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During the past few months we at the Mortgage Bankers Association of America (MBA) have spoken at recent conferences with secondary marketers, servicers, originators, financial managers, warehouse lenders, document custodians, information system managers and others inside our industry about barcoding. What usually starts off as a brief presentation of the barcode standard leads to discussions about how mortgage lenders believe the implementation of an industry barcode standard could help them. The points raised by mortgage bankers about barcoding are very similar and reveal much about our industry.

Every industry group that we have talked to believes that barcoding will allow it to get closer to its data operations. Barcoding enhances the relationship managers have with their data operations. This occurs in two ways. Staff and management alike can avoid a great deal of the paper chasing that is common to clerical or research tasks. Second, and perhaps more important, barcoding allows a manager to know more about a piece of paper immediately, such as where it has come from, what other papers accompany it, who else has touched it and what group characteristics have been assigned to it. When mortgage bankers can get closer to the vast amounts of data that their shops possess, they feel the pulse of their organizations.

Data, when interpreted, condensed and analyzed, becomes information. Barcoding allows this compilation process to be shortened. In the words of Jeffrey Butler, chief information officer of Pasadena-based Countrywide Funding Corporation, "Data no longer flows up and down, it gushes in, out and sideways." To use these data effectively, mortgage bankers must be on the cutting edge of technology. Presentation of the data must be uncluttered, time-relevant and accurate. Barcoding allows for orderly storing and retrieval of pertinent data in our industry. It also has the potential of giving the document (and the data it contains) a history. For instance, a note being examined as collateral is more valuable if its coding indicates its origin and perhaps its interim ownership. Barcoding can also play a major role in an intelligent workflow and in assisting optical imaging systems with document recognition.

Another belief commonly expressed by members is that barcoding will not be limited to keeping track of documents in files. Many industry sectors are proposing that information be embedded in the user-definable portion of the code. Some of the many ideas presented are: * Identifying investor codes on collateral instruments;

these codes would refer to the bailee letter traveling with

the instruments themselves. * Transmission of ARM characteristics. * Correspondent/branch identification codes. * Insurance premium amount and due date.

What is most significant is the idea that codes can be used to exchange data with others. Whether this results in workflow simplification, reduction of data entry expense or simply better tracking and history of collateral instruments, it is evident that mortgage bankers will take a pioneering role in the definition of code usage.

Fannie Mae's Year 2000 Group has also taken a great interest in the barcode. Under the direction of Richard Amatucci, vice president, this forward-thinking task force represents the philosophy of a new technocracy - using information to plan the way business should be, rather than basing strategies on the way things are. The group had already been considering novel delivery mechanisms to make it easier for sellers and more efficient for Fannie Mae. Also, barcoding may be the missing link in document, loan plan and loan number identification that will allow for fax/imaged deliveries. When taken in conjunction with the desire to capture additional data elements on loans that it purchases, barcoding may allow Fannie Mae to get closer to what it wants to know.

In the MBA's efforts to establish a barcode standard, particular attention has been given to make the standard imminently usable, yet with long-range capability for enhancement. For instance, though each MBA member has been assigned a unique identifier code, which all industry participants can recognize, the capability for more than 1,000 variations of that code has already been built in. Hence, those who wish to identify different segments of their pipeline base (such as branches or correspondents) will find this ability accessible. In addition, the maintenance of tracking the codes assigned to all known documents used by the industry will allow participants to share common coding. This will aid the flow of information whenever documents are exchanged between two different barcode users. Servicing transfers and document custodial functions are just two examples where the jungle of paper-intensive applications can be cleared by a well-maintained and capable standard.

Information is power. The ability to know the pulse of your business can open windows of opportunity. By using information as a resource, mortgage bankers can empower themselves - perhaps by reducing staff time associated with repetitive tasks, tapping into existing and new lines of business, creating consumer-oriented loan products and developing excess capacity to handle different tasks. Excess capacity is probably the single most valuable advantage to technology. With it, mortgage bankers can handle additional business more efficiently using existing staff. Profitability and enhanced presence in the marketplace are sure to follow.
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Title Annotation:implementation of an industry barcode standard for mortgage lending
Author:Hershkowitz, Brian
Publication:Mortgage Banking
Date:Jun 1, 1991
Previous Article:The Mortgage Banking Sourcebook: A Reference Guide to Information Sources on the Mortgage Lending Industry.
Next Article:Secondary market.

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