Snapshot reaction to MERS 2.0
The idea of establishing a new national mortgage registration system — or MERS 2.0 — is gaining some traction among servicing professionals, while others remain skeptical. Mortgage Electronic Registration Systems is under fire from municipalities across the country that claim the widely used Reston, Va.-based electronic registry avoided paying county recording fees when transferring property deeds over the past decade. Dave Worrall, president of RoundPoint Mortgage Servicing Corp., wants to see changes to the system, but not necessarily a new entity formed to track the changes in titles and deeds. Sen. Bob Corker, R-Tenn., recently released a legislative proposal, saying he would like to create a mortgage registration system to streamline the national transfer of loans. "I fully support some type of MERS solution," Worrall said. "MERS is a critical component of our business now. If for some reason MERS cannot continue providing the service that it does, we absolutely need an effective alternative. As long as it replaces the functionality that MERS provides to the servicing industry." Losing a system that streamlines the servicing process would ultimately slow everything down, Worrall said, and "it would significantly increase the cost of servicing loans." Worrall prefers a situation where "everybody works together to try and fix what's wrong with MERS and not introduce a new counter-party and a new set of rules" that servicers have to absorb. "There is almost no way to make a uniform system for tracking ownership of mortgages and notes," said Richard Isacoff, a Massachusetts-based foreclosure defense attorney. "Further, differences between judicial foreclosure states and nonjudicial foreclosure states add some complications. Also, it has been shown, MERS doesn't work. The concept is great but application will require certain uniform laws in the states regarding real estate law. That will not happen in this century." But Isacoff is challenging the idea that anything should or can replace MERS given the numerous legal complaints now surrounding the system. "The privatization of any mortgage and note ownership system is giving license to avoid taxes and fees and ignores consumer protections. Except for being more efficient at what it does, how would any system, put in place with our laws as they currently stand, be any better than MERS?" Isacoff asked. MERS, on the other hand, is looking forward to discussing the plan further. "We appreciate Senator Corker’s recognition of Mortgage Electronic Registration Systems as the model for a national mortgage registry," the company said in a statement. "His proposal brings an important perspective to the mortgage industry reform debate. Clearly there are many details to address, but we look forward to participating in discussion of the issues and working with all parties in the Senate, House, the Executive Branch and other stakeholders, as proposals are considered." Write to Kerri Panchuk.