MBA MERS Initiative Makes A Difference

The MBA Vacant Property Registration MERS initiative is currently being used by 238 cities, which is already helping the mortgage industry see a substantial decrease in code violations on vacant properties.

At no cost to the city, code enforcement officials can go into the MERS database and immediately see who the titleholder is, who the servicer is, the property preservation company, and most importantly, the point of contact.

“The biggest issue from code enforcement officials around the country is they don’t know who the point of contact is when they have an issue. It seems as if it has been resolved,” said Robert Klein, founder and CEO of Safeguard Properties, which through the Mortgage Bankers Association and its lender/servicer members created the initiative to address the increasing number of vacant property ordinances being enacted across the country. “It’s being used by most of the major cities which I think is a phenomenal success. It definitely has alleviated quite a bit of the issues the industry has had from both sides not being able to communicate with each other. We’re seeing an 80% hit rate. For those with a 40%-50% hit rate, those cities are ecstatic. That’s 40% less than they have to go in and dig around when they have an issue.” Prior to this, there was no way the industry as a whole was able to comply with different vacant properties ordinances.

The program is being taken to the next level as states are getting more and more involved with passing laws at the statewide level. “Every single state has some type of vacant property law on the books, and this new program is going to be very helpful to start establishing dialogue and communication with different states around the country.”

Mr. Klein, chairman of the MBA VPR Committee, worked closely with the MBA’s Chris Oswald, director/state legislative affairs, and Vicki Vidal, association vice president, loan administration, at government affairs, to make this unique program a reality.

“Ninety-five percent of the national servicers are part of that committee. The entire concept was thought up and implemented by the MBA, which if I'm no mistaken released a letter to all its members strongly requesting its servicers all register or put their properties on the MERS database. It’s widely industry endorsed.”

The collaboration was a very natural occurrence, he adds. “In my opinion, some of the city's had legitimate complaints of the vacant blight issue. Vacant properties are impacting communities around the country. The MBA was an ideal vehicle to pull together the industry as a whole to come up with this idea and the solution to in my opinion to help stem the tide of vacant blight on a national level."

“MERS has always had informational on a particular mortgage but the problem was all they had was the title holder’s name. Just by having that did not help the city. In order to reach someone at the mortgage company to address the code violation it took two to three weeks or a month of frustration. Now, they get the point of contact within the organization. It’s a simple solution.”

Dan McLaughlin, executive vice president and product division manager for MERS, speaks highly of his experience working with the folks at the MBA and Mr. Klein.

“It was very expensive and very difficult for national servicers to register these properties. They would have to go into potentially thousands of Web portals and enter all of this information on all these different registries around the U.S. and pay a fee to the jurisdiction for that,” noted Mr. McLaughlin.

“This became such a problem that the MBA was trying to help solve it. It occurred that MERS is a potential solution here. Robert Klein of Safeguard saw the vision there, too, and saw the opportunity. What we did was we said we are going to add fields to the MERS system that identifies the person, the individual, their telephone number of the company they work for, who is responsible for maintaining a vacant property associated with that loan on MERS, etc.”

The loans are already registered on MERS and it is costing cities nothing, he stresses. “The 20% where they do not have MERS, it’s costing them 97 cents or less. The alternative would be to pay all these jurisdictions, like in Virginia, $350 or $600 or as much as they want to charge. It’s been as much as that by the way for the privilege of registering the property on the local registry,” said Mr. McLaughlin.

It’s all highly automated. Without using this technology, lenders would have a staff of people doing nothing all day except for registering tens of thousands of properties in all the different jurisdictions. “I’d like to take credit for it, but I can’t. Vicki Vidal, Robert Klein. They saw the vision and the opportunity. This is a just a phenomenal collaboration.”