MReport November 2017

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28 | TH E M R EP O RT FEATURE and CEO of MERSCORP said. Sharon Horstkamp, MERSCORP SVP, Chief Legal and Legislative Officer, and Corporate Secretary, who has been there from the beginning 20 years ago, and has witnessed first- hand the growth and the evolu- tion of MERS from a concept to a startup company to the success- ful organization that it is today, knows that the legal foundation of MERS is solid and that has been one of the reasons why the Company was able to persevere during this challenging time. Horstkamp notes that in addition to serving members, the MERS ® System is often used by local mu- nicipalities to identify the servicer responsible for maintaining vacant or abandoned properties. "Title agents, government agencies, and the general public can review certain information registered on the MERS ® System to obtain the name and contact information for the mortgage loan servicer, and in the case of the borrower, the name of the inves- tor as well, said Horstkamp." Because of its frequent use among these diverse enti- ties, allegations by the County Records surfaced that MERS was illegally reducing fees due to County Recorders and various County Recorders in multiple states began filing lawsuits. While a couple of the County Recording fee suits are still mak- ing their way through the courts, MERS has won dozens of the cas- es, settled in a few, and lost none, leaving the MERS ® System permis- sible in all counties in the U.S. Between then and now, Beckmann said he sees two obvious points of progress—market share, which is now higher than it was five years ago, and the recent investment by Intercontinental Exchange (ICE). ICE, a Fortune 500 company that operates a global ecosystem of markets and clearing houses while delivering information and listing services, announced in June 2016 it would acquire a majority equity position in MERSCORP and entered into a software agree- ment to modernize and enhance the MERS ® System. MERSCORP and ICE came to the agreement that it would make sense to have a strong resource from ICE join the senior team at MERS so that ICE could better understand MERS' people, prod- ucts, and customers, and MERS could better understand ICE's capability and culture. Brendon Weiss, now SVP and COO of MERSCORP, was uniquely suited for the job. Coming from the New York Stock Exchange (NYSE) and then ICE through its acquiring of NYSE in 2013, Weiss knew what it was like personally to go through a merger process—a transition that can come with some growing pains. According to Beckmann, though the change was—and can continue to be—difficult for some, most everyone knows that longer term, having MERSCORP be a part of a larger body that has the resources and capabilities to do more is good for the organization and good for the industry. "With the company stable and in need of a new technology plat- form, the consortium of MERS owners knew that turning to a well-capitalized company with ex- pertise in building secure market infrastructure would preserve and solidify the value that MERS pro- vides the industry," Weiss said. And with the robust quality assurance program put in place under the leadership of Beckmann and MERS data having over 99 percent accuracy, Weiss says the company is as stable as ever. Transitioning Into the New MERS A fter a year in his new role, Weiss said ICE has been able to make significant prog- ress on the migration to the new system, and has focused on additional initiatives such as launching a new Legal En- tity Identifier (LEI) service for Home Mortgage Disclosure Act (HMDA) filers and expanding the knowledge base of eNotes through the release of an eMort - gage video and a new eNote white paper written by a lead- ing law firm in the space. Much of his time has also been spent meeting with MERS® System members by attending conferences and visiting mem - bers onsite to hear about what MERSCORP can be doing better. But no matter how much you try to solve and address problems, issues still inherently occur. It's no secret that compliance costs have increased dramatically for lenders, servicers, and investors over the past eight years. Beckmann said the change in servicing rules—especially around default servicing—has raised costs. Capital requirements associated with holding servicing have gone up significantly, and there are risks associated with servicing and litigation enforcement risks that have led to high-profile deci - sions to reduce servicing portfo- lios, especially among the banks. As the origination market be- comes tighter and margins are being squeezed, Beckmann said it's natural to see more opportunistic servicing sales and transfers among mid-sized players who are looking to maintain their cash flow—somewhat of a counter-cyclical trend. But for every challenge, there's an opportunity, accord - ing to Beckmann. This will give MERSCORP a chance to move from the framework of catching up to the rules of the past to as- sisting members with implement- ing digital mortgages (eMortgages), which will help them automate processes, reduce paper, gain capital efficiencies, and cut back on manual reviews and handoffs Left to right: MERSCORP's Sharon Horstkamp, Bill Beckmann, and Brendon Weiss

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