Stephen Morrison, a senior vice president at Norwest Mortgage, has his work cut out for him.

With its parent bank merging with Wells Fargo, his company must get in touch with the offices of all 3,142 county clerks to change the name of the servicer on all its loans to Wells Fargo Mortgage.

"It's a massive undertaking," he said, and is likely to cost $1 million.

As the industry consolidates, solving such predicaments has become a selling point for a mortgage registration system that had been struggling to get off the ground. Mr. Morrison's costly busywork will soon be unnecessary, says R.K. Arnold, president of Mortgage Electronic Registration Systems Inc., known as Mers.

"We're going to have all of America's home loans registered on this system one day," said Mr. Arnold, who argues that it will eliminate the need for the time-consuming exercise of changing the mortgagee on thousands of loans.

After a slow start, Mers has removed several legal and financial obstacles and now says it is on track to get the whole mortgage business signed up on its electronic loan registration system.

Late last year the company won the authority to register as the lender of record for new loans-a crucial step in making it worthwhile for mortgage banks to join. More recently it raised about $9 million of additional capital in a transaction that closed this week.

Mers has traveled a rocky road since it went on-line in April 1997. The company had to pay high up-front development costs, and revenues did not come in fast enough to offset expenses because lenders were slow to register.

Some were too distracted to join Mers, their hands full with the year- 2000 problem and the refinancing boom. Others, skeptical about the benefits, were reluctant to come on board.

The 90,000 loans on the system were registered during transfers of large servicing packages. Mers was assigned the servicing rights in county land records, so ownership can be transferred without anyone having to go back to the county courthouse.

For most servicers, this was an economical way to register a portfolio, because they would have had to pay the county recorder's fees anyway.

"Since it was already going to take place, the companies agreed to give it to Mers," Mr. Arnold said.

But since late last year, Mers has a new benefit to promote: It can be the owner of record when loans are first originated. Last October Fannie Mae and Freddie Mac gave their blessing to "Mers as Original Mortgagee," or MOM. Ginnie Mae, the Department of Housing and Urban Development's FHA program, and the Veteran's Administration followed suit in subsequent months.

"Before MOM, there was a lot of skepticism," said Mark Fleming, a vice president at Freddie Mac. "What people want in today's age is very sound value proposition and that's what MOM presented."

For correspondent lenders, that means saving at least $22 per loan when they sell loans to wholesale lenders, according to Mr. Arnold's calculations.

Countrywide Home Loans is said to have been an early skeptic. More recently, Countrywide was one of more than a dozen lenders that together purchased in advance $1.5 million in loan registrations, which will eventually add some 650,000 loans to the 90,000 already on the system. Countrywide officials declined to comment.

While MOM gave lenders more incentive to join, "it wasn't soon enough to sustain Mers with the original capitalization it had started out with," recalled Larry Walker, executive director for credit and real estate services at Electronic Data Systems Corp., which helped develop Mers.

So Mers had to raise more capital. Fannie Mae, Freddie Mac, and the Mortgage Bankers Association agreed to guarantee $8 million in additional funds over the next five years. The association also raised its equity stake in Mers to $1 million, from an original $100,000.

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