Mortgage Electronic Registration Systems Inc. (MERS): A Comprehensive Guide to the 10,000+ Institutions Using It

What is MERS and Why Does it Matter?

Mortgage Electronic Registration Systems, Inc. (MERS) is a registry that tracks the ownership of mortgages in the United States. It was created in 1995 as a way to streamline the mortgage recording process and make it more efficient.

According to the American Mortgage Bankers Association (AMBA), over 10,000 institutions use MERS to track their mortgages. These institutions include banks, credit unions, mortgage companies, and other financial institutions.

MERS provides a number of benefits to lenders and borrowers, including:

• Reduced costs: MERS can help to reduce the costs of mortgage recording by eliminating the need for multiple recordings in different counties.
• Increased efficiency: MERS can help to streamline the mortgage recording process by providing a central location for tracking mortgage ownership.
• Improved accuracy: MERS can help to improve the accuracy of mortgage records by providing a consistent and reliable way to track mortgage ownership.

How MERS Works

MERS is a centralized registry that tracks the ownership of mortgages. When a mortgage is originated, the lender records the mortgage with MERS. MERS then assigns the mortgage a unique identifier, which is called a MERS number.

The MERS number is used to track the ownership of the mortgage throughout its lifetime. When the mortgage is sold, the new lender records the transfer of ownership with MERS. MERS then updates its records to reflect the new owner.

MERS does not hold the mortgage or have any ownership interest in the property. MERS simply provides a way to track the ownership of mortgages.

Common Mistakes to Avoid

There are a few common mistakes that lenders and borrowers should avoid when using MERS. These mistakes include:

• Failing to record the mortgage with MERS: When a mortgage is originated, the lender must record the mortgage with MERS. Failure to do so can result in the mortgage not being properly recorded and could lead to problems down the road.
• Recording the mortgage with an incorrect MERS number: When a mortgage is recorded with MERS, it is important to use the correct MERS number. Using an incorrect MERS number can result in the mortgage not being properly recorded and could lead to problems down the road.
• Transferring the mortgage to a new lender without recording the transfer with MERS: When a mortgage is sold, the new lender must record the transfer of ownership with MERS. Failure to do so can result in the new lender not having a valid ownership interest in the mortgage and could lead to problems down the road.

Benefits of Using MERS

There are a number of benefits to using MERS, including:

• Reduced costs: MERS can help to reduce the costs of mortgage recording by eliminating the need for multiple recordings in different counties.
• Increased efficiency: MERS can help to streamline the mortgage recording process by providing a central location for tracking mortgage ownership.
• Improved accuracy: MERS can help to improve the accuracy of mortgage records by providing a consistent and reliable way to track mortgage ownership.
• Reduced risk: MERS can help to reduce the risk of mortgage fraud by providing a secure and reliable way to track mortgage ownership.

Conclusion

MERS is a valuable tool that can help to streamline the mortgage recording process and make it more efficient. Lenders and borrowers should be aware of the benefits of using MERS and how to avoid common mistakes.

Tables

| Table 1: Number of Institutions Using MERS |
|---|---|
| Year | Number of Institutions |
| 1995 | 100 |
| 2000 | 1,000 |
| 2005 | 5,000 |
| 2010 | 10,000 |
| 2015 | 15,000 |

| Table 2: Benefits of Using MERS |
|---|---|
| Benefit | Description |
| Reduced costs | MERS can help to reduce the costs of mortgage recording by eliminating the need for multiple recordings in different counties. |
| Increased efficiency | MERS can help to streamline the mortgage recording process by providing a central location for tracking mortgage ownership. |
| Improved accuracy | MERS can help to improve the accuracy of mortgage records by providing a consistent and reliable way to track mortgage ownership. |
| Reduced risk | MERS can help to reduce the risk of mortgage fraud by providing a secure and reliable way to track mortgage ownership. |

| Table 3: Common Mistakes to Avoid When Using MERS |
|---|---|
| Mistake | Description |
| Failing to record the mortgage with MERS | When a mortgage is originated, the lender must record the mortgage with MERS. Failure to do so can result in the mortgage not being properly recorded and could lead to problems down the road. |
| Recording the mortgage with an incorrect MERS number | When a mortgage is recorded with MERS, it is important to use the correct MERS number. Using an incorrect MERS number can result in the mortgage not being properly recorded and could lead to problems down the road. |
| Transferring the mortgage to a new lender without recording the transfer with MERS | When a mortgage is sold, the new lender must record the transfer of ownership with MERS. Failure to do so can result in the new lender not having a valid ownership interest in the mortgage and could lead to problems down the road. |

| Table 4: Future Applications of MERS |
|---|---|
| Application | Description |
| Mortgage servicing | MERS could be used to streamline the mortgage servicing process by providing a central location for tracking mortgage payments and other servicing activities. |
| Mortgage foreclosures | MERS could be used to streamline the mortgage foreclosure process by providing a central location for tracking foreclosure proceedings. |
| Mortgage fraud prevention | MERS could be used to help prevent mortgage fraud by providing a secure and reliable way to track mortgage ownership. |