Mortgage Electronic Registration System (MERS) is a national database offering free public access to information about the servicer for registered mortgages. Real Estate finance industry (Residential and Commercial mortgage loan trading) uses this simplified process to track the ownership and servicing rights. It has been accepted and approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA & VA and all major Wall Street rating agencies.
It allows Lenders to check the history of mortgages taken by the borrowers/co-borrowers which in turn helps in deciding their credit worthiness. The search is done with the SSN number of the borrower/co-borrower to avoid any mismatches and the search result gets reviewed to ensure borrower has declared all the current mortgages in the 1003. In case of purchases, Lenders expect the borrowers not to have any mortgages outstanding while in the case of refinance the report should only be showing the current mortgage on the property. This is one of the initial items to be completed on a mortgage loan process and these searches are performed by Loan Set-up, Pre-Processing or Processing teams.
Lenders are also required to register all the funded loans to the same website with the borrower information for future searches. Registering on MERS is a task generally performed by post-closing teams once the loan has been funded.
Both of these tasks are simple but critical for Lenders hence it does consume considerable effort and attention. There are mortgage service providers who offer solutions for MERS review and registration along with many other services which could be of interest to you if your operations team is swamped with increased volumes.
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