Magazine article American Banker

Viewpoint: Two ID Systems Better Together

Magazine article American Banker

Viewpoint: Two ID Systems Better Together

Article excerpt

Byline: R.K. Arnold

One of the lessons from the near-collapse of the credit market is the need for more accountability in both the primary mortgage origination market and the secondary market for mortgage-backed securities.

Mortgages and the securities created with them should be tracked over time and linked with the people and companies who create them to make our financial system more transparent.

There would be a relatively easy way to do this if two resources, which are already in place, were connected.

My company, Mortgage Electronic Registration Systems, maintains a national loan registry used by virtually all mortgage originators and servicers. In the Mers database, each mortgage has a 18-digit mortgage identification number.

The database tracks information regarding the originator, the borrower, the property, the loan servicer, the investors, and any changes of ownership for the life of the loan.

It currently tracks more than 60 million loans and is embedded in every major loan origination, servicing, and delivery system in the United States.

On the securitization side, the American Bankers Association has a program called Cusip that generates a nine-digit identification number for most types of financial instruments, including mortgage-backed securities. The number uniquely identifies the company or issuer and the type of instrument.

Together, these two identifiers solve the need for greater transparency and accountability - Mers tracks millions of individual loans, and the Cusip system tracks thousands of unique financial instruments produced each year. …

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