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Without automation, monthly MERS reconciliation is an operational headache for servicers. Compliance teams are left to manually cull through thousands of MINs (Mortgage Identification Numbers), as well as format and process exceptions line by line. The result is compounding inefficiency and inaccuracy each and every month.
By letting automation take the heavy lifting out of MERS compliance, Servicers can experience significant improvements in reconciliation speed, accuracy and cost. With it you can:
Focus auditors only on the MINS with discrepancies. An automated system helps MERS staff extract the relevant data from the MERS database and servicing system in order to perform a 2-way data-to-data validation. Manual comparisons to hunt for discrepancies are no more. When a defect is found, auditors are made aware of which issues to address by a color-coded indicator. Access to the loan-level detail right on the screen also helps complete the monthly audit review more efficiently.
To start the process, once a servicer uploads the MERS MRE (MERS reconciliation export) and the corresponding servicing system data file, automated systems can process overnight to give servicers the most time possible to work through their corrections.
With the ability to then produce a discrepancy report with an outbound data correction file for both the MERS and servicing systems, servicers can be assured that the same errors do not show up the following month and can streamline the process for the data fix overall.
For the MERS system, automation generates a flat file that the servicer can post in their MERS FTP folder, which MERS sweeps each night for updates and makes the changes in that file automatically on the MERS system. This process too helps speed up the reconciliation process.
Eliminate user error. With manual processes errors are inevitable. Your eyes glaze over and miss a line, you copy the wrong data into Excel for analysis, or worse there are hundreds of formatting issues you can’t possibly identify from visual inspection alone. Automation handles all that. With the right programming, a reconciliation system can be set up to format and group different variations of a given word to ensure auditors are identifying true defects. For example, ST, STREET and STR can be linked together into what MERS defines as “functional equivalents.” Automated systems match for many types of functional equivalency, which keeps servicers compliant without forcing pure character-for-character matches in your data.
Automated reconciliation systems also provide summary reports in addition to detail reports to improve the overall accuracy of a Servicer’s reconciliation. These summary reports can help the servicer identify trends and month to month progress with MIN correction and reduction of discrepancies.
Repurpose your staff members. It’s not uncommon for MERS compliance to rest of the shoulders of a single person in an organization’s servicing department. When monthly reconciliation time is dramatically reduced by automation, staff skills can be leveraged for other, more complex servicing tasks that drive higher value to the organization. Automation also alleviates the pressures on the department to complete the reconciliation on time when that dedicated staff member is out of the office for an extended vacation or unexpected illness. Anyone else can easily perform the reconciliation with just a little training.
Servicers still working through thousands of MINS each month on spreadsheets should consider the benefits automation can bring to their organization.
PrimeWest Mortgage recently shared their success story using LoanLogics’ automated system for MERS compliance, LoanHD® MERS Audit Tool. Learn how it helped them stay compliant and efficient during an organizational transition. Click to read the case study.
