MISMO’s new dataset will map adverse action notices

The Mortgage Industry Standards Maintenance Organization has released a dataset standard that maps to a sample adverse action notification form.

This sample notice, called the statement of credit denial, termination, or change form, and its accompanying XML file, matches fields between various information systems that lenders can use when reporting negative decisions to applicants.

“This MISMO dataset addresses a key industry pain point since there are multiple credit denial documents in use across the mortgage industry,” Seth Appleton, the organization’s president, said in a press release. “This MISMO solution standardizes the content and formatting of such documents to enable more consistent communication between lenders and consumers and a more efficient credit vetting process.”

A reporting obligation for the denial of credit to applicants has been in place for decades, and it was amplified in a 2003 revision to the Fair Credit Reporting Act.

Recently, the Consumer Financial Protection Bureau warned lenders that make decisions using artificial intelligence systems of the requirement to issue adverse action notifications.

“The law gives every applicant the right to a specific explanation if their application for credit was denied, and that right is not diminished simply because a company uses a complex algorithm that it doesn’t understand,” Director Rohit Chopra said in May.

This new dataset features the information points included in existing variations of credit denial documents by representing a “typical” adverse action notice in terms of the form template text, sample loan file data and document field data mapping to MISMO version 3.5 (including the version 3.6 extension). The accompanying sample XML file demonstrates the format required for dataset use.