HousingWire recently talked with Chris McEntee, vice president of ICE Mortgage Technology about the latest updates to the MERS eRegistry and what they mean for the industry.
HousingWire: The MERS eRegistry is the only registry of its type in the industry. What kind of impact does this have on lenders?
Chris McEntee: For over 25 years MERS has been integral in the mortgage industry’s evolution of moving from paper to eMortgages. As the legally proven common agent serving as a mortgagee in the public land records, eliminating the need for mortgage assignments, lenders save up to $125 on every loan when servicing is transferred. The addition of the MERS eRegistry endorsed by lenders, investors, and stakeholders more than a decade ago showcases the scalability of its business model. The industry benefits immensely from having this single System of Record to establish ownership of electronic promissory notes (eNotes) which given its nature, can be reproduced many times over. The MERS eRegistry brings additional value by eliminating guess work, operational expense, and unnecessary counterparty risk when a lender, investor, or stakeholder wants to ensure the validity and authenticity of an eNote or a specific mortgage document.
HousingWire: How does the MERS eRegistry increase the efficiency of recording mortgage transactions, and why is this important?
Chris McEntee: The MERS eRegistry as the System of Record identifies the holder of the eNote and by facilitating the transfers of sales creates an efficient legal mechanism for transferring the right to collect and enforce the loan. Due to lower costs of handling and greater access to information, loans represented by eNotes can be more valuable to investors than the equivalent loans using paper notes. Lenders can reduce costs with eNotes by streamlining the post-closing and certification process, eliminating transportation costs, and reducing costs associated with lost, destroyed, and missing paper notes. The utilization of MERS as the mortgagee and the MERS eRegistry saves millions of dollars a year for the industry, not to mention eliminating the operational complexity of tracking paper documents.
HousingWire: MERS now offers RON video storage. Can you give us more insight into how it works and what this means for lenders?
Chris McEntee: Remote online notarization (RON) has emerged as a key component of digital mortgage production, and it is natural for MERS to play a role in supporting adoption. In many cases, an eNote is part of a mortgage loan where closing documents are being notarized via the RON process, so it makes logical sense to link the mortgage and the eNote to the video that memorializes the closing ceremony. It also links the video to the MERS Mortgage Identification Number, or MIN, which is widely adopted across the industry as a unique loan identification, or “ULI,” data point. This builds and extends on proven scalable infrastructure that the industry has benefited from for more than two decades. This is the first repository of its kind for RON video storage; allowing lenders to reliably identify that a loan was a RON transaction.
It’s important to mention that non-eNote transactions are also able to be tracked. Supporting all RON transactions within MERS provides an opportunity to further extend a single source of truth for the entire industry. All while capitalizing on what MERS does best by providing a standardized repository.
HousingWire: ICE reports a 46.5% year-over-year increase in the number of companies transacting on the MERS eRegistry as of April. What implications does this hold for the future of digital mortgages?
Chris McEntee: What we are seeing is a broad-based adoption of digital mortgage infrastructure across the industry. As the industry makes this transition from analog to digital, the promise is immense with respect to less friction, lower costs and more responsiveness to the consumer, lender and investor. What is encouraging is the industry made its investment in MERS years ago, and it is now paying off with more diverse usage. We have built the launching pad for the digital future.