Does use of MERS® Residential change the current mortgage closing process?

Yes, it makes it better! When your organization uses MERS® Residential (also known as the MERS® System), you follow your normal and customary closing procedures, except that you'll start saving $30 or more per loan.

How does it work?

At closing, both the lender and borrower agree to standard, Freddie Mac- and Fannie Mae-approved language in the security instrument that names Mortgage Electronic Registration Systems, Inc. (MERS, wholly-owned subsidiary of parent company MERSCORP Holdings, Inc.) the original mortgagee or beneficiary. After closing, lenders record the security instrument in the public land records and register the loan on MERS® Residential (also known as the MERS® System), the national electronic database operated by MERSCORP Holdings that tracks changes in mortgage servicing rights and beneficial ownership interests in loans. Through this role as mortgagee or beneficiary in the security instrument, our members no longer need to record assignments of the mortgage when ownership of the promissory note or servicing rights transfer between members because the security instrument—the mortgage or deed of trust—remains in the name of MERS. This reduces work and at least $30 in assignment recording fees. 

What are the benefits of naming MERS as Original Mortgagee?

In addition to greater savings and making assignments unnecessary when transfers of servicing or the promissory note take place between MERS® System Members, the benefits of MOM loans include:

  • Faster execution
  • Reduction of shipping time and expenses
  • Elimination of documentation errors
  • Simplification of loan closing process
  • Money savings
    • Approximately $30 saved per loan
    • No correction costs (up to $30 saved per document)
    • No tracking costs
    • No correspondent or broken document penalties
    • One deed of trust or mortgage form for all transactions

What is the MOM language used in the security instrument that is recommended by Fannie Mae and Freddie Mac?

The following revised MERS as Original Mortgagee (MOM) language must be used on the revised security instrument. After July 2000, only the revised security instrument may be used. Please see Fannie/Freddie Bulletins for further details. (April 26, 1999)

"MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the mortgagee under this Security Instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.

NOTE: This is representative language only. Consult official Fannie Mae and Freddie Mac Announcements for specific language for your state. Other changes also may be required in the body of the Deed of Trust or Mortgage.

Can a lender also assign loans to MERS if the loan has already been closed in the lender's name?

Lenders may also assign loans to MERS if the loan has already been closed in the lender's name. Once the loan is assigned to MERS using the same paper assignment process as you use now, tracking servicing and beneficial rights can occur electronically for all future transfers. Additional assignments after this point become unnecessary unless the servicing rights are sold to a non-MERS® System member.

In addition to receiving the same benefits as MOM loans, assigning a loan to MERS enables you to become compliant with the requirements of trading partners.

What is an iRegistration?

An iRegistration enables companies to take advantage of the fraud and loan tracking benefits of a MERS® System registration at a discounted price by registering the loan, but without the requirement of recording MERS as the original mortgagee in the county land records. Benefits of iRegistered-loans include:

  • Mitigates fraud by verifying a borrower’s declaration of property
  • Enables lenders to complete property preservation information (as required by certain jurisdictions)
  • Provides transparency throughout the life of the loan

Am I allowed to designate MERS as mortgagee and use MERS® Residential with new loans only?

No. If MERS was not namd as the original mortgagee on the security instrument at the time of closing, you can assign the mortgage to MERS after closing. You may also register your entire portfolio on MERS® Residential (also known as the MERS® System) to help you streamline your operation by eliminating the need to run dual tracking of mortgages registered, and those not registered. Then, if you decide to sell the mortgage rights, you’ll save the time required to register them on MERS® Residential and prepare an assignment to MERS for a portion of the sale portfolio—speeding the transfer process along the way. In addition, the value of the servicing asset may be enhanced.

Is MERS® Residential intended for registration of first liens only? 

No. Multiple lien positions are supported.

Does the Mortgage Identification Number or MIN require us to replace our current loan number system? 

No. While the MIN is a unique life of the loan identifier, your organization is under no obligation to abandon use of its loan number system. In fact, you can use your existing loan number wrapped by your unique MERS® Residential organizational ID (Org ID) and a check digit to generate the MIN. You need to enhance your servicing system to carry the MIN, which is a unique 18-digit identifier. The MIN becomes the vehicle for communicating information with other members of the real estate finance industry without having to resort to elaborate cross-referencing schemes for different loan numbering systems. And since you can assign a MIN for a loan when application is first made by the consumer, you may find that your numbering system is no longer needed.

Can I designate MERS as the mortgagee in all 50 states?

Yes. MERS has been designed to operate within the existing legal framework of all 50 states.

How can I become a member?

It's easy! Call 800-646-MERS (6377) today and ask for the Customer Group, or click here to contact your regional director directly. Membership is open to the real estate finance industry.

How much does it cost to be a MERS® Residential member?

Annual membership fees begin at $150 and go up from there, depending on the size of their organizations and the level of service and access they require. Modest transaction fees are also assessed for mortgage registration and transfers of mortgage servicing rights. Download the MERS® Residential marketing kit here for more specific information. 

What agreements does my organization have to sign to become a member?

Your organization signs a standard binding application which sets out the relative rights and responsibilities of all members. The application refers to the MERS® System Terms and Conditions and its Rules and Procedures, which control the operation of  MERS® Residential (also known as the MERS® System).  

If I don't sell servicing, why should I become a member?

Because predicting the future in the mortgage industry is risky, registering your servicing on MERS® Residential (also known as the MERS® System) serves to inoculate your portfolio against risk and gives you the flexibility to react quickly to future market changes. Designating MERS as the mortgagee also reduces paperwork by eliminating the need to prepare and record assignments if and when you decide to sell servicing. With MERS as the Mortgagee of Record, you don't need additional assignments. 

Do my correspondent lenders have to become members?

While it is not required, it would be to their advantage. Capital lenders are urging their correspondents to become members because they prefer the elimination of assignments, not to mention the savings of about $30 per loan that correspondents realize. But you can instruct correspondents to name MERS as the mortgagee of record on the original assignment without the need for them to become a member.

How does the designation of MERS as original mortgagee save lenders time?

Designating MERS as Original Mortgagee (MOM) saves the time associated with processing multiple assignments, plus it streamlines the lien release process since MERS is virtually guaranteed to be the end of the chain of title. This corresponds to reduced research time and fewer re-recording fees.

For lenders who originate for their own portfolio, what benefits do we get from designating MERS as Original Mortgagee?

Lenders who originate their own portfolio see the same benefits—eliminating the cost of multiple assignments and reducing costs associated with lien release.

Are there any benefits to title companies?

For loans registered on MERS® Residential (also known as the MERS® System), title companies have a single, electronic source for identifying the current servicer of a loan to obtain payoff quotes and verify that payoff funds have been received, simplifying the entire titlework process.

Does MERS replace the role of the trustee in deed of trust states?

No. Servicers perform substitution of trustee and satisfactions just as they do without MERS except that they prepare these documents in the name of MERS since MERS is the Mortgagee of Record.

Have the nationally recognized rating agencies approved use of MERS® Residential?

Yes. All of the major rating agencies (Standard and Poor's, Moody's and Fitch) have approved MERS® Residential-registered loans for inclusion in a rated security.