Mers, the electronic registration system that tracks ownership of mortgage servicing rights, has received a boost from Fannie Mae and Freddie Mac.
This month, Fannie and Freddie announced that Mortgage Electronic Registration Systems Inc., the company that operates Mers, can be listed as the mortgagee of record on mortgage documents.
This means lenders can close loans under the Mers name and then immediately register the loan on the system.
"With this change, there is a paradigm shift. This will make Mers the standard in the industry in a really short while," said Paul Mullings, president and CEO of Mortgage Electronic Registration Systems Inc.
This change is expected to benefit wholesale lenders the most because brokers and correspondents who sell lenders mortgages will not have to record a transfer of the rights when they sell the loan.
"With Mers being a mortgagee at the point of origination, this is a much more efficient way for lenders to receive loans from correspondents," Mr. Mullings said.
Registering loans on Mers this early in the origination process could save brokers and correspondents an average of $22 per loan on front-end costs, Mr. Mullings said.
"All the lenders we spoke with are happy to see this change. They see a tangible and immediate economic benefit to Mers," Mr. Mullings said.
Norwest Mortgage, the nation's largest lender, has committed itself to begin registering most of its loans on the system in the beginning of 1998, and it hopes to have all its loans on the system by yearend.
Another large lender, First Nationwide Mortgage, has already fully adopted Mers. Other companies that plan to use the system soon are GE Capital Mortgage Services Inc. and PNC Mortgage Corp.
Mortgage Electronic Registration Systems Inc. is owned by a consortium of industry players including Fannie and Freddie, lenders, and mortgage insurers. Electronic Data Systems Corp. designed the technology for Mers and runs it.
