Servicing Guide

Published December 12, 2018

A2-8-01: Mortgage Electronic Registration System (11/12/2014)

MERS is an electronic system that assists in the tracking of mortgage loans, servicing rights, and security interests. To initiate the electronic tracking, the seller/servicer assigns a special MERS MIN to the mortgage loan, registers the mortgage loan in MERS and the either

  • originates the mortgage loan with MERS appearing in the security instrument as nominee for the beneficiary and its successors and assigns, or

  • records an assignment of the mortgage loan to MERS (thus making MERS the mortgagee of record).

This topic contains the following:

Registration of a Mortgage Loan to MERS

When a MERS-registered mortgage loan is delivered to Fannie Mae, the seller/servicer reports the MIN on the Loan Schedule (FRM/GEM Loan Schedule (Form 1068) or ARM/GPARM Loan Schedule (Form 1069) or on the Schedule of Mortgages (Form 2005).

The following table outlines the steps that must be taken when a mortgage loan is registered with MERS.

If the mortgage loan is… Then…

registered with MERS before Fannie Mae purchases it

Fannie Mae will notify MERS to ensure that its records are updated to reflect Fannie Mae’s ownership interest in the mortgage loan.

not registered with MERS until after Fannie Mae purchases it

the seller/servicer must report Fannie Mae’s ownership when it registers the mortgage loan.

If the seller/servicer encounters a situation where Fannie Mae is the owner of record for a mortgage loan because the original assignment of the mortgage loan to Fannie Mae was recorded in the public records, the seller/servicer must correct the error before it completes the MERS registration by

  • preparing an assignment of the mortgage loan from Fannie Mae to MERS,

  • sending the assignment to Fannie Mae for execution, and

  • recording the assignment in the public records.

Naming MERS as the Nominee for the Beneficiary in the Security Instrument

MERS will have no beneficial interest in the mortgage loan, even if it is named as the nominee for the beneficiary in the security instrument. In addition, the failure of MERS to perform any obligation with respect to a MERS-registered mortgage loan does not relieve the seller/servicer from its responsibility for performing any obligation required by the terms of its Lender Contract.

The following table describes the requirements of the seller/servicer.

The seller/servicer must…

Accurately and timely prepare and record security instruments, assignments, lien releases, and other documents relating to MERS-registered mortgage loans.

Take all reasonable steps to ensure that the information on MERS is updated and accurate at all times.

Be solely responsible for any failure to comply with the provisions of the MERS Member Agreement, Rules, and Procedures and for any liability that it or Fannie Mae incurs as a result of the registration of mortgage loans with MERS or any specific MERS transaction.

Registration of Fannie Mae mortgage loans in MERS (as either assignee or the nominee of the original mortgagee) does not change the seller/servicer’s responsibility for complying with all applicable provisions of

  • the MSSC;

  • Fannie Mae’s Guides, as they may be amended from time to time;

  • the seller/servicer’s Master Agreement;

  • any negotiated contract that it has with Fannie Mae, unless Fannie Mae specifies otherwise; or

  • any other agreements that are part of the Lender Contract.

Termination of the Use of MERS

If the seller/servicer decides to discontinue the use of MERS, the seller/servicer must request from MERS that the mortgage loan be “deactivated” in MERS. MERS will notify Fannie Mae about the deactivation of any mortgage loan in which it has an interest.

If the seller/servicer’s membership in MERS is terminated, the seller/servicer must promptly notify Fannie Mae.

For each MERS-registered mortgage loan that it is servicing for Fannie Mae, the seller/servicer must perform the functions outlined in the following table.

The seller/servicer must…

Prepare an assignment of the mortgage loan from MERS to itself.

Have the assignment executed.

Record the executed assignment in the public land records.

Prepare in (recordable form) an unrecorded assignment of the mortgage loan from itself to Fannie Mae.

Submit the original of that assignment to Fannie Mae’s DDC or the applicable document custodian.