Greg Ousley wants to be a chaperone of sorts for the secondary mortgage market. The chief executive of Global Debt Registry said his company's system, which was designed to track ownership of delinquent credit card debts, can improve upon the widely used Mortgage Electronic Registration System (MERS).
MERS' reputation has taken a beating in recent months as questions about its legal standing in foreclosure cases have increased amid a broader controversy over mortgage servicers' record keeping.
One criticism of MERS is that it relied on its members to update and register mortgage assignments themselves. Ousley's system would manage and oversee the entire mortgage-transference process for lenders and servicers.
"What GDR advocates is a person-managed solution, a third party that watches and makes sure that everyone is doing what they're supposed to be doing," Ousley said.
"My system is managed with a person involved in the transaction and a quality assurance process that says, 'The note is here, it was transferred,' not just relying on two parties to say what they were going to do," he said. "It makes sure they're the actual owners of what they're trying to sell, makes sure the documents exist that are supposed to exist and then, once it takes place, validates that everything that was supposed to happen, happened."
Analysts and legal experts say Global Debt Registry, or some other start-up, could conceivably capitalize on MERS' troubles and take market share.
"There's a lot of controversy around MERS right now," said Michael Benoit, who represents banks as a partner in the Hudson Cook law firm. "Can you build a better, or not necessarily better, but a different mousetrap? Absolutely. I don't know that MERS is necessarily the final say."
Karmela Lejarde, a spokeswoman for Merscorp, the company that owns the MERS system, said it is not familiar with Global Debt Registry.
Developed in 2006, Global Debt Registry has the capability, Ousley said, to record the flow of all the underlying documentation of a mortgage, not just the assignment of the note, which is what MERS was designed to track.