePortfolios
AdministrativedatafromtheEnterprises
OriginationandservicingdataforloansownedorguaranteedbyFannieMaeandFreddieMac.Containscreditscore,HMDA,andperformancedata,withoriginationdatalinkedtoongoingperformancedatabyloannumber;doesnotcontainaddressorotheridentifyinginformation.
FHFA FederalHomeLoanBankAcquiredMemberAssets
ServicerreportstoFederalHomeLoanBanks
FilesincludedatafromeachloanpurchasedundertheFHLBankAMAprogramalongwithsemiannualprogressreports.Dataelementsincludeloancharacteristicsattimeofacquisitionandupdatedloanstatusinformation.
FHFA MonthlySurveyofRatesandTermsofConventional1‐FamilyNonfarmMortgageLoans(MIRS)
Sampleofloanoriginators
LoansreportedtotheFHFAforthepurposeofconductingtheMonthlyInterestRateSurvey(MIRS).Thisdatasetcontainsdataonloansclosedduringthelastfivebusinessdaysofeachmonth,including:propertygeographyandpurchaseprice,andloanterms.LenderIDandloanIDarereportedtotheFHFA.
FHFA/CFPB NationalMortgageDatabase
Enterpriseadministrativedata,creditbureaudata,andHMDAdata,mergedbyExperian
Afivepercentnationally representativesampleoffirst‐liensingle‐familymortgages,basedoncreditreportdataandsupplementedwithinformationfromotherdatasets.Thisdatasetcontainsdetailedinformationonpropertycharacteristics,geography,borrowerdemographics,andallofaborrower'screditlines.
FRB FRY‐14M BHCswith$50Bormoreintotalconsolidatedassets,submittedthroughLPS
Thismonthlydatacollectionincludesoriginationandservicingdataforloansownedbyrespondentbanks.Thedatacollectionusesaddressesformatchingpurposes.
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Agency Dataset Source Description
GNMA GNMAMBSPools OriginationandservicingdataforloanssecuritizedinGNMAMBSpools.Thesedataincludepropertystreetaddress,borrowerinformationincludingcreditscore,andloancharacteristics.
OCC LargeBankMortgageMetrics(MM)
Servicerreportstolargebanks
Retailmortgage‐servicinginformationcollectedfromlargeinstitutions,whichincludes103dataelementsforeachmortgageloan;76dataelementsforeachsecond‐lienresidentialrealestateloan;12dataelementspertainingtopropertyinformation(matchingoffirst‐lienandsecond‐lienresidentialrealestateloans);and30homeequityportfolio(profit&loss)dataelements.
SEC MBSofferingmaterialsandperiodicreportsonEDGAR
MBSissuerreports Issuersfileofferingmaterialsthatmaycontainloan‐levelinformation.Ongoingreportsmayincludeloan‐levelinformationaboutprepayments,defaultsormodifications.
Treasury HAMP Servicers,submittedtoFannieMae
InSupplementalDirective09‐01,theTreasuryDepartmentannouncedtheeligibility,underwriting,andservicingrequirementsforHAMP.UnderHAMP,servicersapplyauniformloanmodificationprocesstoprovideeligibleborrowerswithsustainablemonthlypaymentsfortheirfirst‐lienmortgageloans.PursuanttoSupplementalDirective09‐01,servicersarerequiredtoperiodicallyprovideHAMPloanleveldatatoFannieMae,asHAMPprogramadministrator.TheHAMPfilescontaindataonmodificationsmadeandtheirsubsequentperformance,aswellasdatacollectedfromborrowersforNPVcalculationsandwhetherornotaloanwasapprovedforamodification.
VA VA‐GuaranteedMortgagePortfolio
Includespropertyaddress,type,andvalue;loanpurpose,UPBandterms;borrowerincome,DTI,andcreditscore;mortgageinsurancestatus;andotherdata.
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ExistingLoanIdentifierRegimesSeveralloan‐leveluniqueidentifierregimescurrentlyexist.Theyareassignedoradoptedbygovernmentagenciesandmortgagelenderswithvaryingdegreesofmarketcoverageandforvaryingpurposes.Theseidentifierscanbeplacedintothreecategories:regulatoryreportingIDs,governmentbusinesspurposeIDs,andproprietarybusinesspurposeIDs.
RegulatoryreportingIDsHMDArequiresthecollectionofloan‐levelapplicationandoriginationdata.Coveredinstitutionsannuallyreporttotheirfederalregulatorseveralrequiredfields,includinganidentifierupto25characterslongoflettersandnumbers,foreachloanorapplication.Theidentifiermustbeuniquewithintheinstitution,anditis“stronglyrecommended”thatnamesandsocialsecuritynumbersbeexcludedfromtheidentifier.33InstitutionshaverelativelatitudetoassignandreportloanidentifierstheymayalreadybeusingforbusinesspurposesunderHMDA.However,notalllenderscomplywiththerecommendation,andsomeincludeborrowernamesorsocialsecuritynumbersintheirIDs.
In2010,theSECproposedtorequireissuersofasset‐backedsecuritiestoprovideasset‐leveldisclosuresabouttheunderlyingloansbackingsecurities.Inprovidingtheasset‐leveldata,auniquenumbermustbeassignedtoeachassetintheunderlyingpool.AswithHMDA,theproposedrulesdonotspecifyanumberingconvention.TheSECnotedthatacceptableidentifierscouldhavebeengeneratedatoriginationoratdifferenttimesduringthesecuritizationprocess.34However,theproposedruleswouldrequirethattheassetnumberusedforofferingdisclosuresshouldalsobethesamenumbersusedtoidentifytheassetforallreportsrequiredofanissuerundertheExchangeAct.
TheOfficeoftheComptrolleroftheCurrency(OCC)collectsuniqueloanidentifiersfromthelargestmortgageservicersforitsquarterlyMortgageMetricsReport.TheOCCdefinesthefieldasa"uniqueidentifierfortheloanrecordthatwillbethesamemonthtomonth.Referencenumbersmaybeusedinlieuofactualloannumbersaslongasitmeetsthiscriteria."35
TheFederalReserveBoardcollectsuniqueloanidentifiersaspartoftheFRY‐14MCapitalAssessmentsandStressTestingreport,whichmustbefiledbybankholdingcompanieswithmorethan$50billioninconsolidatedassets.TheidentifiercollectedbytheFRBisanalpha‐numeric
33SeeHMDA2010GuidetoGettingitRight.http://www.ffiec.gov/hmda/guide.htm.34SeeAsset‐BackedSecurities,SECReleaseNo.33‐9117(April7,2010)[75FR23328].35http://www.occ.treas.gov/publications/publications‐by‐type/other‐publications‐reports/mortgage‐metrics‐q4‐2008/loan‐level‐data‐field‐defin‐q4‐2008.pdf
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codeofupto32characters.36TheFRBprovidesthefollowinginstructionsintheFRY‐14Mfortheloannumberfield:37
Anidentifierforaloanthatwillbethesamefrommonthtomonth.Referencenumbersmaybeusedinlieuofactualloannumbersaslongasitmeetsthesecriteria.Thisloanidentifiermustuniquelyidentifyanyloaninthefile.Itmustidentifytheloanforitsentirelifeandmustbeunique(piggy‐backsshouldbeseparated).
GovernmentbusinesspurposeIDsSeveralothergovernmentagencieswithmissionsrelatingtohousingfinanceuseidentifiersforinternaldatacollectionandmaintenance.TheFederalHousingAdministration(FHA),theU.S.DepartmentofVeteransAffairs(VA),andtheU.S.DepartmentofAgriculture(USDA)haveloan‐levelidentifiersforloansguaranteedorinsuredbytheagencies.TheFHAcasenumberisgeneratedontheFHAConnectionwebsiteafterinputandverificationofdatafieldscontainingborrowerandpropertyinformation.Itisa10‐digitidentifierassignedtoamortgageasthefirststeptowardFHAendorsementofmortgageinsurance.TheVAassignsa12‐digitloanidentifiernumberatthetimetheappraisalisrequested,anditisusedinsubsequententriesintoVAsystemsandonvariousdocuments.GinnieMaeassignsa9‐digitloanID.
ProprietarybusinesspurposeIDsInadditiontouniqueIDsthatindividualentitiesorloanoriginationsystemsmayuse,therearetwobroadlyavailableproprietaryloanidentifiers:(1)theMortgageElectronicRegistrationSystem(MERS)MortgageIdentificationNumber(MIN)and(2)theAmericanSecuritizationForum(ASF)LINC(loanidentificationnumbercode).Individualbusinessneedsdrivetheiruseinmortgageorigination,servicing,andsecuritization.TheMERSMINisan18‐digitloanidentifierrequiredforloansregisteredintheproprietaryMERSsystem.Theprimarypurposeofthesystemistotrackownershipinterestinregisteredmortgages.Thenumberitselfmaybeauto‐generatedbysoftwareorassigneddirectlybyMERS.Aportionofthenumbercanbeeitherrandomlygeneratedorcreatedfromanexistingloannumbercreatedbythelendinginstitution;thestringwouldthenbewrappedbyauniqueMERSresidentialorganizationalIDandacheckdigit.OncetheMINisassigned,itdoesnotchangeforthelifeoftheloan.Currently,FannieMaeandFreddieMacrequirealle‐mortgagestobedeliveredregisteredwithaMERSMIN,contributingtoadoptionratesamongoriginatorsinthemarket.TherearemembershipfeesassociatedwithregisteringloansontheMERSsystem.
TheLINCisa16‐digitloanidentifierformortgages,autoloans,creditcards,andstudentloans,developedbytheASFandStandard&Poor'sFixedIncomeRiskManagementServices(FIRMS).TheLINCwasdevelopedincoordinationwithASF'sProjectRESTART,aloan‐leveldisclosure 36Ifthebankholdingcompany(BHC)isalreadysubmittingdatatotheOCCaspartoftheOCCMortgageMetricsDataorOCCHomeEquityData,itisrequiredthattheBHCusethesameloannumberfortheFRY‐14Mdataschedules.TheFRY‐14Mdatapopulationmayincludeadditionalloans,whichmaynotbepartoftheOCCdatasample,andforsuchloansthegeneralrequirementslistedinthescheduleinstructionswillbeapplicable.Overall,theentiredatafilesentbyaBHCshouldhaveuniqueloannumbersacrosstheentiresubmission.37Reportformscanbefoundat:http://www.federalreserve.gov/reportforms/forms/FR_Y‐14M20130331_f.zip
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initiativefortheresidentialmortgage‐backedsecuritiesindustry.ASFassignsauniquenumberafterreceiving30datafieldsfromtheoriginatororservicer.LINCincludesembeddeddata,suchasunderlyingloantype,loanoriginationdate,andcountrycode.38Topromoteintegrationoftheassignmentprocess,S&PFIRMSdevelopedanautomatedrequestmoduletofitintoexistingplatforms.TheLINCislinkedtoloan‐levelinformationinthecentralizeddatarepositoryrunbyS&PFIRMS.LINCisavailabletooriginatorsandsecuritizersfreeofcharge,butadoptionseemstobedependentuponnewregulationsanditsuseisnotcurrentlygeneralpractice.
InSeptember2012,MISMO,anot‐for‐profitsubsidiaryoftheMortgageBankersAssociationfocusedontechnologystandardsdevelopmentforthemortgageindustry,createdaUniqueLoanIdentificationDataWorkingGroup(DWG)withthefollowingstatement:39
ThereisnotasingleUniqueLoanIdentificationNumber(ULIN)ofamortgageloaninuseuniformlythroughouttheindustryoverthelifeoftheloan,andmanyintheindustryuseindividualmethodsofidentifyingloansatvariousstagesintheloan’slifecycle.ThisproposedDWGwillexplorethedevelopmentofauniversallyacceptedULIN.Thegroupwillexaminecurrentmortgageidentifiersystemsandthepotentialforstandardization,andwillalsoreviewothernon‐mortgagebankingindustryeffortssuchasthedefinitionoftheISO[InternationalOrganizationforStandardization]"bankcard"standardforcreditanddebitcards.40
38http://www.americansecuritization.com/uploadedFiles/ASF_LINC.pdf39Seediscussiononpage2.40http://www.mismo.org/files/PressReleases/NewDWGPressRelease9_14_2012.pdf
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ReferencesAmericanSecuritizationForum.“ASFLoanIdentificationNumberCode(ASFLINC™)forSecuritizedLoansDevelopedbyASFandStandard&Poor’sFIRMS.”Pressrelease.September24,2009.http://www.sifma.org/news/news.aspx?id=13216
Bottega,John,andLindaPowell.“CreatingaLinchpinforFinancialData:TowardaUniversalLegalEntityIdentifier.”FederalReserveBoardFinanceandEconomicsDiscussionSeries,2011‐07.
MortgageIndustryStandardsMaintenanceOrganization(MISMO).“UniqueLoanIdentifierDevelopmentWorkgroupWhitePaper.”September25,2013.
Panchuk,KerriAnn.“MISMOdevelopinguniversaltrackingsystemformortgages,properties.”HousingWire.Published9/12/2012.Accessed3/28/2012.http://www.housingwire.com/fastnews/2012/09/14/mismo‐developing‐universal‐tracking‐system‐mortgages‐properties.
Sokolowski,Rachael.“UniqueLoanIdentifiers.”PresentationatMISMOforumon9/26/2012.
U.S.DepartmentofHousingandUrbanDevelopment.“EvolutionoftheU.S.HousingFinanceSystem:AHistoricalSurveyandLessonsforEmergingMortgageMarkets.”April,2006.
Wachter,SusanM.Writtentestimonyforhearingtitled“RegulationC:HomeMortgageDisclosureAct(HMDA)PublicHearing.”July15,2010.Atlanta,Georgia.http://www.federalreserve.gov/communitydev/files/wachter.pdf
Warren,SamuelandLouisBrandeis.“TheRighttoPrivacy.”HarvardLawReview,Vol.4,No.5,1890,pp.193‐220.
Westin,Alan.“SocialandPoliticalDimensionsofPrivacy.”JournalofSocialIssues,Vol.59,No.2,2003,pp.431‐453.
