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A toast to BREW.

What a great name for one of the newest MISMO[R] Workgroups: BREW. It even works whether you are a Starbucks[R] person or a barfly. BREW stands for Business Rules Exchange Workgroup, and IMHO (in my humble opinion) it has been a long time coming.

Five years ago, we had a discussion within the eMortgage Workgroup about whether we wanted to create standards in MISMO for the business rules of how eMortgages would be purchased on the secondary market. At that time, the secondary market was not ready to move off a static format of publication of business rules (think Adobe[R]'s portable document format [PDF[R]]).

Now the industry has come back together to discuss business-rules standards with a larger scope than just eMortgages or the secondary market. Following is the initial charter for the BREW:

For a number of years in MISMO, there has been recognition that efficient trading partner processes would be enhanced if a standard existed for the trading partners to exchange business rules. This topic has been of interest in the broader eCommerce arena as well. There are several different business-rules exchange formats under development by other standards bodies: the World Wide Web Consortium (W3C[R], Boston; Object Management Group Inc. (OMG), Needham, Massachusetts; and Organization for the Advancement of Structured Information Standards (OASIS), Billerica, Massachusetts. They all have initiatives that are focusing on different aspects of the issue. There is also a collaborative effort [among] the groups to have interoperability, at a minimum.

The real estate finance industry has a number of unique-use cases. Designers of eCommerce systems in this industry could benefit from these external standards. As general standards, there will be a lot of flexibility and choice embedded in the standard.

In recognition of these trends, we established the MISMO BREW. Just as MISMO data standards have taken the flexibility of XML [extensible markup language] 1.0 standard and restricted it down to standards that serve the use cases of our industry, the standards created by the BREW will provide guidance on how to use external business-rules standards for the use cases of our industry.

The general activities of the BREW will be:

* Identify the status of the business-rules exchange standards;

* Identify the major real estate finance use cases for business-rules exchange;

* Determine which external business-rules exchange standards fit our use cases;

* Submit comments about the proposed external standards, as the external standards pass through their public comment phase; and

* Prepare MISMO standards that will promote interoperability, once the external standards reach their final state of approval.

Thus, when this group is successful, the vision is to have a standard whereby business rules, which could include loan-product rules, would be imported and exported in an open manner among systems such as loan origination systems (LOSes), automated underwriting systems (AUSes), and secondary and loan administration systems.

The industry has now matured to a point where it is able to abstract and share these rules. Until now, getting rules loaded into systems was painstaking and slow, requiring a lot of specialized programming. The hope of a standardized format by which to exchange these rules is that by creating one these complex systems will be able to work seamlessly with one another. Lenders would be able to have personnel who knew the MISMO standard way of representing rules, and they could write and store them in this format for use by all their systems and applications.

Then, for the first time, these systems--both within and outside mortgage banking organizations--will be able to universally process the business rules in a standardized fashion from which they make decisions. When a company merges and goes through the process of selecting which applications will become primary within the merged entity, it could move the rules from the systems it was phasing out to the primary systems and applications.

Let's talk at a high level about what business rules are. By now, all of you should be familiar with XML, so in its simplest form the industry would agree that all business rules would be called "rule(s)." So, for example, you might have an exported rule that looks like this:

<Rule> If FICO GREATER THAN 680 then BORROWER(S) qualify for a 3 year ARM. <Rule>

This is a step in the right direction, but there is very little automation you can accomplish with this, because the rule is still written "free form" within the XML. In this example, there are several decision factors: FICO[R], GREATER THAN, 680, 3 and ARM [adjustable-rate mortgage]. The art, then, is to come together as an industry to be able to take this to the next level of automation--for example, by agreeing to name things within the rule as its parts, think of a specification that says you can have "IF, THEN" and "ELSE, IF" statements in the rule, and would use MISMO tags for LOAN_PRODUCT within the rule, so that the product could be automatically detected.

There are many more examples than in underwriting, such as closing instructions, loan or pool purchase criteria and servicing/administration guidelines. The possibilities are limitless.

Fortunately, a lot of work has already been done in this area. Groups such as OMG, OASIS and others have worked on creating horizontal (i.e., spanning vertical markets like ours) standards for business rules. As with other horizontal standards that MISMO uses (XML, XHTML [extensible hypertext markup language], SOAP [simple object access protocol], etc.), there is still a need to apply those standards to the mortgage industry, i.e., add the vertical-market specifics to the standards. This is where BREW will go with its use cases after it surveys the landscape for what the latest and greatest available and adopted standards are.

To get more involved with the BREW Workgroup or MISMO, visit

Gabe Minton is vice president of industry technology for the Mortgage Bankers Association (MBA) and executive vice president for MISMO. He can be reached at
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Title Annotation:Business Rules Exchange Workgroup
Author:Minton, Gabe
Publication:Mortgage Banking
Geographic Code:1USA
Date:Aug 1, 2006
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