Bulletin: SLS2020010

Dear Associates:

Closing instructions from different lenders present challenges for settlement service providers because instructions from different lenders are unique to each lender, and differ in format, organization, definitions, length, terms, and other aspects. Complying with each lender’s closing instructions requires settlement service providers to find information in different sections of each lender’s form.

Mortgage Industry Standards Maintenance Organization (“MISMO”) is a standards development organization for the mortgage industry. MISMO recently announced the availability of standard closing instructions. These are the result of years of effort and contributions by many participants in mortgage-related industries, including the Mortgage Bankers Association, national and regional lenders, ALTA, title underwriters, settlement services providers, escrow companies, document preparation vendors, and others.

The MISMO standard closing instructions are created as templates that lenders can use to communicate their instructions to settlement service providers. The standard instructions create a common format that is intended to improve efficiency and reduce errors by introducing consistency into the closing instructions. The MISMO closing instructions standardize the content (what information should be included) and the organization (where the information is located). Related information and important data and dates are located in unified locations. This reduces the need for the settlement service provider to scroll and search for this information in order to extract it.

The MISMO standard closing instructions consist of two templates: a Master Closing Instruction Template and a Transactional Closing Template.

The MISMO Master Closing Instruction Template contains general instructions that are common to all of the loans closed for that lender. It includes such aspects as conflicts of interest, data security, verification of signer identity, recording, and document destruction, etc. These instructions won’t change for each transaction, and lenders may choose to provide the Master Closing Instructions periodically, rather than with each transaction.

The MISMO Transactional Closing Instruction Template contains specific instructions and information relating to each particular loan. It includes such aspects as property information, parties’ contact information, critical dates, title insurance requirements, and conditions and stipulations, etc. Lenders would always provide Transactional Closing Instructions for each transaction.

MISMO also created an Implementation Guide to assist lenders in the adoption of the standard closing instruction templates. The Guide contains the standardized category titles used in the templates and guidance for describing the lender’s requirements and expectations with regard to each category.

MISMO recently announced that the standard closing instruction templates are upgraded to "Candidate Recommendation" status, indicating that MISMO believes that they are ready for implementation. Although lenders are not required to use the MISMO closing instructions, lenders provided input into their development, which may increase the likelihood that some may adopt them. The templates and related implementation guide are available to MISMO members. They are also available to others for internal and non-commercial use. Click here for a link to the MISMO website.

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