A closer look at MERS….

Ever heard of “MERS”? ” MERS” stands for Mortgage Electronic Registration Systems, Inc. and is a private company at the center of scrutiny for it’s involvement in the current foreclosure mess.  According to Wikipedia MERS is a “privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States.”

Essentially, MERS acts an “agent” and as an exchange for mortgage servicers and mortgagors.  The founding objective of MERS was to privatize the recording of mortgage notes and offer an exchange of sorts so that loan servicers could buy and sell securitized mortgages.  In principal, it should provide greater efficiency to the secondary mortgage market and decrease the cost of loans to consumers.  However, as this housing crisis has shown theoretical models don’t always pan out as expected.

The NY Times published THIS PIECE last week and offers a great summary of the formation of MERS and why it is complicating the foreclosure and loan modification process for many homeowners.  I would recommend it to anyone looking for some good weekend reading.