It's been a long time coming, but an automated system that tracks ownership of mortgage servicing rights is up and running.
Mortgage Electronic Registration System, or Mers, was launched last week with Norwest Mortgage, the nation's largest lender, and Allied Group Mortgage Co., entering loans into the system.
Fannie Mae and Freddie Mac also have gone live with the system, agreeing to accept loans that are sold to it through the system.
Industry analysts estimate that Mers can cut the cost of processing a loan by about $40 by eliminating the substantial amount of paperwork that was required to track ownership of servicing rights.
The system is owned by a group of 28 institutions in the mortgage industry, including lenders, insurers, Fannie Mae and Freddie Mac, and the industry's trade group, the Mortgage Bankers Association of America.
Mers was first discussed in 1993 in a paper published by the MBA, Fannie Mae, Freddie Mac, and the Government National Mortgage Association, a government-sponsored entity that backs loans insured by other government agencies.
Last year, Electronic Data Systems was chosen to develop the technology and is in charge of maintaining it.
Industry analysts said Mers could amount to annual savings of about $200 million for the industry.
Paul Mullings, the registration system's chief executive officer, warned that this estimate is contingent on a "significant portion of the industry" using Mers. He said it is unlikely that the industry will be able to realize $200 million in savings this year.
But membership has exploded rapidly, more than doubling after Countrywide Credit Industries' decision to sign up in early March. At that time, the system had about 60 members. Now it has more than 130.
"Countrywide has such a large presence in the market and has a reputation for using technology. When the market saw Countrywide tangibly step forward, other people got more confident to step forward," Mr. Mullings said.
In the next few months, 13 more lenders are expected to go on-line, including three of the nation's largest 15 servicers: GE Capital Mortgage Services Inc., First Nationwide Mortgage, and Mellon Mortgage Co.
Mr. Mullings said he expects more than 200 companies to join by the end of the year.
