MERS Southeast Legal Seminar (11.10.04) Final[1]

8/8/2019 MERS Southeast Legal Seminar (11.10.04) Final[1]

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MERS Southeast Law SeminarNovember 10, 2004

R.K. Arnold, MERS President & CEO

Sharon McGann Horstkamp, MERS Corporate CounselBrian Pinnell, MERS Associate Counsel

Suzanne Barkett, Esq., Butler and Hosch

Matthew Gibbons, Esq., Butler and Hosch


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MERSResidential

26+ million residential loans registered

Over 1,800 companies actively registering loans on amonthly basis

85 of the top 100 lenders in the country are using thesystem in at least one or more divisions

Over 50% origination market share

More than 25% of total outstanding mortgage loans in

U.S. registered


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MERSCommercial

Live July 2003

Over 300 loans registered, over $6 billion in CMBSproduction

System development partners:

Bear Stearns GE Capital

Wells Fargo GMAC Commercial

John Hancock Banc of America Live on the system: Bear Stearns, Wells Fargo, Banc ofAmerica, Morgan Stanley and Ginnie Mae


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Future of Mortgage Banking:The MERSeRegistry

Launched April 2004

Working with MBA, the Agencies and others industryparticipants

Designed to track and identify electronic promissorynotes

MBA has officially endorsed MERS to create andoperate the eRegistry

Without an eNote, there is no eMortgage


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Agenda

Current Status of MERS

Overview of MERS

How MERS works in day to day practice including title

policies, pay-offs and lien releases

Service of Process

Foreclosures and Bankruptcy

Suffolk County Litigation

MERS Link

Questions and Answers


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What is MERS?

Electronic Registry: Electronic registry for trackingservicing rights and beneficial ownership interests inmortgage loans.

Mortgagee: MERS is the mortgagee in a nomineecapacity for the beneficial owner of a mortgage loan inthe land records.


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Registration vs. Recording. MERS is not a system oflegal record nor a replacement for the public landrecords. Mortgages must be recorded in the countyland records.

MERS is a tracking system. No interests aretransferred on the MERS System, only tracked.

MERS Basics


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MERS System


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MERS System


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MERS History

Inter-Agency Technology Task Force in 1991.

MERS was incorporated in 1995.

ED

S selected as technology provider in 1996.

MERS System operational in 1997.

First MOM (MERS as Original Mortgagee) loansregistered in 1998.


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Corporate Structure

MERSCORP, Inc. The operating company that ownsthe MERS System. Owned by 28 leading mortgageindustry companies.

Mortgage Electronic Registration Systems, Inc.(MERS):A bankruptcy-remote subsidiary ofMERSCORP, Inc. whose sole purpose is to serve asmortgagee in the land records for loans registered onthe MERS System.


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Governing Documents

Each Member enters into a Membership Agreementwith MERSCORP, Inc.

Agreement consists of Membership Application that

incorporates Terms and Conditions, Rules ofMembership and the Procedures Manual.

All documents can be downloaded from MERS web-site: www.mersinc.org.

Member agrees that MERS shall serve as their nomineeas the mortgagee in the land records in exchange forthe Member registering the mortgage on the MERSSystem.


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MERS as Original Mortgagee (MOM). Use Deedsof Trust or Mortgages with MERS as OriginalBeneficiary or Mortgagee using standard languageapproved by Fannie Mae, Freddie Mac, FHA and VA.

Assignment to MERS. Use an assignment to MERSfor an existing non-MOM mortgage.

Two Ways for MERS toBecome Mortgagee


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MERS as Original Mortgagee

Changes to Security Instrument

Definition Section - MERS is defined in subsection(C) as the Mortgagee.

Granting Clause Borrower mortgages, grants andconveys the Property to MERS.

Disclosure Section Borrower agrees that MERSholds legal title and acknowledges that MERS has right

to exercise rights of mortgagee, including foreclosing.


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MERS executes documents through CertifyingOfficers who are employees of the members.

Corporate Resolution v. Power of Attorney What powers do Certifying Officers have?

Certifying Officers


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We recommend that MERS be a named insured ontitle policies when a MOM is used.

Note owner is always an insured party.

MERS cannot fix problems in the chain of title thatoccurred prior to becoming mortgagee.

Issuing a Title Policy


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Payoffs

Only the loan Servicer can provide a payoff figure.

Best way for title professionals to contact thecurrent servicer is by using MERS Link.

Sample letter explaining relationship betweenMERS, Servicer and Note Owner


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Lien Releases

When Servicer receives payoff, an officer of MERSexecutes lien release.

IfLender executes the lien release instead ofMERS, it will cloud title.


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Modifies the mortgage and note, which means bothMERS and Lender should sign Agreement.

Modification Agreements


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Service of Process

How does MERS receive mail?

Address on MOMs and Assignments

MERS Mailroom

MERS Corporate Headquarters

Registered Agents

Delaware Secretary of State

All mail received is electronically scanned andforwarded to the current Servicer


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MERS provides Recommended ForeclosureProcedures as a guideline.

Status of foreclosing in MERS name in Florida.

Use of Connecticut cases by Borrowers counselsin challenging MERS standing is misleading to theCourt.

Foreclosures


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Bankruptcy

MERS holds an in rem interest and such aninterest constitutes a claim under the BankruptcyCode.

Motions for Relief from Automatic Stay should bebrought in MERS name as a creditor andmortgagee.


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Suffolk County Litigation

Began with a 2001 Attorney General Opinion thatdeals with how to index documents.

Resulted in a 2004 decision confirming that countyclerks are obligated to record and index mortgagesand assignments naming MERS as mortgagee.

Case is currently on appeal on collateral issuesraised by the Court.


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Georgia Intangible Tax

To receive exemption, the mortgage lender must be theoriginal lender and cannot have assigned the mortgageloan at any time prior to refinancing the mortgage loan.

Department of Revenues position on exemption whenusing MOM mortgages.

Revisiting issue to clarify exemption when original loanis non-MOM forLender ABC and refinanced loan isMOM forLender ABC.


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MERS Link

Browser-based access to MERS System withpaid subscription.

Subscribers and members can get informationregarding current servicer.

Some servicers have a hot link to the servicerswebsite for customer information.


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MERS Link

Live Demonstration