[Update 1: Clarifies that a MERS national database already exists to allow borrowers to track their loan]
Mortgage Electronic Registration Systems will audit its records and report results as part of a settlement announced with the Delaware Attorney General Friday.
"MERS' inaccurate and unreliable records raised serious questions about who owns what in America," Delaware AG Beau Biden said. "The steps MERS will now take will help answer those questions."
MERS CEO Bill Beckmann said the rest of the settlement requirements were in tune with responses it's taken nationally, including database available online and via a toll-free telephone number.
"The agreed upon measures are consistent with steps we've taken nationally to improve offerings to our constituencies and are natural outcomes of our responsiveness to the rapidly changing market-reform environment," MERS CEO Beckmann said in a statement.
MERS agreed not to foreclose in its name for the next five years in Delaware. Biden's office said it was drafting legislation to make this permanent.
Banks using MERS must record assignments of mortgages with the county deeds office before filing a foreclosure. The company also agreed to examine documents signed by its 25 largest members and check the identity of each signee.
"As a result of this settlement the homeowner database is now required, for the first time, to identify investors who own the mortgages," a spokesman for Biden said in a statement clarifying the requirements of the database. "Because of Attorney General Biden’s efforts, MERS is now legally obligated to institute these reforms that will help homeowners by increasing accuracy and transparency, and will be held accountable if it does not follow through on its obligations under our Agreement."
MERS signed a consent order with the Federal Reserve in April 2011 after its business of tracking mortgages as they transferred among holders and initiated foreclosures came into question. The Fed required the company add more safeguards and oversight.
Delaware was the first state to reach such a detailed agreement with MERS, according to Biden's office.
"Every homeowner should be able to find out who owns their mortgage, not just the company hired to collect payments," Biden said.