While many mortgage loan originators are focused on upcoming TRID rules that go into effect in October 2015, many are unaware of important changes to the Mortgage Electronic Registration System (MERS) rules of membership that include penalties for not adhering to their mortgage registration and transfer requirements.
Registration & Transfer Requirements
As has been the case, members have:
- 7 calendar days to register a new loan into the MERS system
- 5 calendar days to transfer interest after loans are sold on the secondary market
Note: Calendar days include holidays and weekends so, if a mortgage is purchased on a Monday and the next Monday is a holiday, transferring the interest on the following Tuesday would be a violation of MERS policies and procedures.
If members are found to violate these requirements, they will face fines based on the MERS penalty schedule. It is unclear on how much these fines are and how they vary as they have not yet been published in the Rules of Membership, but the minimum amount cited in latest draft of the MERS Penalty Schedule is $1,000.
Investor Requirements Supersede MERS
It's important to note that investors purchasing mortgages on the secondary market may have their own requirements in regards to registration and transfer deadlines that supersede MERS standards. For example, if an investor requests that loans be transferred to them in the MERS system within 4 calendar days, then MERS standards do not automatically grant a lender extra time to complete the transfer.