The policy that prevents mortgage servicers from initiating foreclosures in the name of Mortgage Electronic Registration Systems Inc. became permanent this week after parent company Merscorp Inc. finalized changes to its procedures and quality assurance manuals.
Merscorp announced its intent to change the rule in February and member servicers haven’t been able to foreclose in the name of MERS since March 8, when the comment period on the change began.
Fannie Mae has required its servicers to file an assignment of the mortgage out of MERS’ name in judicial foreclosures since Dec. 2006. In March, Fannie extended that policy to include nonjudicial foreclosures. Freddie Mac also told its servicers to put an end to the practice on all its foreclosures in April.
Prior to the system-wide change, MERS already prohibited its members from foreclosing in its name in the state of Florida and when the case also required the filing of a lost note affidavit.
The policy became permanent on July 22. When the comment period ended in June, Merscorp officials
“If this was a proposed regulation from the government, of course it would be reasonable to ask all those questions about the comments and have copies and so forth,” Janis Smith, Merscorp vice president corporate communications, told National Mortgage News and its affiliate, Mortgage Technology. “But what happens in this case is very different. It really is an internal exchange between the company and the members.”
But the multi-agency consent order filed against Merscorp on April 13 would appear to be a proposed government regulation about this MERS foreclosure policy.
The five federal agencies that reviewed Merscorp found the company “failed to establish and maintain adequate internal controls, policies, and procedures, compliance risk management, and internal audit and reporting requirements,” in the services it provides “to tracking, and registering residential mortgage loans and initiating foreclosures.”
The consent order requires Merscorp to draft an action plan by mid-August to develop a compliance and quality assurance program to ensure members follow MERS policy—and in two places, specifically references adherence to the Feb. 16 announcement of the change to the foreclosure filing rules.
Another section of the consent order gives Merscorp until June 13 to create a “process that provides sufficient incentives for members to inform Merscorp and MERS of the filing of all lawsuits brought in MERS’ name,” and “proposed revisions as necessary to the Merscorp Rules to implement these processes.”
