Each month, you send in your mortgage payment to your loan servicer. But do you know who actually owns your mortgage loan? And does that even matter?
Mortgage loans are sold often, especially ones that have long terms, like 15-year and 30-year fixed-rate mortgages.
Most times, who owns your loan doesn't really matter. But it might if you want to refinance your mortgage under new programs offered by government-sponsored enterprises. To qualify for Freddie Mac's Refi Possible or Fannie Mae's RefiNow, your mortgage loan must be owned or serviced by Fannie Mae or Freddie Mac.
Fortunately, finding out who owns your mortgage is easy thanks to the Mortgage Electronic Registration System (MERS). Let’s take a closer look at what MERS is and how it works.
MERS is an electronic registry designed to track servicing rights and ownership interests in loans.
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.
This can be a labor-intensive process, requiring the owners of a loan to create an assignment with the county recorder every time a loan is sold.
The mortgage banking industry created MERS to simplify this process. This database tracks mortgages for member companies as they are sold from one bank to another financial institution. Loan owners who are members of MERS no longer have to submit assignments on their own.
Homeowners can visit the MERS website to look up the owner or servicer of their mortgages.
To do this, log onto this 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 or FHA/VA/MI 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, the Federal Trade Commission and other housing organizations.
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.
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, forcing you to move. 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 do 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.