By Gabe Minton

As I transition from the staff of the Mortgage Bankers Association (MBA) back into the trenches of an enterprise loan origination system (LOS) product company, many new (and old) topics confront me as good ones to discuss in my ongoing technology column. This new column will focus more on key technology trends in the industry, and away from strictly MISMO developments (the MISMO Memo column will retain MBA authorship). However, I reserve the right to comment on key trends in MISMO in the future as they come up.

One of the many topic areas generating lots of discussion is generally categorized as "online lending." For the purposes of this column, I will define online lending as lead generation through an Internet Web site(often called a portal) with consumer and any origination services that are offered to business partners (correspondents, brokers, etc.) via a Web site. Where exactly and how far the process goes is not of large concern for the basic topic presented here—although the further along in the process you go, the more data are gathered and available. This is the focus of my column.

Where exactly and how far the process goes is not of large concern for the basic topic presented here—although the further along in the process you go, the more data are gathered and available. This is the focus of my column.

Before the Internet became as pervasive as it is, the delineation between trading partners on the front end of the process was much more prevalent. Consumers were more in need of services from people in the beginning of the process—that is, they needed much more help filtering through the data in their search for a home, search for a good loan product and more.

Today, most consumers are using the Internet for their research (at least initially),which is causing Realtors and brokers to provide more services, often through Inter-net portals and Web sites. This is causing a "blending" effect on the front end that is blurring the lines between these previously distinct service providers. For example, the Realtor my wife and I are working with due to my recent job-related move is also a broker, title agent and rental property manager—four businesses in one person. The last Realtor I worked with (12 years ago) was only a Realtor.

The question I would like to pose in this column is: As Web sites are used more regularly and are applied more throughout the loan application life cycle—thus making data much more available to many more parties—who owns the data, and where are the boundaries of data, ownership as you move through the loan origination process?

This is where it gets interesting. When you are using a Web browser, for the most part your application is "stateless"—that is, the data you are manipulating are on a Web server somewhere, and not stored locally on your machine. Therefore, the party whose site you are using then likely has a policy in effect about (its) data ownership. If you are a broker and you log in to a wholesaler's site and upload loan application data to get qualified product and pricing information, but have not made an execution decision yet, do those data now also belong to that lender? This is still being worked out at the trading-partner level in the industry.

As a thought exercise, suppose you are a large lender looking to advance your broker Internet channel. Your objective is to acquire the broker's business and qualify the loan with one of your products. You hope the broker visits your Web site and stays there. What can you offer to keep that broker on your site, how can you acquire that consumer data set, and how early in the application process?

If you are a mortgage broker, you might look at it differently. You want to search across as many products and trading partners as possible to obtain the best possible product for your customer. Therefore, you won't necessarily want to lock in your consumer data to any particular lender until a decision has been made on a product. Therefore, most brokers want to keep the data to themselves (think San Jose, California–based Calyx Software's Point™) until the execution decision is made—or at least near-final.

If you are a correspondent, you have likely made a commitment in front of the originations—so you don't look at it the same way. Your job is to fill the pipelines with the right products; the Internet just makes that easier from a delivery perspective.

Data agreements, while very mature in some transaction areas (auto-mated underwriting systems, credit-report providers), are still largely handled on a one-off basis for others (pre-qualifications). Obviously, if a consumer is logging on to a Web site (although we are starting to see data agreements with consumers as well), then the data belong to the Web-site owner.

So, what should you be doing? Start by treating data as a true asset of your organization. Formally work out who owns loan data at what stage of the life cycle, within and outside your company. Have complete and concise agreements with your trading partners on exactly which data will be changing hands and for what purpose. You could even mandate that data be destroyed in certain circumstances if a decision is not made to move forward with a particular party or service.

How you structure your transactions, in terms of what information you put where and how, is a rapidly developing area. This will likely be the case for the next few years as consumers and businesses continue to move a majority of transactions and operations to the Internet. It would also not hurt to research data rights or speak with your organization's general counsel about its legal rights to data, with the understanding that data access rights are evolving legally as well.

Gabe Minton is chief strategy officer for Mortgage Cadence Inc. in Greenwood Village, Colorado. He was formerly vice president of industry technology for the Mortgage Bankers Association (MBA) and executive vice president for MISMO. He can be reached at gminton@mortgagecadence.com.