Bank Regulators Launch Examination of MERS

Federal bank regulators are conducting examinations of two companies that banks use to process foreclosures, amid concerns that banks cut corners on thousands of foreclosure documents, Acting Comptroller of the Currency John Walsh said Wednesday.

Walsh, in remarks prepared for delivery Thursday, said his agency is examining Reston, Va.-based Mortgage Electronic Registration Systems, MERS, in conjunction with the Federal Reserve, the Federal Deposit Insurance Corp. and the Federal Housing Finance Agency.

MERS, which lets lenders package and sell mortgages without recording each transaction with county property offices, has come under fire from critics, who say it doesn’t have the right to act as the legal representative of the mortgage owner in foreclosure cases.

MERS officials have said the company’s activities are legal in all 50 states and have held up under previous scrutiny.

The examination will asses MERS’ “corporate governance, control systems, and accuracy and timeliness of information,” Walsh said in testimony prepared for delivery Thursday at the House Financial Services Committee.

Walsh also said his agency is also participating in an examination of Jacksonville, Fla.-based Lender Processing Services Inc. (LPS). That probe is being led by the Federal Reserve.

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