by Carson A. Mullen
Rapid access to information is quickly changing the real estate finance industry. In the environment of the last two years, refinances have pushed loan originations to all time highs and have stressed the capacity of lenders severely. That much we know, but what can you do about it, and why should you care?
Saving time and money, that’s why. ALTA® has worked for many years with MERS®— the Mortgage Electronic Registration Systems, Inc., —to help mortgage lenders eliminate the need for recording, mortgage loan assignments when ownership rights changed in secondary market trans actions. MERS is reducing costs and paperwork associated with preparing, recording and tracking assignments, thus saving title companies time and money and making closings faster and less troublesome.
For years title companies have experienced the inconveniences, costs, and delays that incorrect, misrecorded, unrecorded, or just plain missing assignments have had on real estate closings and delivery of closed loans to investors or securities trustees. Impaired title chains need to be cleared or insured over, and during periods of heavy volumes, they place undue stresses on capacity. These inconveniences and their associated high costs are eliminated when no assignments are necessary because lenders register the loans on the MERS® System.
How Does it Work?
Member companies (lenders) either use MERS as the Original Mortgagee (MOM) language security instruments, or assignments into MERS and assign an 18 digit Mortgage Identification Number (MIN) to track changes for the life of the loan.
Once loans are closed on MOM documents and recorded in the land records, title is grounded in MERS. Lenders register the loans on the MERS® System electronically either in batches or individually, then transfer them to their trading partners. These trades can cover several transactions for delivery to Fannie Mae or Freddie Mac, to private and public investors, or to conduits like GMAC RFC. The MERS database tracks the various interests of the parties to these trans actions initially and as they change in the months and years to follow.
Elimination of assignments by MERS members has resulted in faster, less troublesome, and lower cost closings for title firms, lenders, and borrowers by:
• Permitting fast retrieval of servicer information for MERS loans to obtain existing loan payoff balances; and
• Eliminating breaks in chain of title; and
• Eliminating assignment costs by using MOM mortgage documents.
MERS charges the lender a one time registration fee of $3.95. The savings per loan is at least $22 per loan over the cost of assignments. Savings have improved even more in recent years because many recording jurisdictions around the country have increased fees for assignments. Examples include New York at $30 and Massachusetts at $75 to record an assignment.
Don’t Rest On Your Laurels
MERS began with the Servicer Identification System (SIS). SIS provides toll free telephone access to MERS for determining the current servicer of a loan. SIS has proven to be reliable and is still a good solution for low volume users. But, due to the meteoric growth of loans registered on the MERS® System in recent years, ALTA® approached MERS to provide an alternative to SIS. So, MERS has introduced MERS® Link for the title industry. MERS® Link is a business to business application available to ALTA® members and nonmembers for a fee.
Access to SIS hasn’t changed. Title companies and consumers may dial into the system via the telephone and key in a Mortgage Identification Number (MIN) or an applicable social security number to learn current servicer information. Although this function works well for the general public, ALTA® wanted a more streamlined solution for title professionals. ALTA® funded the project and worked with MERS to enable MERS® Link to interact with the MERS® System. The differences in MERS® Link and SIS are in the web’s unique capacity to format information and link to other companyies information with the click of the mouse. MERS® Link’s expanded capabilities greatly increase the amount and flow of information available to title companies.
The browser based MERS® Link allows settlement agents to quickly determine the correct current servicer of loans registered on the MERS® System. Users may enter the property address, borrower name, borrower social security number, or the loan’s MIN. Because multiple servicing transfers are common during the life of a loan, opportunities for unrecorded assignments, delays in recording assignments, and even misidentified servicers exist. MERS minimizes those possibilities because it eliminates the need to record assignments when servicing rights are traded between MERS members. The identity of the new servicer is typically updated on the MERS® System within 24 hours of being notified of the transfer.
Eric Meyer, Title Researcher at American Title Services Company in Greenwood Village, Colorado, needs to look up servicers frequently. “It’s actually very useful when we get deeds of trust that make the current servicer hard to track, especially when releases are not yet filed. The MERS® System provides an indication if the loan is reported as paid off. It’s very easy to get servicer information, and we’re very satisfied. We just wish even more lenders would use MERS.”
How Can You Access MERS?
ALTA® members can sign up to use the MERS® System by clicking on the MERS logo on the bottom right hand corner of ALTA®’s Web site (www.alta.org). The special ALTA® member rate is $75 for one year.
Users will receive an Org ID, Username and Password. Then you can retrieve the borrower’s name, property address, lot, block, subdivision and parcel number (if present) security instrument, and assignment recording information if present, and current servicer/subservicer identification contact information.
MERS® Link provides access to information regarding the current servicer of any mortgage registered on the MERS® System. For some servicers you can also “hot link” to the servicer’s Web site for customer service information. MERS® Link provides several features: Look up by property address; look up by borrower name; look up by company name; and look up by FHA/VA/MI certificate number.
MERS was established in 1996. By 1999 MERS had one million registrations and ten million at the end of 2002. Today the system tracks more than 15 million registered loans with about 29,000 loans registered on the system daily.
If you would like additional information about how the MERS® System can help make closings faster and less troublesome for you, contact me at the number below, or click on the MERS logo on the ALTA® Web site.
Carson A. Mullen is executive vice president & customer division manager for MERS. He can be reached at email@example.com or 703 761 1276.