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County looks into residents’ concerns about Mortgage Electronic Registry System

August 29, 2011

Jefferson County Commission Chairman Paul Corbin

BROOKVILLE — For the past few months, Tea Party members have been asking the Jefferson County Commissioners to research a mortgage-recording system that they believe is causing the county to lose money.

MERS, a Mortgage Electronic Registry System, is set up to allow the assignment of mortgages without recording the assignment in the county recorder's office.

Because of the concern displayed by some Brookville residents, the commissioners asked the county's solicitor, Jim Dennison, to thoroughly examine MERS.

"It was our desire to let these folks know that we looked into it," Commission Chairman Paul Corbin said.

"We did our due diligence, and we didn't just push it aside."

MERS is a privately-held company that operates an electronic registry system designed to track mortgage ownership and rights of mortgaged properties.

According to Dennison, if the initial recording of a mortgage is sent to MERS, then MERS itself handles the tracking of all the mortgage assignments.

But he said a "potential problem" may arise when it comes time to foreclose.

"The foreclosing bank is not the mortgage bank of record in the recorder's office since the assignments were not recorded," Dennison said.

"Some states say the bank can't foreclose unless they are the holder of record in the recorder's office, and that is the basis of most of the challenges to the MERS system."

It also creates a title problem because it may be difficult to tell if a recorded mortgage has been foreclosed on or not since there is no record of the assignments in the recorder's office.

"As long as you can trace the chain of title, it's not a problem," Dennison said. "But with MERS, I'm not sure you can do that."

In addition, the county does lose out on collecting the recording fees for the assignments; however, there is no way to force people to record them, Dennison said.

But Dennison said the use of the MERS system does not yet appear to be a problem in Pennsylvania.

Janis Smith, vice-president of corporate communications for MERS, agreed.
"When a borrower goes into default, at that point, the loan is assigned out of MERS and into the lender's name," she said. "That assignment is recorded. As long as it is followed, there should never be a problem."
Dennison said that it appears that "most of the time," the assignments are being recorded.

Although he does not see a major issue with the electronic system at this time, the Attorney General is looking into it, and "stepping in on behalf of the homeowner," because MERS could potentially create problems in the future.

"It could become a big problem for homeowners down the road," Dennison said. "It's a property owner and bank problem — you may not be able to sell your house later."

In other business:
• The commissioners accepted the resignation of Tammy Sawyer as deputy warden for Jefferson County. They also accepted the resignation of Tom Crumlish as voter registrar for Jefferson County.

• Director of Economic Development John Weible asked Jefferson County residents to visit the development council's new Web site: www.jeffersoncountydevelopment.com.

• The commissioners approved invoices in the amount of $203,745.23 for the period Aug. 10 through Aug. 23 inclusive.

• The commissioners approved pending invoices in the amount of $137,652.45.

• The commissioners approved the actual gross payroll in the amount of $197,078.15 for payment for the period July 31 through Aug. 27 inclusive.

• The commissioners approved the tentative gross payroll in the amount of $198,000 for payment for the period Aug. 14 through Aug. 27 inclusive.

• The next commission meeting will be held at 10:30 a.m. Tuesday, Sept. 13.

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