Video Transcript:
So what is MERs or the mortgage electronic registration system? This is Dave at TitleSearch.com. In many cases on a title search, whether it's for insurance or other purposes, you'll see a reference to MERS on the mortgagee section. What that means is the actual lender was recorded as an entity called MERS. It stands for, like I said, the mortgage electronic registration system. It was an entity or a collection of recordings established in the mid nineties by, at the time, the largest lenders that were lending mortgages in the early to mid nineties. The purpose for it was lenders were starting to transfer mortgages back and forth between themselves. So if Wells Fargo had a mortgage and they wanted to sell it to, at the time let's say Wachovia, and they wanted to exchange some of their inventory of loans, they would have to take each loan to the courthouse, record it as a transfer -as an assignment -and then put it at the new lender. Well, that generated a lot of legal costs for creating that assignment document, for paying somebody to bring it to the courthouse; for the recording fee at the courthouse. And they were starting to do so much volume in mortgage exchanges and assignments that it was costing them millions of dollars. So they created this electronic registration system where they could keep the original mortgage recorded in MERS and behind the scenes, just have MERS identify who was the lender responsible for collecting the payments; who owned the note, who owned the mortgage. Well, it was all well and good. It had really good intentions. But there were some issues. Once the foreclosure crisis started hitting in the early to mid two thousands, there was a question on whether or not it was a valid mortgage -it was a valid assignee. And there was the robo-signing scandal. And all these other scandals that happened with MERS. Well, it turns out that in most of the court cases, it's been established that as long as the underlying lender has the proper documentation that they have authority to go ahead and foreclose under MERS or to have the servicing rights under MERS. If you do have a title search that shows MERS as the lender, then in theory, they are the lender of record. Now, in practice, there is some actual bank behind the scenes; Bank of America, Wells Fargo, who knows who it might be? And that's something that, as part of a real estate title search for an insurance claim, an expanded search, we would normally recommend that we also look up the lender of record within MERS. They're not part of the official property title. So this isn't something that would be on a real estate title search that a title commitment or title insurance policy, or even if we did a title search for a real estate industry need would show up. All they care about is that it's MERS, but for an insurance purpose: to make sure that the additional loss payee or the additional insured is captivated. Then it's important to know who might be behind the scenes in MERS. And in most cases we have the ability to look that up and to see who is in MERS. Again, it's not in the title system. It's not in the title records. It's in a separate location that we can look up. So as an insurance claims professional, you want to make sure that if you have a lender of record on your underwriting that it matches up whatever's on the title search. Or if not, it matches who is showing as the registered servicing agent within MERS. If you do have questions about MERS lookups, title searches, or matching up a lender of record on your insurance policy, you can reach us at our website at title search dot com.