This is brilliant – rather than regulate or bailout MERS, these three are pushing to cut them off. If lenders want to sell loans to Fannie/Freddie/FHA, they’ll have to find another way to track them other than MERS, and pay recording fees every time they sell or transfer the loan. From HW:
Three congressional representatives recently introduced a bill into the House that would gradually phase out the use of Mortgage Electronic Registration Systems, commonly called MERS, within the government-sponsored enterprises as well as Ginnie Mae.
The Transparency and Security in Mortgage Registration Act of 2010, also known as H.R. 6460, would prohibit Fannie Mae and Freddie Mac from purchasing or acquiring any new MERS mortgage deal of six months after its enactment.
MERS allows lenders to track individual mortgages through an electronic tracking and holding system. According to MERS, the firm holds legal title to a mortgage as the loan owner’s agent and is sometimes granted the authority to enforce foreclosure. The firm has been at the epicenter of foreclosure-gate and under scrutiny for wrongful foreclosure.
Under the bill, Fannie and Freddie would also be prohibited from new lending or investing in securities consisting of MERS mortgages for six months.
After the six-month time period expires, “MERS shall not be the named mortgagee or mortgagee of record on any mortgage owned, guaranteed, or securitized” by the GSEs. If at the six-month deadline, Fannie and Freddie still hold loans with a connection to MERS, the agencies will assign those loans to a servicer or holder, the bill states.
Ginnie Mae would be subject to the same timelines and similar terms as Fannie and Freddie under Transparency and Security in Mortgage Registration Act of 2010.
“[T]he association may not newly guarantee the payment of principal of or interest on any trust certificate or other security based or back by a trust or pool that contains, or purchase or acquire, any MERS mortgage,” the bill states.
Marcy Kaptur (D-Ohio), Raul Grijalva (D-Ariz.) and Carolyn Kilpatrick (D-Mich.) introduced the bill, which would amend the National Housing Act.
MERS said it has been reviewing the bill and analyzing its impact on the mortgage and housing markets.
“MERS brings considerable value and clarity to homeowners, regulators and the mortgage industry, and we hope to emphasize those contributions in our conversations with Rep. Kaptur, her staff, and others involved with this legislation,” the company said in a statement.
Patton Boggs commented that banning the use of MERS from the government agencies is remarkable since Ginnie Mae just adopted the Uniform Loan Delivery Dataset by MISMO, which is a owned subsidiary of the Mortgage Bankers Association, but used and managed by MERS. Fannie and Freddie also use the MISMO system.
The Transparency and Security in Mortgage Registration Act calls for a study to be conducted on the impacts of the lack of electronic mortgage record keeping. It would note any progress states have made in developing electronic land title recordation systems for their localities that contain uniform standards, and any findings and conclusions and best practices resulting from such development. It would also study the feasibility of creating a federal land title recording system.
MERS said it is pleased the subject will be researched and the firm “is ready and well-positioned to provide this service to the federal and state governments, county recorders, and the American homeowner.”
The study is mandated to the secretary of Housing and Urban Development and the Comptroller General of the United States.
MERS has caused alot of problems and seeing them go would be good. Try to find the investor on your home loan – good luck since MERS.
Wow, an idea coming out of Congress I actually like. Imagine that.
JtR,MERS is a disaster. Any private,opaque,system for recording title is a bad Idea.The current system has worked well for hundreds of years and although it is “Inefficient”,that is a feature,not a bug. BTW, have you considered becoming a VP of MERS? For $25 you get a corporate seal and can become one of thousands of Vice Presidents of a corporation that has NO employees! Buy yourself a Bishopric from the Universal Life church and impress the Babes…who could resist that combination?
The underlying problems and associated cost with Fannie and Freddie as insolvent entities in government conservatorship is several orders of magnitude more serious than MERS.
But instead of congress attempting to address those issues directly, we get these kind of politically charged proposals which ultimately don’t mean anything. I think this kind of proposed legislation reflects a sad state of affairs in our legislative branch.
spot on Kingside.
I was involved in a MERS mix-up and I wondered if I would become a homeowner again. I had two items that came up on a MERS report that was tied to my SS#. One was a foreclosure in 2005 (over $217K) and a second mortgage the same year ($54K). But the name was some lady living in S. CA that I’ve never heard of with an address to match. Both entries were a mistake.
It only turned out OK, because the underwriter checked my SS#, etc, and it came back “clean” and my loan was funded back on 11/10. She thinks it was a data entry error of some type. It has never showed up on any of my credit reports.
The lady w/ BOA said, “It was back in 2005, it’s not on your credit reports, so it’s had no effect on you.” No effect? I was driving from CA to my new home, and I had given up my rental in a small town (no other rentals), all my possessions were already being sent to my new address, and I was told over the phone that it was a possibility my loan wouldn’t be funded and I wouldn’t get the house. I had to explain I’d never had any foreclosures on the three mortgages I’ve had (not even a late payment). It proved to be two hours of “worst case scenario in RE land” while driving from the Central CA Coast.
After I explained all that, at least the BOA rep admitted it was important for them to fix the mistake. I’m calling them both back this week to make sure everything is now OK.
My opinion of MERS? *Grin* It s-u-c-k-s!