What Is the Mortgage Electron🉐ic Regis🦂tration System?

The Mortgage Electronic Registration System (MERS) is a database created by the mortgage banking industry. A confidential electronic registry of mortgages originated in the United States, it keeps track of transfers of and modifications to servicing rights and ownership of the loans. The real estate finance industry uses it for residential and commercial mortgage loan recording trading.

MERS, which also refers to the privately held company that manages the database, is approved by such government-sponsored enterprises as the Federal National Mortgage Association (Fannie Mae), the Federal Hom💛e Loan Mortgage Corporation ✨(Freddie Mac), and the Government National Mortgage Associatꦺion (Ginnie꧙ Mae), along with such government agencies as the Federal Housing Administration (FHA) and the Department of Veterans Administration (VA) that are involved in housing loans. The California and Utah Housing Finance Agencies and all major Wall Street rating agencies also use it.

How the Mortgage Electronic Registratio𝓰n Systemꦏ Works

Each time a mortgage is sold from one bank to another, an assignment—a document showing that the mortgage has been transferred—is, theoretically, prepared and recorded in the county land records. The assignment transfers the original lender's interest under the mortgage to the new bank.

𝓀By tracking loan transfers electro😼nically, MERS eliminates the long-standing practice that the lender must record an assignment with the county recorder every time the loan is sold from one bank to another.

The MERS system is used by mortgage originators, servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, settlement agents, title companies, insurers, investors, county recorders, and consumers. County and regulatory officials and homeowners can access MERS free of charge. Homeowners can look up information on their own mortgages that are registered with the system.

In order to use electronic tracking, the mortgage servicer assigns it a mortgage identification number (MIN) and then registers the loan with the MERS database. Sometimes, MERS itself is designated as the mortgagee, as the original lender is officially called in the mortgage documents; such a loan is known as an original mortgagee (MOM) loan. From there, the seller can originate the mortgage with MERS as a nominee of the lender (also referred to as the beneficiary), and then assign or record the loan assignment to MERS in the county land record. This would make MERS the mortgagee of record.

If the lender s🐓ells the loan, MERS will update its information regarding the mortgage. The mortgage servicer can have it removed from the MERS database by sending a request to have it deactivated. MERꦓS will, in turn, notify Fannie Mae. If the mortgage lender wants to end their membership with MERS entirely, it must also notify Fannie Mae as soon as possible.

Pros and Cons of the Mortgage Electronic Registrati🏅on System

As an electronic, one-stop site for mortgage documents—deeds of trust and promissory notes—MERS greatly simplifies the mortgage process. MERS can act as a cost-saving measure to some degree because, by acting as a mortgagee, it cuts the expense of recording the transfer of a mortgage from one lender to another. Having the loan in MERS’ name (as nominee) in the land records saves time and recording costs because multiple assignments aren't necessary each time the loan changes hands.

The database has drawn some criticism, though. During the 2008 housing crisis, the system made it difficult at times to sort out who actually owned mortgages. That created a challenge for homeowners facing 澳洲幸运5开奖号码历史查询:foreclosure or relief from their loans, as they needed to know who held their mortgages in order to work out some remedy.

The Bottom Line

The Mortgage E💦lectronic Registration System was designed to track servicing rights on mortgages, which is supposed to make the mortgage financing system easier for lenders and borrowers. It has proven to be a cost and time-saving syste🎀m, although critics note that during the subprime mortgage crisis of 2008, MERS made it difficult to see the actual owners of home loans.