Top 5 Ways Loan Servicers Get into Trouble on MERS Annual Report
We know how annoying it can be when retailers start reminding you to get a head start on your holiday shopping in the middle of October. But December does have a way of sneaking up on you.
That was part of the message MetaSource Manager for MERS Operations Kelly Jensen shared with the audience at his panel on MERS reconciliation at last month’s MERS User Conference in Virginia.
Jensen doesn’t really care when you start your holiday shopping. But as an expert on the requirements of the MERS® system, he has seen too many loan servicers wait until the last minute to start planning for the annual report.
The MERS e-annual report, which must be filed by Dec. 31, is not an easy process to navigate under the best of circumstances. If you put it off and try to pull it together in a crunch, you can find yourself in almost every category of trouble, up to the possibility of a steep fine. Get started now and avoid these common errors that can leave servicers in trouble at the end of the year:
For a Worry Free Annual Report, Don’t Do This:
1. We’ll say it again because Jensen insists: Waiting too long to get started is the #1 way to get into trouble with your annual report. Now is the time to line up the third-party review required of servicers who process more than 1,000 loans per month.
2. Not doing timely reconciliation. This means monthly for large servicers and quarterly for those with fewer than 1,000 loans per month. Make sure you’ve got the team in place to stay on top of this. MERS expects you to be able to document this process.
3. Not having written procedures for MERS compliance. Your annual report must document that your practices follow clearly established policies and procedures.
4. Not auditing your annual quality assurance plan to ensure that you’re in step with its requirements.
5. Not having a big enough team in place to accomplish 1-4. Monthly reconciliation alone can require a team of two to three people (or more) if you’re doing it by hand.
Seven Books of Rules and Procedures
“People tend to underestimate the amount of work involved,” Jensen says. “There are seven different books full of rules and processes along with many Quick Reference Guides (QRGs), Layout Documents, User Guides and Recommendation Documents.”
But it doesn’t have to be crazy difficult, he says. Start early, and get into a cycle that will allow you to get started early again next year. Ideally, you’ll be ready to begin as soon as MERS releases its annual report guidelines at the end of June.
Third-Party Review Service
At MetaSource, we provide third-party review for MERS compliance (including preparing the e-annual report), along with a full suite of MERS QA services, including monthly data reconciliations using our mintrak2® monthly/quarterly data reconciliation platform, all of which can leave you facing the end of the year with confidence.