The Mortgage Industry Standards Maintenance Organization (MISMO) said Thursday it is seeking participants for a new development workgroup (DWG) focused on creating standards for electronic Home Equity Lines of Credit (eHELOC).
MISMO said several factors are driving interest in creating standards for electronic closing documents for the HELOC process, including:
- Most homeowners have high home equity, which has resulted in consumers' increased interest in HELOCs over the past several years. As the Federal Reserve continues to slow inflation, rates are expected to remain high. The DWG will consider these economic conditions in the development of the product.
- Given that HELOC organizations are more streamlined than closed-end lending, there is a greater importance for adopting electronic closing documents.
- Unlike closed-end eNotes, which have limitations on the substance of the note, eHELOCs are not "negotiable instruments," so they contain more and greater variation of substantive terms. Standardizing these electronic closing documents would allow for increased interoperability of HELOCs — easing the onboarding process as the assets are sold/transferred between parties.
- The terms of the eHELOC credit agreement and the open-end security instrument vary from the standardized closed-end note and mortgage — as there's no primary investor/liquidity provider with broadly used form model documents, allowing this MISMO workgroup the ability to step in to innovate and standardize.
“Industry professionals who have an interest in, or experience with, developing electronic document standards are encouraged to join,” said David Coleman, MISMO president. “The new eHELOC DWG will collaborate with industry participants, government agencies, and other stakeholders to complete the analysis to determine eHELOC standard feasibility and prepare a roadmap of artifacts that would be needed to standardize this across the Digital Mortgage ecosystem."
Industry support is necessary to ensure that all relevant needs are considered and to confirm that key activities are identified, addressed, and incorporated into the eHELOC Roadmap, MISMO said. Meetings will be conducted regularly via conference calls.
Anyone interested in joining the DWG who is already a MISMO Member may join the collaboration site that has been established on MISMO Connect. Those not already members of MISMO who would like to participate should send an email to [email protected].
