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X12 transaction guide · Finance

EDI 205 Mortgage Note

The X12 document used by mortgage originators, settlement agents, custodians and investors to exchange the data that makes up a mortgage note.

Sent by
Mortgage originator or settlement agent
Received by
Warehouse lender, document custodian or investor
Standard
ANSI ASC X12

What is an EDI 205?

The EDI 205 Mortgage Note is the ANSI X12 transaction set mortgage originators, settlement agents, warehouse lenders, document custodians, secondary market entities and other participants use to exchange the data that makes up a mortgage note.

The note is the borrower's promise to repay: principal, interest rate, payment terms and signatures. As loans are financed and sold, custodians and investors must confirm that the note data matches the loan records. Exchanging it as data supports that check, and the industry later developed electronic note (eNote) standards for the same purpose.

How the EDI 205 worksDiagram of the EDI 205 Mortgage Note. Mortgage originator or settlement agent sends it to warehouse lender, document custodian or investor. It usually follows 199. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: BGN (Beginning Segment) and the required NM1 loop with NM1 (Individual or Organizational Name) and detail: the required MNC loop with MNC (Mortgage Note Characteristics) and the required IN1 loop with IN1 (Individual Identification). 2 optional loops are listed by their first segment.How the EDI 205 worksMortgage Note: who sends it, where it fits and what the standard marks required1 WHERE IT FITSUSUALLY FOLLOWS199Real Estate SettlementInformationEDI 205SENDERMortgage originator orsettlement agentRECEIVERWarehouse lender,document custodian orinvestor997 or 999 acknowledgment back, if the partners agreeUSUALLY FOLLOWED BY997FunctionalAcknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDsISA … IEAFunctional group, ID code MNGS … GETransaction set 205ST … SEHEADINGBGNBeginning SegmentRequired loop NM1 · repeats up to 5NM1Individual or Organizational NameDETAILRequired loop MNC · repeats many timesMNCMortgage Note CharacteristicsRequired loop IN1 · repeats many timesIN1Individual Identification+ 2 optional loops, starting with:CDINX1Blue box: required loop. Optional loops are listed by the segment that starts them; when a loop is used, that first segment is required. Optional segmentsoutside loops are not drawn.Structure: required segments and loops in the X12 008010 listing for the 205. Your trading partner's implementation guide adds its own requirements.
How the EDI 205 worksDiagram of the EDI 205 Mortgage Note. Mortgage originator or settlement agent sends it to warehouse lender, document custodian or investor. It usually follows 199. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: BGN (Beginning Segment) and the required NM1 loop with NM1 (Individual or Organizational Name) and detail: the required MNC loop with MNC (Mortgage Note Characteristics) and the required IN1 loop with IN1 (Individual Identification). 2 optional loops are listed by their first segment.How the EDI 205 worksMortgage Note: who sends it, where it fits andwhat the standard marks required1 WHERE IT FITSUSUALLY FOLLOWS199Real Estate Settlement InformationEDI 205SENDERMortgageoriginator orsettlementagentRECEIVERWarehouselender,documentcustodian orinvestor997 or 999 acknowledgment back, if the partnersagreeUSUALLY FOLLOWED BY997Functional Acknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDs (ISA… IEA)Functional group, ID code MN (GS … GE)Transaction set 205 (ST … SE)HEADINGBGNBeginning SegmentRequired loop NM1 · repeats up to5NM1Individual orOrganizational NameDETAILRequired loop MNC · repeatsmany timesMNCMortgage NoteCharacteristicsRequired loop IN1 · repeatsmany timesIN1IndividualIdentification+ 2 optional loops, starting with:CDINX1Blue box: required loop. Optional loops are listedby the segment that starts them; when a loop isused, that first segment is required. Optionalsegments outside loops are not drawn.Structure: required segments and loops in the X12008010 listing for the 205. Your trading partner'simplementation guide adds its own requirements.

How to read this diagram: the top row shows who sends the 205, to whom, and which documents usually come before and after it. The lower part shows what X12 release 008010 itself requires: the envelopes around the 205 and the segments and loops the standard marks as required, area by area. Optional loops are listed by the segment that starts them rather than drawn in full. This is the standard's minimum, not a trading partner's requirement: each partner's implementation guide usually makes some optional loops mandatory, restricts the codes and may use a different release.

Expand diagram Download SVG

When it is used

  • Sending note data to document custodians
  • Supporting warehouse financing of closed loans
  • Confirming note terms for investors

Where it fits in the document flow

Usually follows 199 Real Estate Settlement Information
This document 205 Mortgage Note
Usually followed by 997 Functional Acknowledgment

Structure

Mandatory segments in the 205 (X12 release 008010)

The segments X12 release 008010 marks as mandatory at their level, in order. Segments inside optional loops are needed only when the loop is used. This is the standard's requirement, not your trading partner's: each partner's implementation guide names the release it uses, adds the optional segments it requires and restricts the values. The requirement status comes from one published X12 reference listing and has not been checked against a second source.

  • ST
  • BGN
  • NM1
  • MNC
  • CDI
  • LX
  • IN1
  • NX1
  • SE

Practical example

The 205 in practice

After closing, a lender sends its warehouse bank and the document custodian a 205 with the note's principal, rate, term and payment details. The custodian compares the data with the original note it receives and certifies the loan for sale.

Implementation

Implementation considerations for the 205

  • Keep note data identical to the signed note.
  • Check whether partners use electronic note standards instead.
  • Protect borrowers' personal data under applicable law.
  • Track custody and transfers of each note.

How ECOM helps

Automate the 205 with ECOM

Industry

Financial Services

Secure file transfer and B2B integration for banks and financial institutions.

Solution

Financial Document Automation

Automate invoices, remittances, payment files and bank statements from capture to posting.

Solution

EDI Integration

Exchange X12 and EDIFACT documents with partners and integrate them directly with your ERP.

More general questions about EDI are answered in the EDI FAQ.

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