MERS May Tighten Rules
MERS looks like it will prevail when it comes to questions about the validity of assignments where it is involved, but some think it may "lock down" its procedures as a result of the concerns.
"In my opinion, MERS is still and will remain an important part of the industry," said Mike Wileman, president and chief executive officer of Orion Financial Group. "There are going to be some procedural lockdowns I think are necessary, but think in the long run it's too much an integral part of the industry [to go away]." When asked about questions that have arisen about the validity of assignments where MERS is involved, Wileman said, "I could only weigh in from the standpoint of you've got rulings on both sides of the fence.
Obviously, I think MERS and their members feel like they have the ability to assign loans and I think there's probably been some adjustments and there's been some additional education. They're taking the steps to make sure people understand and have some basic information on MERS and what their role is as an assignment officer," he said. MERS is "re-emphasizing to the members their responsibility of maintaining good information in the system," he said.
When asked how his company handles situations involving MERS, he said it would vet them to the extent that the company's own legal counsel was satisfied.
"We know from experience and certainly from our legal counsel...what needs to be done to have complete chain of title," Wileman said. "If there are really title chain issues that are unresolved...then [we will tell clients] 'you're going to need more direct legal counsel.'" Reconvenance and assignments in general are becoming a higher priority for many in the industry, he said.
Wileman, whose company provides assignment and reconveyance-related services to these players and others, said that demand has increased. In particular interest in document retrieval and research has picked up, often in conjunction with foreclosures.
Services like beneficiary research "where we're trying to find people who owned the loan, two, three companies ago to try to clear up the chain of title," he said, are gaining traction.
Clients are taking steps to do quality control checks like this on "more and more loans, and maybe even on a proactive basis versus handling it by exception," Wileman said.
Title chains can weaken when, for example, a foreclosure gets dismissed.
When a borrower brings an account up to date, the assignment may go unrecorded because clients sometimes react to the development by sending a note back the service provider saying "the foreclosure has been stopped, we don't need [the assignment] anymore," Wileman said.
"It's important that they go through and get those assignments recorded and get the title chain cleaned up, at the very least from a customer service standpoint." Cleaning up assignment lapses like this is important because, when the customer does pay his loan off, there could be problems releasing the lien properly in certain jurisdictions, Wileman said.
Whether the company is cleaning up title chains or doing lien releases for loans being paid off, Wileman said he believes the need for such services "has always been there.
"It's just that we knew it maybe more than our clients or prospects knew it.
"But they're more willing to look at that now," he added.
"It's just that much more important to get title chains cleaned up and get proper information on the property records." Today's distressed loans, which were made in the days when mortgages were "blowing and going," in some cases did not get assignments vetted until after the fact, he noted. Wileman said because of this, some assignments fell through the cracks.
Because of this, now the company finds itself helping in some cases with due diligence that is part of the loan buying process. If a problem is found with the chain of title, a seller may be put on notice that it needs to be corrected in a certain timeframe or the transaction might not occur.
As a "back office" service provider, Wileman said his company provides a certain amount of assistance with some of these thorny title and reconveyance issues. But he stresses that while the company has a legal advisor on hand to vet its own practices, it does not give legal advice itself.