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19.03. How does MERS work?, 15 Tex. Prac., Texas Foreclosure Law & Prac. ...

15 Tex. Prac., Texas Foreclosure Law & Prac. 19.03 (2011) Texas Practice Series TM Texas Foreclosure: Law And Practice Current through the 2011 Update Mike Baggett a0 Chapter 19. Mortgage Electronic Registration System, Inc. By G. Tommy Bastian 19.03. How does MERS work? The Mortgage Identification Number (MIN) or MIN number is the backbone of the MERSSystem. All loans registered on the MERSSystem are assigned a permanent eighteen-digit MIN number, which is usually paired with a bar code. No matter how many times a loan is bought and sold or the servicing transferred, the MIN remains attached to the loan until it is paid off or released. The MIN should be conspicuously disclosed on the first page of all loan documents recorded in the real property records related to a loan registered on MERS. The first seven digits of the MIN identify the MERS organization that initially registered the loan on MERS. The next ten digits identify the specific loan, and the last number triggers a Mod 10 Weight Algorithm that ensures that no MIN is duplicated. If the loan will be registered on the MERSSystem immediately after closing, the MIN is assigned at loan origination and the MIN number placed on the deed of trust. Other loans that were originated before MERS came into existence or were not intended to be MERS loans when closed must obtain a MIN before the loan can be registered on the MERSSystem. The MIN number should be placed on all assignments of any MERS registered loans. A MIN can be generated from most loan origination systems (LOS) including MINGen or MERS1-2-3 for warehoused loans, which is software provided by MERS. Once a loan acquires a MIN, the number remains for the life of the loan, regardless of who owns, holds, or services the loan. A MIN can be deactivated if the loan is delisted on the MERSSystem because it is transferred or serviced by a non-MERS member and then later reactivated, if the loan is re-registered on MERS when ownership or servicing is transferred to a MERS member. While the MIN number is the backbone of MERS, the hands and feet of MERS is the certifying officer. Any action or document that needs to be executed in the name of, or on behalf of MERS in the normal course of buying, selling, or servicing a loan can be signed by certain employees of the servicer who have been authorized to serve as certifying officers of MERS. Pursuant to a corporate resolution from MERS, the designated employees of the mortgage servicer are appointed to serve as an assistant secretary or vice president of MERS. On behalf of MERS, certifying officers of the mortgage servicer servicing the loan in question are authorized to: 1. Execute assignments, releases, and any documents required to refinance, amend, or modify a loan registered on the MERS System; 2. Execute all documents necessary to foreclose a debt secured by a registered loan, to include the appointment of substitute trustee; execute deeds from MERS into the VA, HUD, or other third parties resulting from a foreclosure sale; execute affidavits of nonmilitary status, lost note affidavits, endorsement of promissory notes, and documents required for the government claims process;

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TIGHE PATRICK 5/16/2012 For Educational Use Only

19.03. How does MERS work?, 15 Tex. Prac., Texas Foreclosure Law & Prac. ...

3. Execute any document needed to protect any of the various bundle of rights owned by a MERS member related to a bankruptcy proceeding; 4. Take any action necessary to fulfill a member's servicing obligations to any of the beneficial owners of a registered mortgage; and 5. Endorse checks erroneously made payable to MERS to the proper party for any loan over which the certifying officer's principal or employer has control. It should be noted that the mortgage service that employees the certifying officer can generally perform the same services, duties, and functions attributed to a certifying office because the mortgage servicer is the agent for loan servicing administration for its principal, the investor or its designees, or as the holder or transferee of the borrower's note, as the terms holder and transferee are defined in Tex. Bus. & Com. Code 3.301 and 3.203. The MERS Rules of Membership require its members to indemnify MERS and MERS's employees, directors, officers, agents, or affiliates against all loss, liability, and expenses that may be caused by any act or omission of a certifying officer. The MERS Rules of Membership, can be found on the MERS primary website at www.mersinc.org under the MERSSystem tab and the Publications menu. The MERSSystem and MERSCommercial electronically track any changes in the beneficial ownership and servicing rights that are transferred, assigned, foreclosed, or released for any registered loan. However, MERS is not a party or privy to any of the agreements or transactions between members and third parties that generate any of the changes made to the bundle of rights registered on MERS. All security instruments for loans registered on the MERSSystem and MERSCommercial must be recorded in the real property records. As long as a loan is registered on MERSSystem, Mortgage Electronic Registration Systems, Inc. is intended to be the mortgagee of record and no assignment or transfer of lien is required regardless of the number of times a registered loan is bought or sold. One of the principle advantages of Mortgage Electronic Registration Systems, Inc. serving as the mortgagee of record in the real property records is that MERS eliminates most of the frustration of determining who has possession or knowledge of the pertinent information related to a lien filed in the land title records. MERS fulfills the purpose for which the recording statutes were created, i.e., to give the general public notice of the existence of a lien and a means to determine who is the mortgage servicer that has all the pertinent information related to the lien. Contrary to public opinion, recording a deed of trust in the real property records does not perfect the lien against the encumbered real property and thereby make it enforceable by foreclosure. In fact, as Tex. Prop. Code 13.001 and 13.002 make it clear, the mortgagee can enforce a deed of trust against the mortgagor without the security instrument ever being recorded in the land title records. One of the most important benefits of MERS is that almost any question related to MERS can be answered by a search on the MERS website at www.mersinc.org. Whether it is the MERS Rules of Membership, specialized forms, detailed operation manuals, or accepted business practices and procedures, all can be obtained on the MERS website. MERS admirably performs its function as a utility for the real estate finance industry by providing transparency of its operations via the internet. Westlaw. 2011 Thomson Reuters. No Claim to Orig. U.S. Govt. Works. Footnotes Dallas, Texas. a0

2012 Thomson Reuters. No claim to original U.S. Government Works.

TIGHE PATRICK 5/16/2012 For Educational Use Only

19.03. How does MERS work?, 15 Tex. Prac., Texas Foreclosure Law & Prac. ...

End of Document

2012 Thomson Reuters. No claim to original U.S. Government Works.

2012 Thomson Reuters. No claim to original U.S. Government Works.