What Is MERS For Mortgages?

Each month, you send in your mortgage payment to your loan servicer, but do you know who actually owns your mortgage loan? Mortgages are sold often, especially ones that have long terms, like 15-year and 30-year fixed-rate mortgages.

While ownership usually doesn’t matter, it can be important if you want to refinance under government programs like Freddie Mac’s Refi Possible℠ or Fannie Mae’s RefiNow™. These programs require your mortgage to be owned or serviced by government-sponsored enterprises Fannie Mae or Freddie Mac.

Fortunately, the Mortgage Electronic Registration System (MERS) makes it easy to find out who owns your mortgage. Here’s what you need to know about MERS and how it works.

What Is The Mortgage Electronic Registration System (MERS)?

MERS is an electronic registry designed to track servicing rights and ownership interests in loans. Established in the 1990s by the mortgage banking industry, MERS simplifies the process of transferring mortgage ownership and servicing by eliminating the need to record changes in ownership at county offices.

For consumers, this means they can easily look up who owns their mortgages through the MERS database. This ensures transparency and helps with situations like refinancing or selling a house. MERS also helps streamline the mortgage process and can reduce the administrative costs of borrowing a home loan.

How Does MERS Work?

When a bank or financial institution sells a mortgage, an assignment is prepared and recorded in the appropriate county land records. This assignment is a document that indicates the mortgage has been transferred to a new owner. Before MERS, this was a labor-intensive process, requiring the owners of a loan to create an assignment with the county recorder every time a loan was sold.

The mortgage banking industry created MERS to simplify this process. When a loan is registered with MERS, MERS becomes the mortgagee in the country’s land records and acts as a nominee for the actual lender and subsequent buyers.

So instead of recording every sale or transfer with the county, the change in ownership is recorded electronically in MERS. 

Loan owners who are members of MERS no longer have to submit assignments on their own. This significantly reduces paperwork and administrative costs. The MERS system also allows for more efficient tracking and management of mortgage ownership. It provides clarity and ease of access for both lenders and borrowers.

How To Use MERS To Look Up Your Mortgage

Homeowners can visit the MERS website to look up the owner or servicer of their mortgages.

To do this, log into the MERS ServicerID page on the MERS site. You can search with your 18-digit Mortgage Identification Number (which you can find on your loan statements or online loan portal), property address and borrower details. You may also be able to use your Federal Housing Administration (FHA) loan, Department of Veterans Affairs (VA) loan or mortgage insurance certificate number.

The MERS site also provides links to resources for homeowners provided by agencies such as Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA), the Federal Trade Commission and other housing organizations.

What Is The Role Of MERS In Real Estate?

In some mortgage transactions, a mortgage will state that MERS is the mortgagee, or the lender. If you sign a deed of trust instead of a mortgage, MERS could be named as the beneficiary of your loan.

In the lending industry, these loans are known as “MERS as original mortgagee” or MOM loans. Your lender might name MERS as the beneficiary or mortgagee to save time and recording costs. If a loan is designated as a MOM loan, lenders won't have to submit new assignments every time the loan is sold.

It's important to note that MERS never owns loan debt, even when it’s named as the mortgagee or beneficiary in a loan. It also doesn’t hold the loan's promissory note nor store the eNote – or electronic promissory note – from your eMortgage. Naming MERS as a mortgagee is just a way to streamline the process of recording and tracking loans as they are made and sold.

This won’t impact you as you’ll still send monthly payments to your lender or servicer.

The Role Of MERS In Foreclosures

If you stop making your mortgage payments, your lender has the right to begin foreclosure proceedings against your property. In a foreclosure, your lender takes over ownership of your home. The lender will then try to sell the home to recover its costs.

In 2011, MERS enacted a rule stating that foreclosures cannot be started in its name, even if MERS is listed as the mortgagee or beneficiary of a loan. If these MOM loans go into foreclosure, MERS will usually assign the loan back to the actual lender or the current owner of the mortgage. That lender will then be named as the party initiating foreclosure procedures.

Pros And Cons Of Having Your Mortgage Filed With MERS

MERS has little impact on homeowners paying off their mortgages. That said, there are some pros and cons to take note of.

Pros Of MERS

• Saves time and money: MERS reduces the need for repeated assignments and recording fees, which can potentially lower the overall cost of originating the mortgage for consumers.
• Simplifies mortgage ownership tracking: MERS simplifies the process of tracking mortgage ownership, which makes it easier for borrowers to find out who owns their loan.
• Streamlines mortgage processes: The electronic registration system streamlines mortgage servicing and transfer processes. This can lead to faster transactions and potentially quicker loan modifications or refinances.

Cons Of MERS

• Confusion for homeowners: If MERS is named as a beneficiary or mortgagee of your mortgage, you might mistakenly think that MERS has a significant role in your home loan. In reality, it’s mostly designed to assist lenders. You still make your payments to your mortgage lender or servicer. 
• Potential lack of transparency: Some consumers may feel like MERS lacks transparency because it separates the mortgage ownership from the local county records. This can make it difficult to trace the actual owner of the mortgage.
• Legal challenges: There have been legal challenges and controversies surrounding MERS, with some courts questioning its standing in foreclosure proceedings, which can create uncertainty for borrowers.

Other Ways To Determine Who Owns Your Mortgage

When your mortgage is transferred to a new owner, the buyer must send you a notice. You might have to send your mortgage payment to a new address or use a new website to make your payments if you pay online. But often, you’ll continue to send your payments to the same mortgage servicer that you’ve always sent them to. If your loan is sold, it doesn’t mean that your mortgage servicer will change.

Aside from consulting MERS, you can discover who owns your mortgage in several ways, either by searching on the websites of Fannie Mae or Freddie Mac or calling your mortgage loan’s servicer.

Contact The Mortgage Servicer

You can start your search by contacting the company that services your mortgage. This is the company that you send your mortgage payment to each month. For example, if your home loan is with Rocket Mortgage®, there are several ways you can communicate with us to get your questions answered.

If you’re still sending in a paper statement and mailing checks, you can find your mortgage servicer’s contact information on your statement as well as your loan number.

If you pay your mortgage online, log into your account and you’ll find your loan number on your payment portal. You should also be able to contact your loan servicer online.

Use Digital Lookup Tools

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

To use Fannie Mae's Loan Lookup Tool, you'll need to enter your name, street address and the last four digits of your Social Security number. Once you do, Fannie Mae will tell you if it owns your mortgage. Freddie Mac's Loan Look-Up Tool works in the same way.

Why Does It Matter Who Owns Your Mortgage?

Knowing if Fannie or Freddie owns your home can be especially important if you want to refinance your mortgage loan but don't have enough home equity

Lenders usually require that you have at least 20% equity in your home to refinance. Freddie Mac and Fannie Mae, though, now offer refinance programs that allow you to refinance even if you have 3% equity in your home – Fannie Mae’s RefiNow™ and Freddie Mac’s Refi Possible℠. But your loan must be owned by Fannie or Freddie to access these programs.

The Bottom Line

The Mortgage Electronic Registration System (MERS) is an electronic registry that tracks the servicing rights and ownership interests of residential and commercial mortgage loans. As a homeowner, you might never need to think about MERS. However, this electronic registry is a way to save time when loans are bought and sold.

Ready to take the next step in your homeownership journey or refinance your current loan? Start your mortgage application today to find the best option for you.