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MERS Offers Free Assistance to Troubled Borrowers

Reston, VA-On the heels of the Obama administration making public its mortgage relief plan designed to help up to nine million homeowners avoid foreclosure, MERS has responded to help this effort.

The Obama program provides financial incentives for lenders to modify or refinance loans into more affordable terms. Struggling homeowners seeking to modify or refinance their loans need to contact the mortgage company that collects their payments. MERS provides this informational link through MERS ServiceID, a free website and toll-free number (888-679-6377) that identifies the mortgage company that services loans registered on MERS.

Nonetheless, MERS' efforts to standardize the e-recording of loans and to make it easier for borrowers to reach their servicer, the American Securitization Forum so far is not considering the MERS MIN as part of its efforts to push both standardization and best practices. In early February in a request for comment, the ASF released a document indicating, "On July 16, 2008, the American Securitization Forum announced the public launch of ASF's Project on Residential Securitization Transparency and Reporting to restore investor confidence in mortgage and asset-backed securities. Many institutional investors and public commentators have observed that some securitizations suffer from transparency related ills. ASF Project RESTART seeks to cure that noted opacity with massive injections of new disclosure and reporting by issuers and servicers on both new transactions, as well as on the trillions of dollars of outstanding private label transactions. The project has been recognized by senior policymakers and market participants as a necessary industry initiative to improve the securitization process by developing commonly accepted and detailed standards for transparency, disclosure and diligence."

However, in its quest for transparency and standardization, ASF will not consider the MERS MIN. At present the ASF is considering Equifax and Standard & Poor's technology for use in defining the unique loan identifier, not MERS. MERS gives each loan an 18-digit Mortgage Identification Number, which is unique to that loan. All loans registered on MERS are assigned a MIN. At present, both GSEs require that all e-mortgages sent to them must be registered on MERS and have a MIN assigned.

To combat the potential of the MIN being rendered obsolete, R.K. Arnold, president and CEO at MERS, urged lenders attending the MBA tech show to adopt e-processes and use the MIN, arguing that if usage is mainstream, the ASF will have to recognize the validity of the current MIN. No decision on how the ASF plans to act on the matter had been made at press time. Also speaking at the MBA tech show, Ted Adams of Freddie Mac stressed, "The MIN works and we're using it. The introduction of another loan identification number as purposed by ASF would be confusing." The Mortgage Bankers Association also joined this chorus in drafting a letter to ASF that said, "ASF requests comments regarding the two vendors (Equifax and Standard & Poor's) under consideration by ASF to provide the unique loan identifier. MBA believes that ASF has not provided sufficient information on vendor's capabilities. Members have expressed concern that MERS was not selected as the vendor to provide the unique loan identifier. The MERS Mortgage Identification Number was implemented by the mortgage industry 13 years ago as a solution to the universal loan number, assigned to 58 million loans representing 60% of the market.

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