GMAC Mortgage, LLC - Federal Reserve System
GMAC Mortgage, LLC
Mortgage Electronic Registration System
Prepared for the Board of Governors of the Federal Reserve System & the Federal Deposit Insurance Corporation
Revised December 2, 2011
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Table of Contents
Plan Overview for Mortgage Electronic Registration System ............................................ 3 Description and Use of MERS ............................................................................................... 4 Principles Guiding the Program ............................................................................................ 5 Consent Order Response.......................................................................................................6 Summary / Conclusion...........................................................................................................16 Appendix I - Project Summaries.......................................................................................... 17 Appendix II - Board Level Deliverables and Due Dates.................................................... 18 Appendix III - First Level Project Details .......................................................................... 18
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Plan Overview for Mortgage Electronic Registration System
This Program for the Mortgage Electronic Registration System action plan (the "Program") is established in response to the Consent Order dated April 13, 2011 (the "Order") among the Board of Governors of the Federal Reserve System ( the "FRB"), the Federal Deposit Insurance Corporation (the "FDIC"), Ally Bank (the "Bank"), Ally Financial Inc. ("Ally Financial" or "AFI"), and certain of Ally Financial's direct and indirect subsidiaries including Residential Capital, LLC ("ResCap") and GMAC Mortgage, LLC ("GMACM" and together with Rescap, the "Mortgage Servicing Companies"). Capitalized terms not defined in the Program shall have the meanings assigned to them in the Order.
The purpose of this Program is to set forth the actions and responsibilities necessary for GMACM to comply fully with its obligations under Section 9 of the Order (see the Principles Guiding the Proposal section of this Program). Section 9 of the Order requires that GMACM take the following actions:
Within 60 days of this Order, the GMAC Mortgage shall submit an acceptable plan to ensure appropriate controls and oversight of the Mortgage Servicing Companies' activities with respect to MERS and compliance with MERS' membership rules, terms, and conditions ("MERS Requirements") ("MERS Plan"). The MERS Plan shall include, at a minimum:
(a) Processes to ensure that all mortgage assignments and endorsements with respect to mortgage loans serviced or owned by the Mortgage Servicing Companies out of MERS' name are executed only by a certifying officer authorized by MERS and approved by the Mortgage Servicing Companies;
(b) Processes to ensure that all other actions that may be taken by MERS certifying officers (with respect to mortgage loans serviced or owned by the Mortgage Servicing Companies) are executed by a certifying officer authorized by MERS and approved by the Mortgage Servicing Companies;
(c) Processes to ensure that the Mortgage Servicing Companies maintain up-to-date corporate resolutions from MERS for all Mortgage Servicing Companies employees and third-parties who are certifying officers authorized by MERS, and up-to-date lists of MERS certifying officers;
(d) Processes to ensure compliance with all MERS Requirements and with the requirements of the MERS Corporate Resolution Management System;
(e) Processes to ensure the accuracy and reliability of data reported to MERS, including monthly system-to-system reconciliations for all MERS mandatory reporting fields, and daily capture of all rejects/warnings reports associated with registrations, transfers, and status updates on open-item aging reports. Unresolved items must be maintained on open-item aging reports and tracked until resolution. The Mortgage Servicing Companies shall determine and report whether the foreclosures for loans serviced by the Mortgage Servicing Companies that are currently pending in MERS' name are accurate and how
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many are listed in error, and describe how and by when the data on the MERS system will be corrected;
(f) An appropriate MERS quality assurance workplan, which clearly describes all tests, test frequency, sampling methods, responsible parties, and the expected process for open-item follow-up, and includes an annual independent test of the control structure of the system-to-system reconciliation process, the reject/warning error correction process, and adherence to the MERS Plan; and
(g) Inclusion of MERS in the Mortgage Servicing Companies' third-party vendor management process, which shall include a detailed analysis of potential vulnerabilities, including information security, business continuity, and vendor viability assessments.
In response to the Order, GMACM has prepared on behalf of the Mortgage Servicing Companies this Program for the Mortgage Servicing Companies relating to Item 9 of the Order and the requirements therein.
Description and Use of MERS
The mortgage banking industry created Mortgage Electronic Registration Systems, Inc. to streamline the mortgage process by using electronic commerce to eliminate paper and better enable mortgage asset trading. Mortgage Electronic Registration Systems Inc. ("MERS") is a bankruptcy-remote subsidiary of MERSCORP, Inc. whose sole purpose is to serve as mortgagee in the land records for loans registered on the MERS System and governed by the membership rules of MERSCORP, Inc. and MERS, Inc. In many cases, MERS is named as nominee in the county land records for the lender and servicer via specific language in the original security instrument. When MERS is named as the original mortgagee/beneficiary, it is by means of specific language in that original document (otherwise known as "MOM" language). Lenders or servicers may also assign security instruments to MERS as nominee if MOM language was not included at the time of origination ("Non-MOM" loans).
The use of MOM language in security instruments has been approved by Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA, the California and Utah Housing Finance Agencies, as well as all of the major Wall Street rating agencies. Fannie Mae and Freddie Mac adopted standard MERS security instrument language for use in their uniform documents for each state.
The MERS System, a proprietary electronic registry operated by MERS, although not the legal system of record, was designed to electronically track those security instruments incorporating MOM language at origination ("MOM Loans"), of non-MOM loans and, if applicable, future transfers of beneficial rights in the loans and those security instruments to subsequent investors. Because MERS remains the mortgagee or beneficiary in the land records, transfers do not require additional assignments unless transferring servicing to a nonMERS member.
Parties who benefit from the existence of MERS and its operation of the MERS System include mortgage originators, servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, settlement agents, title companies, insurers, investors, county recorders
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and consumers. These benefits are derived from an increase in efficiency in the residential mortgage transfer process as loans remaining registered on the MERS System avoid the need to file assignments in the county land records (except in circumstances where a MERS rule requires such an assignment). This lowers costs for lenders and consumers while better enabling transfer of beneficial ownership interest and mortgage servicing rights. Additionally, the MERS System provides benefits by serving as a central source of information and tracking for mortgage loans registered.
The Mortgage Servicing Companies utilize the MERS System when acting in a servicing, subservicing, investor, interim funder, custodial, or other MERS-associated capacity for residential mortgage loans.
Principles Guiding the Program
The cornerstone of the Program is the comprehensive review of compliance with the terms of the membership rules of MERS throughout the Mortgage Servicing Companies. This review was initiated and remains underway in order to facilitate the development of the Program. As a result of this review, the Mortgage Servicing Companies are planning, and in some cases implemented, the following actions relating to their ongoing use of MERS:
(1) Establishing a MERS Relationship Manager (completed)
(2) Establishing a MERS Council (completed)
(3) Developing and implementing the Mortgage Servicing Companies' MERS Policy and Procedures by October 1, 2011
(a) MERS Policy (b) MERS Certifying Officer Procedure (c) MERS Governance Change Management Procedure (d) MERS Servicing Transfer Procedure (e) MERS Beneficial Interest Transfer Procedure (f) MERS Foreclosure Activity Procedure (g) MERS Bankruptcy Activity Procedure (h) MERS Recovery Procedure (i) MERS Check Endorsement Procedure (j) MERS Lien Release Procedure (k) MERS Servicing Change Management Procedure (l) MERS Data Reconciliation Procedure (m)MERS Warehouse Lending Procedure (n) MERS Registration Procedure (o) Pledge Activity Procedure (p) MERS eNote Transaction Procedure
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