Even as loan servicers put the “robo-signing” controversy behind them, a paperless loan registration system developed for the mortgage industry in 1997 continues to face lawsuit after lawsuit challenging its authority to foreclose on mortgages on behalf of mortgage servicers.
While many of these cases are decided in favor of the system, known as Mortgage Electronic Registration Systems Inc. (MERS), mortgage technology company LoanLogics has come up with a service to help mortgage servicers avoid possible legal action by ensuring compliance with regulations governing MERS.
The Fort Washington, Pa.-based firm recently raised $11.2 million in funding from Boston-based growth equity firm Volition Capital and existing investors.
LoanLogics’ MERS Independent Third-Party Performance Monitoring and Annual Review Service offers something the firm says servicers have done without for too long — a way to audit and test their MERS controls and processes.
“Lenders have long recognized the importance MERS plays in helping save time, money and improving accuracy. At the same time, however, there is an extensive procedures manual that servicers have to familiarize themselves with, and that can prove to be a daunting task for many of them,” said Gary Vandeventer, who recently joined LoanLogics as vice president of loan servicing consulting, in a statement. Vandeventer is a former vice president of the product division at MERS.
“Our firm can deliver the expertise required to review MERS processes and procedures and ensure that clients are always compliant. We perform those services for them on a continuous basis.”
Some examples of regulations include a stipulation that servicers incorporate legal requirements for lien releases into their processes, and that a loan in bankruptcy has to be signed out of MERS before the bankruptcy process can begin, LoanLogics said.
LoanLogics’ service also examines if a client maintains a list of required time frames and can meet them, the company added.
“We make sure the rules covering MERS have been implemented and tested, and that allows our clients to feel confident that they can pass a MERS audit without any issues,” Vandeventer said.
“That’s a critical consideration in the wake of everything that has happened to the mortgage industry over the past few years.”