Mortgage Electronic Registration System - MERS

See: Mortgage.

We love things that are designed to make the world operate more efficiently, which is why we’re fans of MERS. (Not to be confused with the “murse,” which we suppose could also enhance efficiency, but only for the most fashion forward of men.)

MERS, which stands for “Mortgage Electronic Registration System,” is a database of mortgages that is managed by a privately held company (MERS, Inc.). And it doesn’t just record the mortgage itself, but all the changes to ownership and servicing rights that happen to that mortgage throughout the course of its life. In other words, when our mortgage is “sold” by one lender to another, that sale is captured in MERS.

This is great because, prior to MERS, every time something happened to a mortgage (i.e., it was bought, sold, or modified in some way), someone had to call the county recorder’s office and tell them what went on, and then usually fill out a bunch of paperwork to prove it. But with MERS, all that someone has to do is update the database. It saves time, and it saves money.

Of course, there are some criticisms. MERS might be saving folks a little money here and there, but it can also make it harder to follow a mortgage’s trail. Why? Well, when a mortgage becomes part of the MERSiverse, MERS becomes the official mortgagee of record. This means that if homeowners find themselves in a foreclosure-type situation, it can take longer to find out who actually holds the mortgage so they can try to work with them to save their home. And prior to 2011, some states actually allowed MERS to foreclose on a property, even though they don’t hold the promissory note and therefore don’t own the debt.