What is MERS? (Mortgage Electronic Registration System)

What is MERS? Understanding the Mortgage Electronic Registration System

MERS, or Mortgage Electronic Registration Systems, Inc., serves as a crucial electronic registry in the mortgage industry. Created in the 1990s, this member-based organization revolutionized how mortgage ownership is tracked and transferred throughout the loan lifecycle.

How MERS Works for Lenders and Mortgage Servicers

MERS functions as a centralized electronic database that:

• Tracks mortgage ownership changes without requiring costly county recording fees for each transfer
• Monitors servicing rights as loans are bought and sold on the secondary market
• Acts as a “nominee” (legal agent) for current and future lenders after loan registration
• Reduces paperwork and costs associated with traditional mortgage assignment recording

When a loan is initially registered, MERS appears as the “mortgagee as nominee” in county records. This designation allows subsequent transfers between MERS member companies to occur electronically within their system rather than requiring new county filings for each transaction.

Benefits for Homeowners and Property Buyers

The MERS system offers several advantages for consumers:

• Simplified access to mortgage information through online portals and phone support
• Faster identification of current loan owners when requesting payoffs or releases
• Streamlined processing for eMortgages (electronic mortgages)
• Potential fraud detection by tracking ownership patterns and occupancy issues

Understanding Mortgage Tracking vs. Property Ownership

It’s essential to recognize that MERS tracks mortgage ownership, not property ownership. All property title transfers (when someone buys or sells a home) are still recorded with county offices. MERS only manages the electronic tracking of who owns the loan and services the mortgage.

While a lien report will show the original loan originator, subsequent transfers between financial institutions are typically tracked within the MERS system rather than county records.

Why MERS Matters for Real Estate Transactions

For anyone involved in real estate, understanding MERS helps explain why mortgage information sometimes appears missing from county records. When clients need to identify their current mortgage holder or servicer, MERS provides this critical information that may not be available at the recorder’s office.

Both Freddie Mac and Fannie Mae now require lenders to register electronic promissory notes (eNotes) with MERS, highlighting its growing importance in modern mortgage processing.

Homeowners who need to find information about their loan may visit the following link to start the FREE process: https://mersinc.org/homeowners