Mortgage Electronic Registration System (MERS), explained

Do you know who owns your mortgage? While this information isn’t essential for homeowners when they send monthly mortgage payments, it might come in handy one day — for example, if you decide to refinance your loan. This is when the Mortgage Electronic Registration System (MERS) comes into play. Let’s learn what exactly is MERS, its role in mortgages and how to look up your mortgage in MERS.

What is Mortgage Electronic Registration System (MERS)?

MERS is an American private electronic database created to track new mortgage loans, servicing rights and ownership of the loans. It provides free public access to information about home mortgages and is used by homeowners, local governments, servicers, lenders, municipalities and insurers, among others.

Every loan in MERS is assigned a mortgage identification number (MIN). This number stays the same throughout the loan's life, making it easier to track in the system, even if the loan is sold to another financial institution.

MERS and its role in mortgage transactions

Mortgages are bought and sold all the time. However, before MERS was created, the lender would have to prepare and file an assignment — a document that states a mortgage transfer — in county land records. Thanks to MERS, lenders can potentially save time and costs on filing assignments every time the mortgage gets transferred to another holder.

When you look into who owns your mortgage, you may also discover MERS itself documented as the loan owner. This is known as a MOM (MERS as Original Mortgagee) loan. However, even if MERS is mentioned as a mortgagee, it does not collect monthly payments and doesn't own the debt or service any loans. In actuality, MERS is generally only listed as a mortgagee for convenience. This way, every time a loan is transferred, MERS can act on behalf of the loan holder and eliminate the need for separate assignments.

Additionally, you should know that MERS cannot be a party to start foreclosure, even if it's mentioned as a mortgagee. If the MOM loan goes into foreclosure, MERS would usually assign the loan back to the current owner.

How to look up a mortgage in MERS

If you're a homeowner, MERS would have little impact on you or your mortgage. However, it may come in handy to learn who the holder of your loan is. This information is necessary for those who want to refinance their house, ask to modify the loan or update information about homeowners insurance, among others. You can search the registry online or by phone.

Homeowners can access MERS by providing:

• Property address
• Borrower's name and social security number (SSN)
• Mortgage Identification Number (MIN), which you can find on the deed of trust, loan statements or signed mortgage

If you cannot locate your MIN, the other details listed above are usually still sufficient to verify the current servicer. Additionally, you might have to confirm some identifying information to see the results.

Pros and cons of Mortgage Electronic Registration System (MERS)

As you learned earlier, MERS has little effect on regular homeowners. However, it does bring certain benefits and disadvantages to the whole mortgage management process.

Pros of MERS:

• Serves as a singular destination for loan information: MERS is a good place to start for any homeowner who needs to find out who holds their mortgage. It is also used nationwide by many players in the real estate industry for various reasons, such as finding undisclosed liens or establishing those responsible for maintaining vacant properties.
• May save money and time for lenders: MERS helps facilitate the process of transferring the loan and reduces the costs of consecutive assignment filings.

Cons of MERS:

• May be confusing for homeowners: If MERS is indicated as a beneficiary of the mortgage in its database, it may be misleading to borrowers who might think that MERS has more impact on their loan than it actually does.
• Makes it challenging to establish a loan owner in some cases: When it comes to MOM loans, it could be potentially more difficult to track a current loan owner since MERS is technically listed as one.

In summary

MERS is a private database created to facilitate tracking mortgages and any ownership changes. As a homeowner, you can use it to see who your loan holder is in case you want to refinance or modify your mortgage. For lenders, MERS provides the convenience of a singular place.

Mortgage Electronic Registration System FAQs

1. Is MERS the only way to see who owns a mortgage?

You can look up your mortgagee in a few different ways. For example, you can call or send a written request to your mortgage servicer or check the Fannie Mae and Freddie Mac websites. However, MERS was created as a unified database, so it could potentially be a good place to start your search.

2. Is there a MERS registration fee?

Yes, MERS may charge a small registration fee when the loan is recorded in its system. You should also know that as a homeowner, you can access the registry to find information about your mortgage service provider for free.

3. What is an MOM loan?

MOM stands for "MERS as original mortgagee." This is done to save time and recording costs: since MERS is listed on paper as the loan owner, the information about the mortgagee does not have to change.