It is late January, just days from the Mortgage Electronic Registration Systems extended deadline for submission of the Annual Report of Quality Assurance Standards Compliance report.
And yet it is unfortunate that so many mortgage servicers are scrambling to comply when there have been several announcements from MERS regarding this requirement.
What we've found is that mortgage servicers are not aware of the quality assurance requirements in spite of MERS notification efforts. These mortgage servicers as a result, did not conduct planning and budgeting requirements for the audit. In some cases, smaller servicers were not properly staffed to support the yearly requirement.
As a result, we find that some "Lite Members" status were changed to a "General Member" status because they were servicing one or more loans for more than ninety days. This is often due to the fact that those loans are not being processed in a timely manner — something MERS interprets as inefficient.
Many servicers found themselves not prepared to file their Annual Report of Quality Assurance Standards Compliance report because they were not receiving the monthly Portfolio Analysis report or saving the report for archive, not performing the monthly data reconciliation throughout the year or did not have a current MERS quality assurance plan.
It appears from interaction with servicers, that many were not aware of the annual report deadline and the requirement for the quality assurance plan which may have prompted the MERS extension of the report submission deadline. This column stands as a reminder of the MERS compliance filing requirements.
It appears that some mortgage servicers were not taking action on the MERS announcements and the servicing staff may not have been using MERS to its fullest potential. In some cases, servicers missed the opportunity to archive the Portfolio Analysis Report which would have allowed them to perform a monthly reconciliation.
Rule 7 of the MERS System Rules of Membership requires a servicer to file the annual report and comply with the assertions made within the report.
It is our opinion that more mortgage servicers are now becoming aware of the filing requirement and are trying to perform the reconciliation to the best of their ability. The best mortgage servicers would do right by establishing procedures to comply with the MERS System Rules of Membership as soon as possible.