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The Mortgage Bankers Association will resume running the day-to-day operations of its MISMO subsidiary on Dec. 1, taking the task back from Merscorp. Discussions on the move intensified amid MERS' regulatory scrutiny.
September 23 -
A district attorney in Dallas is challenging the mortgage industry's system for electronically transferring mortgages, alleging that Bank of America and others filed false documents through and circumvented mortgage registration requirements.
September 22 -
Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.
August 31
Bill Beckmann begins each week with a flight from his home in St. Louis to Washington, D.C. The weekly flights have become a routine of sorts since he took on a job that of late, has become among the most daunting among executive jobs in the mortgage industry: President and chief executive of Merscorp Inc.
The company, located in the capital suburb of Reston, Va., runs MERS, the Mortgage Electronic Registration Systems. Its MERS System is a database that tracks both mortgage servicers and the corresponding promissory note owners for 60% of the nation's residential mortgages.
Merscorp was created and is owned by the biggest players in the mortgage industry, including the government-sponsored enterprises and the nation's largest mortgage lenders and servicers—like Citi, where Beckmann spent 25 years of his professional career, including time serving as the president of its CitiMortgage unit from 2005 to 2008.
As the foreclosure crisis mounted, the role MERS played in the process has come under fire from borrower advocates and regulators, ultimately leading to a consent order issued by federal regulators two weeks before Beckmann's hiring was announced.
In an exclusive interview with BTN and American Banker affiliate Mortgage Technology magazine — his first interview with any members of the media since taking on this new role — Beckmann explains how he's leading the effort to overcome Merscorp's challenges and why he believes in the future of MERS.
The full interview with Beckmann appears in
MT: What stands out about what you know now inside Merscorp that you didn't know before you started?
Beckmann: That MERS really is a small company. We're up to 65 people now, from 50 at the beginning of the year.
For something so important, with 60% market share in the U.S. of a back office utility function for all the key players, it really is a small company.
MT: What are some of the ways Merscorp is changing under your leadership?
Beckmann: We're transitioning from almost like an association to really a vendor of Fortune 500 companies. We view our role as supporting the members' activities. That's what we were formed to do and we're going to continue to do it well. One of our challenges has been, in doing that, is our name is on all those transactions.
We did not have a robust process to make sure that all the data on our system was accurate, timely and reliable. Our view was that is the servicer's data and they're relying on it for their own transactions, they're using their own systems, so we don't have to double check.
Well, the regulators took the perspective of, "No. You've got your name on it. It's your system. It is being used, but you don't know exactly the way it's being used, so there's no reason those two things shouldn't line up."
So we've put in place a process now that we're going to make sure that since we run a database, that's what we do, it's going to be perfect.
MT: Do you think it's fair for people to ask why that wasn't in place to begin with?
Beckmann: I think it's fair. I think the answer is the organization grew up over a period of 15 years and it was never questioned, much in the same way I think that some of the robustness of servicing processes at servicers got questioned when they got put under stress.
The process worked for a long time and when it was put under stress, people said, "Look, that's just not good enough for the world we live in now. It has to stand up to a different level of scrutiny."
If anything, the regulators got convinced that we do has value. But they said, "If it's going to have value and you're going to use it, it has to meet these criteria because you're a critically important back office function to banks." We've never been held to that standard before.
MT: Is the MERS System still a viable component of the mortgage industry?
Beckmann: What's the alternative? Is the alternative to go back 20 years and start recording these things on paper again? There is no good alternative.
MERS was formed for a valid purpose. There were challenges with the accuracy, timeliness and cost of paper-based recording. None of that has changed.
Yes, there have been some challenges to the governance-related issues at MERS, but we're fixing those and the underlying business model hasn't changed at all. If anything, it's more important than ever.
