This paper assesses the progress of the Uniform Mortgage Data Program (UMDP), which was established by the Government Sponsored Enterprises (GSEs) - Fannie Mae and Freddie Mac - to improve transparency and accountability in loan originations and help fire up the secondary market. The program will phase in three stages by November 2012: the Uniform Appraisal Dataset (UAD), Uniform Loan Delivery Dataset (ULDD), and Uniform Collateral Data Portal (UCDP).

1. • Cognizant 20-20 Insights
GSE Loan Delivery: Interim Analysis
and Approach
Executive Summary benefits of the UMDP program, as well as the
implementation challenges faced by players
While the recent housing crisis can be attributed
across the mortgage industry. It concludes with
to a number of factors — low interest rates, exotic
an approach for deploying business and techno-
products, lack of audit controls, inadequate
logical improvements that can reduce risk and
credit risk analysis, insatiable investor appetite,
optimize the entire loan origination process.
predatory lending and irresponsible borrowers
— one of the key factors was the non-availability UMDP Program Overview
of consistent, accurate and detailed origination
The GSEs announced the launch of UMDP on May
data. This problem has led to inadequate consid-
24, 2010, under the directive of the FHFA. UMDP is
eration/evaluation of several of the factors stated
aimed at helping organizations implement uniform
above.
appraisal and loan delivery data standards, which
Government Sponsored Enterprises (GSEs), would facilitate data accuracy and integration of
Fannie Mae and Freddie Mac, created the Uniform mortgage data across the industry landscape. As
Mortgage Data Program (UMDP) at the direction depicted in Figure 1, this program comprises three
of the U.S. Federal Housing Finance Agency components.
(FHFA). UMDP aims at significantly improving the
While the technical requirements and specifica-
depth, breadth and quality of data throughout
tion for UAD and UCDP are identical, the ULDD
the mortgage life cycle to promote transpar-
requirements are not consistent for both GSEs
ency, accountability, compliance and better risk
in the case of conditionally independent2 data
management. This white paper discusses the
points.
UMDP at a Glance
Component Objectives Data Elements
Uniform Appraisal Improving data quality by having uniform 209 data points.1
Dataset (UAD) standards for capturing appraisal data.
Uniform Loan Improving data quality by having uniform Over 600 data points, approximately
Delivery Dataset standards for capturing loan delivery data. half to be implemented in Phase l and
(ULDD) the rest over time.
Uniform Collateral Facilitating electronic submission of UAD includes all the data points
Data Portal (UCDP) appraisal data files to the GSEs through the required to complete the appraisal
uniform residential appraisal report form. report form.
Figure 1
cognizant 20-20 insights | april 2012

2. A Step in the Right Direction • LOS vendors: Numerous banks have installed
these platforms to originate thousands of
UMDP represents an attempt to address the
loans per month. LOS vendors will be the key
various data issues plaguing the industry.
drivers of ULDD implementation as they will
Supported by UMDP, the breadth and depth of
need to enhance and roll out their products
loan data — delivered on a timely basis through
across several banks.
a common industry standard — will lead to signifi-
cant improvements in transparency for investors, • Originators: These companies have the
as well as strengthen risk management capa- ultimate responsibility to be ULDD compliant
bilities, lender accountability, secondary market as they will be responsible for submitting loans
pricing and reporting/analytics. This initiative in prescribed format to the GSEs.
will not only lay out the foundation for future
controls, but also be essential in bringing back
• GSEs: These organizations will need to
enhance several internal systems to incorpo-
investors to the secondary market. rate enhanced data into their existing pooling,
pricing, trading, investor reporting and
Timelines and Impact Analysis analytics systems.
The GSEs have laid down specific timelines to
implement the components of UMDP, which • Third-Party Service Providers: Appraisal
management companies will need to start
starts with implementation of UAD by September
providing data in the required format to origi-
1, 2011, to implementing ULDD by November 2012.
nators through their existing delivery channels
Key timelines and impact analysis on key players
and will need to enhance their delivery channels
is summarized in Figure 2. Key participants
to provide adequate data depth and breadth
impacted will be loan origination system (LOS)
per UMDP. They will also need to update forms
product vendors, originators, GSEs, third-party
for their vendor network that actually process
service providers, rating agencies, investors and
the orders.
servicers.
ULDD Transition Timeline
Sept. 1, 2011 Dec. 1, 2011 March 19, 2012 July 23, 2012 November 2012
UAD ULDD UCDP ULDD ULDD
All appraisers must All loans with application Appraisal report must be Loans with an application All loan deliveries on or after
complete the appropriate received dates on or after this submitted to the UCDP if: received date on or after this date must include the
appraisal forms as date must include the applicable The loan application is December 1, 2011, that are two additional data points
required by the UAD. ULDD data points for Phase I. dated on or after delivered to either GSE on or required by the SEC.
December 1, 2011, and after July 23, 2012, (previously
UCDP The exact date is yet to be
For loans with application March 19, 2012) must meet the
An appraisal report ULDD Phase I requirements. communicated.
received dates on or after this is required.
date, the appraisal report form, UCDP
if required, must be submitted Doc File ID (ULDD data Doc File ID (ULDD data point
to the UCDP prior to delivery, if point Appraisal Identifier) Appraisal Identifier) is
the loans are delivered on or is not required at delivery required at delivery on or
after March 19, 2012. until July 23, 2012. after July 23, 2012.
IMPACT
UAD ULDD UCDP ULDD ULDD
Originators/LOS Vendors Originators/LOS Vendors Originators/LOS Vendors Originators/LOS Vendors Originators/LOS Vendors
Enhance systems and Enhance systems and prepare Enhance systems and Enhance systems and Enhance systems and
prepare staff to support staff to support and process prepare staff to make prepare staff to support prepare staff to support
and process new UAD data per ULDD. final preparations for and process data per and process data per final
compliant forms. Third-party Servicers mandatory delivery of ULDD. ULDD requirements.
Third-party Servicers Enhance systems and prepare appraisal forms through Final preparations for the Third-party Servicers
Enhance systems/forms staff to support ULDD. the implementation delivery of ULDD Phase I Ensure that they provide
and train vendors/staff of the UCDP. loan data. the required data elements
GSE
on using the new Enhance several internal Ensure users are to lenders required per SEC.
configured in UCDP.
UCDP
appraisal form. systems to move from current Originators/Third-party Servicers
data breadth and format to Servicers Enhance systems to process
new standards. loans with enhanced data
Upload appraisals to the
UCDP requirements and investor
UCDP, working with
Originators/LOS Vendors reporting.
vendor if applicable, to
Enhance systems and prepare capture and store the Rating Agencies/Investors
staff to support and process Appraisal Identifier data Enhance pricing models
data per ULDD. point (DocFileID) for (data and logic) to include
Third-party Servicers delivery with the ULDD. enhanced factors in price
Enhance systems and prepare determination.
staff to support ULDD.
Figure 2
cognizant 20-20 insights 2

3. • Rating Agencies/Investors: Both will need to access controls and accountability for each
enhance their pricing models in terms of data field. This will be a challenging task given
and logic to include enhanced factors in price the fact that detailed analysis of hundreds of
determination. screens, scores of roles and hundreds of fields
will be required to achieve this along with cor-
• Servicers:These companies will need to
responding validations.
prepare for boarding and managing loans
with enhanced data requirements as well as • Training and Change Management: Given
enhanced and consistent investor reporting. the number of parties involved and extent of
changes required, training the staff to adapt
Implementation Challenges
new fields will be a difficult habit to break.
ULDD implementation across various systems Analyzing the impacts on business processes
and stakeholders is not without challenges. The and swiftly aligning them to go in hand with the
challenges include multiple parties and stake- changes might turn out to be another compli-
holders with conflicting priorities, extensive cation during the implementation.
customizations, multiple installations, training
and change management, coordination and • Changes to Data Warehouse Infrastructure:
embracing a unified view of these changes. Any changes to the source systems will have
Specific challenges include: a corresponding impact on the DW. Originators
should implement the changes to the DW along
• Multiple Parties and Stakeholders: Successful with the source systems to avoid inaccuracies
and timely implementation of UMDP is in the reports generated and analysis done
possible only through seamless coordination with the data in the DW.
between various stakeholders — originators,
LOS vendors, third-party service providers
• Tight Data Dictionary and Edit Checks:
The GSEs have published a very tight data
and various units within these entities (IT, dictionary for loan delivery with several
business, data warehousing (DW), etc.). Given business rules at field level. The XML file will be
the different priorities of these stakeholders rejected if the supplied data does not meet the
and their business units, this is easier said than specified guidelines. This would lead to extra
done. programming effort in terms of building these
• Product vs. Client-specific Requirements rules up front into the LOS, as well as checking
and Customizations: LOS vendors and origina- prior to loan delivery. Exception reports and
tors are struggling with identifying, managing exception analysis and remediation teams may
and implementing changes to their disparate be required for an initial period to overcome
versions of systems, as considerable custom these challenges.
code has been added on top of base products.
For some originators, particularly those that Suggested Approach
use plain vanilla features, this change might be A solution approach to implement UMDP
easier to make and manage, but for those that requirements comprises a unified plan and
have customized the platform significantly, governance model across various stakeholders
identifying and implementing changes will be and units within them, GSE data dictionary-driven
difficult given the limited availability of LOS approach, and a deeper/long-term view of imple-
vendors’ professional services teams. Updates mentation. As depicted in Figure 3, the approach
to the customized origination products for a would start with the GSE data dictionary, identifi-
variety of clients (as mandated by UMDP) are cation of data gaps, and a determination of how
a daunting task for product vendors. Simul- to holistically fill these gaps, followed by an imple-
taneously, product vendors will need to make mentation plan. Additionally, the implementation
updates to their core products to facilitate new approach should be flexible and extensible to
implementations in the future. conform to future enhancements with the imple-
mentation of an extensible business rule engine
• Simple Field Additions Will Not Help;
to check and compare each data element against
Role-based Access and Accountability Is
documents (images/PDFs) and data point source
Required: LOS vendors and originators who
system information to ensure data accuracy and
view this simplistically (i.e., just add the fields)
consistency. An effective audit trail should be
will not be able to take true advantage of this
generated to track the prefunding reviews and
opportunity if they do not take into account
cognizant 20-20 insights 3

4. An End-to-End UMDP Implementation Plan
Data Gap to Business
Identify Data Gaps Function/Role/Screen Mapping Define and Prioritize
• GSE data dictionary is the • Map each data gap to business • Sound change management
starting point. process/function and role. practices to enhance systems and
• Map current data set to • Map each gap to various applications; business process to capture data.
GSE data dictionary. start upstream and traverse • Implement through unified
• Identify gaps — data/depth. downstream. governance model.
• Define business rules for each
data element.
• Define document, field and system
mappings for comparison.
Figure 3
Data Sources Master Data
changes to reduce buy-back requests from the Transform Edit Checks
Conclusion
GSEs/investors (see Figure 3).
• Consolidate all data in • Maintain in enterprise UMDP is a data to in the •rightcomparison across bring
• Transform step Data
direction to
single DW for effective data definition and
As with data submission guidelines for various transparency and accountability among various
UMDP standards. system and documents.
control & distribution control repository. • Check data rules before
loss (Sources will beprograms on • Transform &
mitigation LOS, POS, the servicing side - stakeholders. UMDP not only provides trans-
submitting.
Lead, CRM etc.). parency and accountability butmanagement the
standardize data.
Home Affordable Modifications Program (HAMP) • Exception also lays
• Up-front implementation • Source of truth across & resolution.
foundation for possible restart of the secondary
and of rules inAffordability Foreclosure Alternative
Home source apps to the enterprise. • Submit to GSEs.
capture the data points
(HAFA) — the datarules loan market. Delivering high-quality data to
through business dictionary for UMDP is equally
tight and could be a cause for concern. These
engine. investors in a consistent and timely manner will
constraints should be handled at the LOS appli- allow investors and rating agencies to effectively
cation and data submission/DW stage by building evaluate, rate and manage risk associated with
the rules up front in the application as well as mortgage investments.
downstream (prior to submission). Originations
While UMDP will require up-front investment from
IT/DW should take guidance from their servicing
various participants such as lenders, vendors,
counterparts who have already implemented
servicers, investors and rating agencies, in the
a process very similar to UMDP for various
long run all parties will benefit from improved data
government programs. As depicted in Figure 4,
quality and transparency and business processes
the ideal architecture should comprise data con-
enabled by a technology refresh and resultant
solidation and standardization across sources,
new business opportunities. This industry-wide
Data Gap to Business
transformation, Data Gaps
Identify edit checks and corresponding
Function/Role/Screen Mappinglead to a moreand Prioritize efficient,
effort will
Define
transparent,
exception management and submission. This
consistent and streamlined operations and risk
would GSE data dictionary is the
• provide a single source for data definition gap to business
• Map each data • Sound change management
starting point. process/function and management for all industry participants. Loans
role. practices to enhance systems and
management (e.g., set to definition • Map each gap to various applications;
data repository),
• Map current data supported by UMDP will fostercapture data.
business process to an environment
accessGSE datadistribution across the start upstream and traverse
and dictionary. enterprise, • Implement through unified
downstream. of trust leading governance model.
to improved participation in the
while•taking into — data/depth. UMDP requirements.
Identify gaps account the
• Define business rules secondary market.
for each
data element.
• Define document, field and system
mappings for comparison.
UMDP Implementation Data Flow
Data Sources Master Data Transform Edit Checks
• Consolidate all data in • Maintain in enterprise • Transform data to • Data comparison across
single DW for effective data definition and UMDP standards. system and documents.
control & distribution control repository. • Check data rules before
(Sources will be LOS, POS, • Transform & submitting.
Lead, CRM etc.). standardize data. • Exception management
• Up-front implementation • Source of truth across & resolution.
of rules in source apps to the enterprise.
capture the data points
• Submit to GSEs.
through business rules
engine.
Figure 4
cognizant 20-20 insights 4

5. Footnotes
1
A “data point” is the term name that must comply with Mortgage Industry Standards Maintenance Orga-
nization (MISMO) naming conventions and end with a MISMO class word to indicate the category of data
to which the term name belongs.
2
GSE-specific data points are required for all loan delivery transactions when a defined business condition
exists. These conditions are not consistent for GSE delivery applications.
About the Authors
Ashish Shreni is the Consumer Lending Practice Head with Cognizant Business Consulting and has
worked for over 12 years in the banking, brokerage and insurance space on projects spanning business
and IT strategy, business process optimization and complex project execution. He can be reached at
Ashish.Shreni@cognizant.com.
Avishek Bimal is Consulting Manager with Cognizant Business Consulting, and has worked for over 12
years with leading banks across project management, business process optimization and consulting. He
can be reached at Avishek.Bimal@cognizant.com.
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