Realty Check

Published: Wednesday, 10 Jun 2009 | 12:30 PM ET

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You’ve probably never heard of it; I know I hadn’t until I read a New York Times article about it a few months ago, but think of it like that enormous warehouse you see at the end of "Raiders of the Lost Ark", where important artifacts and documents go to die.

Then think of your home mortgage as the lost ark. It’s called MERS, short for Mortgage Electronic Registration Systems, and it is the keeper of your loan. Nope, not your bank, lender, broker, investor, but Virginia-based MERS.

In order to save tons of cash on all the legal mumbo jumbo involved in documenting your loan and how it gets bought and sold and traded, lenders hire MERS, which is a private database, emphasize private. It is currently used by about 3,000 financial services firms.

Since MERS is the final resting place for loans, it is also the name on the foreclosure documents. As the foreclosure crisis deepens, savvy lawyers are helping borrowers avoid foreclosure by demanding to know who owns the loan in question. Judges want to know as well, but MERS wouldn’t or couldn’t say…until now.

This week MERS unveiled a new program that will “inform 60 million borrowers of changes to the owner of their loan.” Why? Well they had to. Under the “Helping Families Save Their Homes Act of 2009,” signed by President Obama, the “Truth in Lending Act” was amended to require that when a loan is sold, transferred or assigned, the new owner of the loan must notify the borrower in writing within thirty days.

“We are excited to support Congress and the Obama Administration’s efforts to help distressed borrowers stay in their homes,” said R.K. Arnold, MERS President and CEO in a press release. “This program will be another tool for the real estate finance industry and the Administration’s efforts to bring greater transparency and accountability to the mortgage lending process.”

I call that progress.

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