What is a Mortgage Electronic Registration System?

Article Summary:

The mortgage electronic registration system is an electronic database that tracks changes in mortgage servicing rights and beneficial ownership interests in loans secured by residential properties. This saves lenders and the mortgage industry considerable time and money.

You probably haven’t heard of the mortgage electronic registration system (MERS). That’s okay, few borrowers or consumers have. However, this database stores valuable information for those in the mortgage industry, which saves them a lot of work. So what can this database do for you? Keep reading to find out how MERS can help you identify your mortgage owner and what this information means for your loan.

What is MERS?

The mortgage electronic registration system (MERS) is a wholly-owned subsidiary of MERSCORP Holdings. MERS is a national electronic database that tracks mortgage servicing rights changes and beneficial ownership interests in loans secured by residential real estate. It maintains a mortgage tracking database for its members as they move from one bank to the other. The database’s electronic tracking of loan transfers eliminates lenders’ need to record every loan sale with the county recorder.

Consumers can use this system to look up who owns their mortgage loans. You can do this by logging onto the MERS site. Search using your 18-digit Mortgage Identification Number (MIN), property address, and borrower details. If applicable, you also need your Federal Housing Administration (FHA), Veterans Affairs (VA), or mortgage insurance (MI) certificate number.

MERS is a reliable database that many government agencies often use. The Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Government National Mortgage Association (Ginnie Mae) all approve of MERS and the data it provides. In addition to these organizations, the FHA, VA, the California and Utah Housing Finance Agencies, and all major Wall Street rating agencies make use of MERS as well.

How does MERS work?

When a mortgage is sold by a bank or financial institution, the bank prepares an assignment and records the assignment in the appropriate county’s land records. This document describes the mortgage transfer and who assumed the mortgage.

This can be a strenuous process as it requires the owners of a loan to create an assignment with the county recorder every time a loan is sold. Mortgage loans can be sold several times during their lifetimes. That means a lot of paperwork.

The MERS process

  • At closing, the borrower signs a mortgage and promissory note. MERS is appointed “mortgagee as nominee” for the lender and its successors and assigns in the mortgage.
  • That mortgage is recorded by the lender, who does one of the following:
    • Record the mortgage in the county land record in MERS’ name. This allows the borrower to look up the servicer and investor information in the database.
    • Register loan information on the MERS system.
    • Sells note, information for investor is updated in the MERS system.
    • Sells servicing, information for servicer is updated in the MERS system. If this occurs, no breaks in the chain of title occur because MERS is still the owner of the lien (provided the service is sold to a MERS System Member).

MERS simplifies this process. Loan owners who are members of MERS now no longer have to submit physical copies of assignments on their own.

Once a lender sells the loan, MERS updates its information concerning the mortgage. Also, the servicer of a mortgage can ask for its removal from the MERS database. MERS will, in turn, notify the concerned mortgage financing institution. If the servicer of a mortgage wants to end their membership with MERS entirely, it must also notify the concerned mortgage financing institution as soon as possible.

Who owns my mortgage?

Banks and other financial institutions usually sell their own mortgages. Two government-sponsored agencies, Fannie Mae and Freddie Mac, are the most popular buyers of mortgages. When your mortgage is sold to a new owner, the buyer will send you a notice. You may have to send your mortgage payment to a new address or use a new website address to make your payments online. Otherwise, you’ll continue sending payments to your original mortgage servicer.

There are several ways you can discover who owns your mortgage. This includes searching Fannie Mae’s or Freddie Mac’s websites, consulting the MERS listing service, or calling your mortgage loan’s servicer.

Contact the Mortgage Servicer

Start your search by contacting the company that services your mortgage, who receives your monthly mortgage payments.

If you prefer paper statements and checks, you can find your mortgage servicer’s contact information on your statement. This statement will also have your loan number and additional information you’ll provide to the customer service representative.

For electronic payments, first log into your account. Once you do, you’ll find your loan number on your payment portal. You can also locate the contact information for your loan servicer here.

Use Digital Lookup Tools

You can deploy digital tools to look up the owner of your mortgage. Start with the loan search tools offered by Fannie Mae and Freddie Mac. These two agencies own most of the mortgage loans that originated in the United States.

To use Fannie Mae’s lookup tool, enter your name, street address, and the last four digits of your Social Security number. If your mortgage shows up in the search results, then Fannie Mae owns your mortgage. Freddie Mac’s Loan Look-Up Tool works in the same way. Having this information is crucial if you want to refinance your mortgage loan without enough equity on your home.

Freddie Mac and Fannie Mae offer refinance programs that allow you to refinance even with 3% equity in your home. However, to qualify for these programs, Fannie or Freddie must own your loan.

What is equity and why does it matter?

Equity is the difference between what you owe on your mortgage and how much your home is currently worth. For instance, if you owe $100,000 on your mortgage and your home is worth $180,000, this will mean you have $80,000 of equity on your home. Lenders typically require that you have at least 20% equity in your home to refinance your mortgage.

Check With MERS

You can also search for your mortgage through MERS’s online database.

The Role of MERS in Real Estate

While MERS may not be helpful to borrowers or consumers, this database is a lifesaver for the mortgage industry. Using MERS, lenders can efficiently record mortgage transactions without the hassle of physical paperwork.

What is MERS’s role in mortgage transactions?

In certain home loan transactions, MERS assumes the mortgagee as the sole nominee for the lender. Lenders then tag the loans as “MERS as Original Mortgagee” or “MOM” loans. MERS is then designated as the beneficiary to act as the lender’s nominee.

In other situations, lenders may assign the loan to MERS as a nominee after the loan closes. MERS hereafter tracks the transfers of the loan by acting as the nominee for each holder, eliminating the need for separate assignments if or when the loan transfers.

What is MERS’s role in foreclosures?

A foreclosure can either be judicial or nonjudicial, which depends on the foreclosure’s circumstances and the state law. If you stop paying your mortgage, your lender may begin foreclosure proceedings against your property. In a foreclosure, the lender assumes ownership of your home before selling the property again to recover lost funds.

In 2011, MERS declared that foreclosures couldn’t initiate in its name, even if the loan listed MERS as the mortgagee or beneficiary. If a loan forecloses, MERS usually assigns the loan back to the actual lender or the current owner of the mortgage. At that point, the assignee can start foreclosure procedures.

Why do lenders use MERS as a nominee?

Lenders use MERS as a nominee in land records to save time and recording costs. This is preferable because multiple assignments aren’t necessary each time the loans transfer. However, it’s important to remember that MERS doesn’t own the debt or hold the promissory note.

Pros and Cons of MERS

  • Homeowners can access information on their mortgage loans online or over the phone by calling 888-679-6377.
  • MERS saves lenders considerable time and money.
  • Provides information on undisclosed liens, such as silent mortgages, which reduces fraud.
  • Naming MERS as a beneficiary confuses many homeowners. (This became obvious during the 2008 housing crisis.)
  • MERS is not the owner of your loan or mortgage debt.

The Importance of the Mortgage Electronic Registration System

Even though MERS doesn’t impact borrowers and homeowners, it is important to lenders. For instance, tracking a loan with MERS eliminates the need for new paperwork every time a loan is sold. This saves lenders a significant amount of time, paperwork, and money.


How does MERS become a mortgagee or beneficiary?

Usually, MERS becomes mortgagee or beneficiary at closing. This occurs when the borrower and lender both agree to standard language in the security instrument making MERS the original mortgagee or beneficiary.

MERS also possesses the right to act on behalf of the lender, its successors, and assigns. This language is approved and used by several of the government agencies listed throughout this article. In cases where MERS is not the original mortgagee on the security instrument, a lender can assign MERS the mortgage after closing.

Does MERS own my mortgage?

MERS acts as mortgagee in county land records, but it doesn’t own the mortgage loan. If the lender sells the loan, MERS will update the information regarding the mortgage transfer.

Are all mortgages registered with MERS?

More than two-thirds of all newly originated residential loans in the United States are registered on MERS. MERS also contains all mortgages or deeds of trust that were recorded in the public land records.

Why do banks use MERS?

Many banks rely on MERS because of the system’s efficiency. Because the system monitors servicing rights transfers, MERS significantly cuts back on time and money consumed by the original process. MERS also provides information on undisclosed liens, which reduces fraud.

Key Takeaways

  • MERS is a national electronic database that tracks changes in mortgage servicing rights and beneficial ownership interests in loans secured by residential real estate.
  • Multiple government-sponsored enterprises support and rely on MERS regularly.
  • You can find out who owns your mortgage by searching MERS, Fannie Mae’s RefiNow, or Freddie Mac’s Refi Possible databases.
  • Even if your mortgage is sold, you’ll likely make your payments to the same company or individual.
View Article Sources
    1. What is a mortgage note? — SuperMoney
    2. What is a wraparound mortgage? — SuperMoney
    3. What is a subprime mortgage? — SuperMoney
    4. What is a mortgage note? — SuperMoney
    5. How to Lower Your Monthly Mortgage Payment — SuperMoney
    6. Refi Possible — Federal Home Loan Mortgage Corporation
    7. RefiNow — Federal National Mortgage Association