The much ballyhooed system that will electronically track ownership of mortgages received a huge boost when one of the industry's leading players signed up to use it.
Countrywide Credit Industries, the nation's second-largest mortgage banker, joined the Mortgage Electronic Registration Systems Inc. or, Mers, last week.
Mers is expected to reduce the cost of the mortgage process by at least $40 a loan by eliminating much of the paperwork in the industry, observers said. Lenders will be able to electronically keep track of transfers of mortgage ownership rights as well as who is providing various servicing functions on mortgage loans.
The system is tentatively set to be launched on March 24, as Allied Group Mortgage Co. and Norwest Mortgage Inc. will go on-line on that date. First Nationwide Mortgage Corp. will start registering loans with Mers sometime next month.
Paul E. Mullings, president and chief executive officer of McLean, Va.- based Mers, said the addition of Countrywide to the group is a major victory because the network of correspondents Countrywide uses could all eventually wind up on Mers. Countrywide is the nation's largest wholesale lender.
"This gives the opportunity for those lenders to become lenders on Mers if Countrywide requires that to become part of the process," Mr. Mullings said.
Rick Wilson, Countrywide's first vice president of document management services, said that a small group of its more than 1,000 correspondents will be the first to use Mers. He added that there was no specific rollout date planned, but that eventually between 10,000 and 15,000 Countrywide loans a month could be registered on Mers.
Countrywide has a strong reputation for developing its own mortgage technology, so choosing to use Mers is another sign of the industry's acceptance, Mr. Mullings said.
This is especially significant because Countrywide initially took a cautious approach to Mers. Some lenders latched on as early as October 1995, when the group was formed, but Mr. Wilson said Countrywide wanted to be sure that Mers would be successful before endorsing it.
"Our view was that we should wait awhile to see if there was enough industry interest in Mers to support it," Mr. Wilson said.
Mers' members are a veritable who's who of the mortgage industry. The group, now over 60 members strong, includes large lenders such as Norwest and HomeSide Lending; mortgage insurers MGIC Investment Corp. and the PMI Group; and the government-sponsored entities Fannie Mae and Freddie Mac. Mers is owned by 28 members of this group.
Mr. Mullings said Mers is on track to sign up over 200 members by yearend.