Last week, I discussed in great detail the significance of recordable documents in MERS® compliance. I thought it prudent in this follow-up piece to share some additional insights on common errors LoanLogics found in 2020 with regards to recordable document errors. The top document categories found with the most errors included Lien Releases/Substitution of Trustee, Assignments and Modification Agreements.
As I noted in the previous post, communication between all responsible parties regarding changes to MERS document requirements is critical. It’s worth pointing out that the errors discovered in the 2020 reviews were made by established organizations that had either gone through staff or organizational changes, departmental realignments, or had not previously been subject to the independent 3rd party review process. Several, in prior years, had no errors in these categories. In at least one instance, a previous review firm had not included documents in its audit.
Lien Releases/Substitution of Trustee
- Naming MERS as a licensed financial institution in Louisiana
- Referencing MERS as the beneficial owner
- Omission of “as mortgagee”, “as beneficiary”, or “as grantee” verbiage when identifying Mortgage Electronic Registration Systems, Inc.
- Identifying MERS as directly receiving the pay-off funds
Assignments
- Referencing MERS transferring the Note
- Use of the word “sells” as in “Mortgage Electronic Registration Systems, Inc., as mortgagee, hereby sells to…”
- Omission of “as mortgagee”, “as beneficiary”, or “as grantee” verbiage when properly identifying Mortgage Electronic Registration Systems, Inc.
- Identifying a sum of money paid to MERS (“…for the sum of Ten ($10) Dollars…)
Modification Agreements
- Identifying MERS as the Lender
- Omission of “as mortgagee”, “as beneficiary”, or “as grantee” verbiage when properly identifying Mortgage Electronic Registration Systems, Inc.
- Stating all loan documents had been assigned to the Lender or Investor but still naming MERS as a party to the modification. Note: This scenario illustrates the use of an old form from pre-MERS days by the MERS member.
Common to all categories was the lack of a Mortgage Identification Number (MIN) and/or the MERS phone number. Furthermore, documents drawn by outside counsel were also typically error prone and void of the correct language.
Year after year, recordable documents seem to remain a challenge for servicers. This year was no different. Back in a 2019 blog post, I highlighted them as one of the top 5 issues in 2018 and found time and time again. If you’d like more support in recordable documents and overall MERS compliance, you can reach out to me at gary.vandevender@loanlogics.com.
Continue to “monitor” b-logics for my next post in the series in a few weeks on data Integrity and reconciliation- to help you monitor the health of your MERS Compliance program.