High volumes combined with a lack of staff resulted in an increase in problematic quality assurance findings in 2021 MERS servicer audits conducted by MetaSource.
The overall exception rate — items which don't conform to MERS standards — increased to 19% in 2021 from 11% in 2020 and was level with 19% for 2019.
Maintaining detailed, up-to-date internal policies and procedures is a longstanding challenge for MERS users and that problem was heightened with the record originations activity during 2021, MetaSource stated. "About 90% of the members reviewed last year did not have detailed procedures," Rachel Pylant, MetaSource's director of MERS Services, said in a press release.
MERS, short for Mortgage Electronic Registration Systems,
Most often, the
The staffing shortages left many servicers to rely on people who were not familiar with what MERS wanted, especially regarding the level of detail it desired in its current policy and procedure expectations.
Servicers also failed to conduct monthly data or quarterly data reconciliations based on requirements and volume. In addition, they did not properly manage or monitor internal audits, subservicers and/or other third-party vendors through the reporting of quality control reviews to confirm that MERS' standards were being met.
"We did hear some comments to the effect of 'our subservicer handles that,'" Pylant said. "MERS' approach is that, as the [primary] servicer, you are ultimately responsible for everything that they do."
It's not just MERS that holds servicers accountable for their subcontractors' activities; long-standing
Many servicers racked up over 1,000 mortgage identifications in the MERS system for the first time. Any MERS member over that mark as of March 31, 2022, needs to have a third-party review and must meet other reporting requirements, such as performing monthly reconciliations.
