GMAC-Residential Funding Corp. (RFC) has completed a securitization using the Mortgage Electronic Registration Systems Inc. (MERS) method of registering its loans into a MERS database.
While the concept of MERS is not new, RFC's participation in the program is. MERS is an electronic database of mortgages originators use that eliminates the need to do an assignment for the trustee.
"A lot of those shelves that RFC has are all-day products," said Connie Davies, communications coordinator for McLean, Va.-based MERS. "So there's a lot of people who sell those products, and now it's being made available in all their shelves." She added that RFC now has six to 10 shelves registered with MERS, giving RFC a place to sell its loans.
"It's new for RFC, but for those who do the all-product, it gives them a place to deliver," Davies added. A representative from RFC did not return calls by press time.
MERS, which started as a "white paper" concept in the early 1990s, quickly developed as a place in which the mortgage industry could benefit from online book-entry. It was supported by the Mortgage Bankers Association, Fannie Mae and Freddie Mac. MERS is designed as the electronic registry to track the ownership interests that the lender must hold and to track who holds servicing rights. In 1999, MERS took a leap from focusing only on agency debt and included private-label securitization.
The first private-label deal placed in the MERS database was a $280 million transaction underwritten by Lehman Bros. and serviced by Aurora Services last spring. Today, MERS has over 1.3 million loans in its system.
When a loan is originated in the MERS system, MERS is listed as a nominee of the originator of the mortgage. An 18-digit identification number is assigned to each loan, and the number cannot be reused or duplicated.
Currently, MERS is a voluntary service.