Underwriting Bulletin No. 62
SUBJECT: MERS -MORTGAGE ELECTRONIC REGISTRATION SYSTEM
Upon electronic registration, the mortgage is assigned a Mortgage Identification Number (MIN) specific to that mortgage. No two mortgages will ever be assigned the same identification number and the number remains the same for the life of the mortgage. The ownership of the mortgage can then be transferred between MERS members without the necessity of obtaining and recording an assignment of mortgage. In this manner, MERS provides for the streamlining of mortgage assignments and it alleviates many of the common problems associated with establishing the chain of assignments when multiple assignments exist. Researching a mortgage registered with MERS greatly reduces the chance of discovering a break in the assignment chain and minimizes confusion related to determining the assignee of record.
Electronic registration of mortgages has become more widely accepted recently due to the fact that more and more lenders are using the MERS system and you can expect MERS to appear on mortgages and other lender documents, in the future. MEE-S is a wholly owned subsidiary of MERSCORP , Inc., a Delaware corporation that is owned by a number of companies within the mortgage industry and the title industry, including First American. MERS was created as a subsidiary that would act as mortgagee of record in a nominee capacity on all mortgages registered on the MERS system. The MERS system has been approved for use by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA.
The benefit of having MERS appointed mortgagee of record is that it eliminates the need for future assignments when rights to mortgages are transferred from one MERS member to another. Instead of preparing traditional paper assignments, this system allows for electronic tracking of all MERS registered mortgages because MERS always remains the mortgagee of record. MERS operates on software that allows its members access to a secure central database where they may only view information on loans that are identified as belonging to them. To enter the system, a member is validated access through the use of an organizational number, operator identification and an operator's password. As use of MERS increases, title searches will become much easier to perform. It is possible that the chain of title to the mortgage may begin and end at MERS, alleviating the need for the traditional paper chase.
If a mortgage is registered with MERS by a member of the system when the mortgage is initially created, the resulting product is called a MOM (MERS as Original Mortgagee). MERS does not lend money and does not collect money. The originating lender is still defined as the Lender. MERS holds only legal title to the interests as nominee for the Lender and Lender's successors and assigns. MERS has the right to foreclose and sell the property or release and cancel the security instrument.
The main benefit to the title insurance industry is that the MERS system can provide instant information to members through the use of a Voice Response Unit (VRU), which is a toll-free number at l-888-679-MERS. The VRU will provide the name and telephone number of the current holder of the mortgage based upon the MIN. Once the holder receives the payoff funds, the lien release is prepared, executed by an officer of MERS and recorded in the respective county land records. The funds are paid to actual holder of the mortgage, not to MERS. At that point, the mortgage is deactivated on the MERS system. Once paid off, additional attempts to access information relating to that particular loan through the VRU will indicate to the member the particular date the loan was deactivated due to payoff and contact information for the loan's last owner. First American agents are authorized to rely upon the information obtained from the MERS system.
If you have any questions, please contact the Underwriting Department at the Georgia State Office at 404-250-1604 or 800-328-2642.
Printable version: ub62.pdf
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