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MERS® System Frequently Asked Questions

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

Yes, it makes it better! When your organization uses the MERS® System, you follow your normal and customary closing procedures.

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 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.

What are the benefits of MERS and the MERS® System?

The benefits of MOM loans include:

  • Reduces cost of homeownership.
  • Eliminates breaks in the chain of title.
  • Hard dollar savings on each loan for homeowners and lenders.
  • Identity of servicer and investor available for free to homeowners via phone or Internet.
  • Used by lenders to find undisclosed liens.
  • Used by governments and code enforcement officers to find companies responsible for maintaining vacant and abandoned properties.
  • Simplifies lien releases when a lender goes out of business.
  • Increases efficiency in sale of loans and servicing transfers in secondary market.
  • Optimizes the Mortgage Identification Number (MIN) assigned to each loan used for tracking.

What is the MERS as Original Mortgagee (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 the MERS® System with new loans only?

No. If MERS was not named 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 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 the MERS® System 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 the MERS® System 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® System 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 MERS operate in all 50 states?

Yes. MERS can operate within the existing legal framework of all 50 states, either as mortgagee, beneficiary or nominee of the beneficiary.

How can I become a MERS® System Member?

Membership is open to the real estate finance industry.

To ensure an efficient path to MERS® System membership, please review and assemble the list of required documents before applying. When you are ready to apply, click Apply now to access the MERS® eApplication Walkthrough, which is a recorded guide to accessing and completing the MERS® eApplication. We highly encourage you to view this walkthrough in full to improve the likelihood of a successfully completed application. Please plan on approximately 45 minutes to 1 hour to complete your guided application.

Alternately, you may request to be contacted by a member of our Customer Group prior to applying.

How much does it cost to be a MERS® System Member?

Annual membership fees begin at $150 and increases 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® System marketing brochure (1.92 MB)

What agreements does my organization have to sign to become a MERS® System 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 the MERS® System.

If I don't sell servicing, why should I become a MERS® System Member?

Because predicting the future in the mortgage industry is risky, registering mortgage loans you service on the MERS® System 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 MERS® System 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. 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 for 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 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 the MERS® System?

Yes. All of the major rating agencies (Standard and Poor's, Moody's and Fitch) permit the use of MERS as mortgagee for mortgage loans included in mortgage-backed securities transactions without any additional credit support.

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