WASHINGTON, D.C. (August 11, 2003)— The Mortgage Bankers Association of America’s (MBA) board of directors, at a meeting in Colorado on August 5, endorsed the creation of a single, national electronic note (eNote) registry system that will operate to establish the functional equivalent of a “holder in due course,” or official promissory note holder for the real estate finance industry. The board also endorsed using MERSCORP, Inc. (MERS) as the builder and provider of the eNote Registry to expedite its prompt and efficient establishment and effective operation.

“MBA and its members want to help facilitate the use of electronic mortgage notes in real estate finance,” said Michael F. Petrie, MBA vice chairman and chairman of MBA’s Technology Steering Committee. “The eNote Registry will permit additional streamlining of the origination, sale and servicing of mortgages that should result in lower costs for lenders, investors and consumers. And MERS is the obvious choice to operate a single eNote Registry, given its experience and proven track record with a similar registry.”

MBA’s Residential Technology Committee brought the endorsement resolution to the steering committee after studying the business needs and possible technology solutions. The committee ultimately recommended a single, national eNote Registry and developed a set of business requirements for such a registry. The research was accomplished by an industry-wide consortium represented by MBA’s eNote Registry Task Force. For a complete list of National eNote Registry requirements, please link to: http://www.mortgagebankers.org/technology/lib/eNote_Registry0307.pdf.

The impetus for building a single, national eNote Registry is grounded in the federal Electronic Signatures in Global and National Commerce Act (E-SIGN) and the Uniform Electronic Transactions Act (UETA). To encourage commercial businesses to migrate to electronic instruments, E-SIGN provides a safe harbor for meeting the requirements for the equivalent of holder-in-due-course status in the paper world. Under E-SIGN and UETA, those wishing to enforce an eNote must demonstrate that they control (own) the “authoritative copy” of the eNote and establish the location of the authoritative copy.

A problem in the eNote environment is that an infinite number of identically signed eNotes (which are now simply digital files, like a Microsoft Word document) can be generated or copied. The single, national eNote Registry will help controllers of electronic promissory notes qualify for the safe harbor provided by E-SIGN. This safe harbor also applies across industry lines, and as the commercial and multifamily mortgage industries begin to adopt electronic mortgages they will also be able to use the eNote Registry.

“The eNote Registry System will go a long way in maintaining important checks and balances for controllers of promissory notes as we move toward a paperless business environment,” added Petrie. “MBA is proud to endorse this new development as it brings us closer to our intention of creating more efficient and standardized systems and processes in the real estate industry.”

MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. MERS’ mission is to register every mortgage loan in the United States on the MERS® System. Beneficiaries of MERS include mortgage originators, servicers, warehouse lenders, wholesale lenders, retail lenders, document custodians, settlement agents, title companies, insurers, investors, county recorders and consumers.

MERS’ experience in operating a similar registry system for the residential and commercial industries and existing member agreements—including MBA members—that should only require modification, was also a plus. MERS’ high penetration into the real estate finance industry and proven management team track record in managing complex electronic vendor agreements and relationships, managing finances, and in handling legal challenges to an e-commerce solution makes it a clear choice to create and operate a national eNote Registry for the real estate industry.

MBA, along with Fannie Mae, Freddie Mac, mortgage lenders and other trade associations, are shareholders in MERS.

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