MERS Tracks 15 MM Loans

MERS, an electronic registry for tracking ownership of mortgage loans and servicing rights, has recorded its 15 millionth loan.

The 15-million milestone represents a 77% increase in the number of loans registered on MERS from one year ago, according to MERS.

R.K. Arnold, president and CEO of MERS, said the system is growing by leaps and bounds. He said MERS is capturing "well over 40%" of loans being originated in the United States.

And its loan originators - often at the behest of wholesale lenders or loan aggregators - are driving the increased adoption rate, Mr. Arnold told MSN. Flow registrations of newly originated loans account for 12 million of the total, with bulk acquisitions of existing loans accounting for just three million. And most of the bulk registrations resulted from a big transaction a couple of years ago, he said.

Mr. Arnold says the growth of MERS' business reflects the power of the MERS system to eliminate paperwork and save money for large and small investors with giving lenders an incentive to adopt electronic registration. Many wholesalers and aggregators now effectively require MERS, because they offer favorable pricing for MERS-registered loans or penalize loans not registered on MERS.

"It's really fundamentally about the fact that we have penetrated so deeply at this point into the origination sector," he said.

Increasingly, originators have to register loans on MERS in order to keep doing business with their trading partners, he said.

Because MERS "inoculates" loans against the need for future assignments when the beneficial interest in the loan or the servicing rights are transferred, it saves money and makes the portfolio more valuable, MERS officials have long contended. Now, the market seems to be agreeing with that premise, according to Mr. Arnold.

In May, daily registration volume averaged 29,000. At the end of last year, daily registrations were averaging 22,000.

The refinancing boom has helped MERS generate volume, and that has also placed MERS on firmer financial footing. In 1998, MERS was re-capitalized with a loan from Fannie Mae, Freddie Mac and the Mortgage Bankers Association of America.

Last year, MERS paid off that debt - two years ahead of schedule. And now, Mr. Arnold said that the company's assets exceed its liabilities.

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