Although it has become less of an issue, What is MERS? is a question I get from time to time from clients as they try to understand just who it is they are dealing with at their home loan lender.
MERS is a warehouse and database for mortgage documents designed to simplify the recording of mortgage documents and the process of trading loans form one investor to another to save the big banks money.
MERS stands for Mortgage Electronic Recording Service. When you first closed on your home loan, you signed two documents: a Note and a Mortgage. The Mortgage was then recorded in the County Clerk’s Office in your County to let the world know there is a loan on the propriety which is secured by the property. The name on your mortgage document was the home lender you first dealt with and MERS. MERS kept a copy of your mortgage document in their warehouse and database as a convenience to your lender. The very next day, your home loan lender transferred your loan to an investor. In fact, your home loan may have been transferred several times between investors since you first closed on your home loan. Each and every time there is a transfer of the loan from one lender or investor to another, an assignment of mortgage would have to filed in the County Clerk’s Office in your County and a filing fee would have to paid to the County Clerk. However, because MERS is warehousing the mortgage document for the lenders and investors and continues to do so even after each and every transfer, there is no need for an assignment or the recording fee. Brilliant! Right?
The Note is a contract between you and your lender where the lender agreed to provide funds to purchase your home and you agreed to pay the bank back over time with interest.
The Mortgage is a document which is recorded in the County Clerk’s office in the County where your house is located and let’s the world know that your home lender has a priority lien on the property and if you default on paying on the Note, the lender has the right to foreclose on the property in order to pay themselves.
While there was lot of discussion about whether or not MERS was legal in the early days of the foreclosure crisis, the issue has pretty much been resolved and is no longer a grounds for a defense in a foreclosure action.
MERS can help you if you don’t know who your mortgage servicer is. You can use the MERS database to find out who your loan servicer is if you don’t know. Go the MERS website and enter the Mortgage Identifier Number to find out.
If you need help with a foreclosure action or getting a loan modification, submit your information through our Free Evaluation feature her on our website.