Mortgage Electronic Registration System Up and Running

Many of you have heard of the MERS Mortgage Electronic Registration System in a variety of publications. Essentially, MERS is a central clearing house for mortgage ownership and cancellation information. MERSCorp, Inc. is a mortgage industry created corporation that: 1. Operates a national electronic registry to track the changes in servicing rights and beneficial ownership interests in mortgage loans, and 2. It’s subsidiary, Mortgage Electronic Registration Systems, Inc. (“MERS”), acts as the mortgagee of record on all mortgages that are registered with MERSCorp, Inc. The MERS System provides easy access to the correct loan servicer for loan payoffs and minimizes errors in the public records because of missing assignments.

MERS can become a mortgagee of record in either of two ways.

On newly created loans, Fannie Mae, Freddie Mac, FHA and VA have approved MERS to be the Original Mortgagee of Record by being named in the Mortgage or deed of trust as the beneficiary. To accommodate this, the agencies have published authorized changes to the Uniform Security Instrument for each State. The following or similar language may appear in a mortgage or deed of trust. “ Mortgage Electronic Registration Systems, Inc. (“MERS”), solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns. MERS is organized and existing under the laws of the State of Delaware, and has an address and telephone number of P.O. Box 2026, Flint. MI, 48501-2026, tel. (888) 679-MERS. ______________________, (“LENDER”) is organized and existing under the laws of ____________, and has an address of __________.”

On an Existing Loan, MERS may be an assignee of the mortgage or deed of trust. The assignment will name “Mortgage Electronic Registration Systems, Inc.” as assignee. The assignment does not use the nominee language because it is not required that the actual beneficiary of a mortgage loan disclose the appointment of a nominee.

Once a mortgage, deed of trust or assignment names MERS, any future transfer of the loan or servicing from one MERS member to another MERS member will be tracked electronically on the MERS System and will not be shown in the local real property records.

A specific procedure is available to facilitate obtaining loan payoff information. Every MERS registered assignment, mortgage or deed of trust will show a Mortgage Identification Number(MIN), an 18 digit number which is unique to that loan. The Min can never be duplicated or used again. In addition to the MIN, the assignment, mortgage or deed of trust will list a toll free number ((888) 679-MERS / (888) 679-6377) to contact MERS for the name of the current loan servicer. This telephone number will give the caller a Voice Response Unit , where you may obtain the name of the current loan servicer by providing one of the following : the MIN, the borrower’s name or the borrower’s social security number. The caller will also be given the option of having this information faxed to them.

You may obtain a loan payoff from the named loan servicer. Appointed employees of the loan servicer are empowered by a MERS Corporate Resolution to be officers of MERS, and authorizes them to execute a release, satisfaction, discharge or reconveyance of a deed of trust.

When MERS is the mortgagee of record, a foreclosure can be brought in the name of MERS in all states under the current state foreclosure procedures. If a deed of trust or mortgage names MERS as the Original Mortgagee of Record, the deed of trust will expressly authorize MERS to conduct a foreclosure sale, by including the following language: “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument; but, if necessary to comply with law or custom, MERS ( as nominee for Lender and Lender’s successors and assigns), has the right: to exercise any and all of those interests , including but not limited to, releasing or canceling this Security Instrument.”

Finally, a judicial foreclosure can be initiated in the name of MERS, if MERS is the mortgagee of record. In most cases, by assigning the foreclosure judgment , title can pass directly to the beneficial owner, typically a secondary mortgage market investor. An understanding of the MERS registration system is clearly important as it will impact our daily business. You can find out more about MERS at www.mersinc.com.