A new Senate bill proposing to wind down the GSEs by at least 10% a year also includes a provision that would replace the private MERS System with an identical platform run by the Federal Housing Finance Agency (FHFA) — along with new national standards for mortgage title transfers.
The bill outlines the director of the FHFA to establish “MERS 2” and incorporate a single national database for all mortgage title transfers, to be maintained and operated by FHFA.
“The rules of the Director shall ensure that property title is transferred in accordance with all applicable provisions of law,” the text of the bill reads. “All mortgage transfers shall take place according to national standards and shall be recorded in the MERS2 system.”
In the wake of the criticism and legal challenges to the Mortgage Electronic Registration System (MERS) and its parent company, Merscorp, the idea that the MERS model is in need of an overhaul or replacement is not new.
In its May cover story titled MERS 2.0 vs. Life After MERS, ASR sister publication Mortgage Technology reported that while changes are clearly coming to MERS, industry participants don't all agree on what the future of the loan registry looks like. Aside from the changes Merscorp has already implemented or identified, some said a simple rebranding would be enough to resuscitate MERS, while others called for its complete dismantling.
In his first-ever, and so far only, media interview since becoming president and CEO of Merscorp in April, Bill Beckmann told MT that Merscorp can and must succeed as a revamped company with a higher level of scrutiny on its operation.
“If this model doesn't work, there are only two outcomes I could see,” Beckmann said in the interview, which appeared in the September issue of MT. “One would be a nationalized approach. Personally, I think that's nuts. Why would you go that route when you're already 60% of the way there with something the regulators and the constituents say is OK?”
“The other alternative is going backwards again,” he continued. “Why would you ever want to go back to a situation where you have 50 people inventing and investing in the same systems and different processes? That adds cost and complexity to the process that's going to get passed on the consumer in the end. It's going to be harder to comply to, rather than easier.”
Sen. Bob Corker, R-Tenn., introduced his Residential Mortgage Market Privatization and Standardization Act bill Wednesday, calling for the reduction of the government sponsored enterprises' portfolios of mortgage-related assets and a reduction in the credit guarantee the GSEs provide mortgage-backed securities investors to 90%.