MERS Overview Enabling eCommerce for the Mortgage Industry December 2, 2005

1. MERS OverviewEnabling eCommerce for the Mortgage IndustryDecember 2, 2005 William C. Hultman, Senior Vice President MBA's Legal Issues in Mortgage Technology Conference November 30 – December 2, 2005

2. What is MERS? • MERS is an industry utility created by the mortgage industry to promote electronic commerce and eliminate paper-based processes. • MERS eliminates the need to prepare and record paper assignments when selling loans between MERS® Ready members. • MERS operates the MERS® eRegistry to provide liquidity for electronic notes.

3. What is MERS? Mortgage Electronic Registration Systems, Inc. (MERS) is the legal entity that is recorded in the county land records as mortgagee for loans registered on the MERS® System. MERS is a bankruptcy remote subsidiary of MERSCORP, Inc. which operates the MERS systems and processes, including the MERS® eRegistry.

4. Who Owns MERS? The mortgage industry represented by: • Fannie Mae Freddie Mac WMC • MBA ABN AMRO Wells Fargo • EverHome CCO Mortgage ALTA • Chase CitiMortgage United Guaranty • Corinthian Countrywide CMSA • GE Capital Guaranty Bank First American • HSBC Merrill Lynch MGIC • Nationwide GMAC-RFC PMI • SunTrust WaMu Stewart Title

5. How Does It Work? • The security instrument names MERS as mortgagee and nominee for the lender. • MERS serves as mortgagee in the county land records for MERS members. • When servicing transfers from one MERS member to another, no assignment is needed because MERS remains the constant mortgage lien holder over the life of the loan. • Chain of title is simplified because it begins and ends with MERS.

6. How Does It Work? • Members register loans on the MERS® System and then report transfers of beneficial and servicing interests as they occur. • MERS receives service of process and electronically forwards documents to the current servicer on the MERS® System. • Members foreclose and release liens in the name of MERS through our corporate resolution naming their officers as MERS officers.

7. MERS® Residential • Over 36 million loans registered since 1997 • Average 34,000 loans registered daily • Over 2,400 companies registering loans • Over 53% market share on all newly originated loans in the U.S. • Over 22 million active loans on the system • Accepted by all major secondary market investors and routinely included in rated securities.

8. MERS® Commercial • Same legal foundation as MERS for residential loans • System adapted for cross collateralized loan products • Over $27 billion (1,600 loans) registered since July 2003 • Live on MERS® Commercial: • Bear Stearns Banc of America Securities • Wells Fargo Ginnie Mae • Pinnacle Fin. RESMAE • LaSalle CBA Commercial • Morgan Stanley Midland Loan Services • Other lenders in the pipeline: • Lehman • GE Capital

9. What is the MERS® eRegistry? • The industry’s response to the requirements imposed by UETA and E-SIGN • The central location to identify the current Controller (holder) and Location (custodian) of the Authoritative Copy of an eNote

10. Definitions Paper World Electronic World Negotiable Instrument Transferable Record (“eNote”) Original Note Authoritative Copy of eNote Possession Control Lender/Investor/Holder Controller Custodian Location (eVault) Endorsement/Delivery Transfer of Control Holder in due course Transferable Record Audit trail Servicer Controller’s Delegatee

11. Why MERS? • Strategic imperative for MERS • Logical extension of the MERS mission and expertise • Potential additional revenue for MERS • Endorsed by MBA • Fannie and Freddie solution for uniform eNote • Supported by Covington & Burling legal opinion • Develop and promote industry standards

12. Assumptions • Industry investors will require eNote registration • eNote must refer specifically to the MERS® eRegistry • Participants must be members of MERS • MERS® eRegistry does not store eNotes • Multiple eVaults will be created to store eNotes • Funding of loans occurs outside the MERS® eRegistry

13. Registration & Sale Process

14. eNote Progress • Two lenders active and registering eNotes on the MERS® eRegistry: First Advantage and Ohio Savings Bank – over 150 registered to date; GMAC also ready • Fannie Mae is an active Investor and has purchased registered eNotes • Other lenders/investors in process: Freddie Mac, Countrywide and Wells • Vendors • Ready: DPS, Fiserv • In process: Encomia, Stewart, Digital Docs

15. Industry Standards • Mortgage Identification Number (MIN) • Organizational ID Number • Registry operator in Uniform eNote • MISMO XML data and SMARTdoc format • SISAC-accredited issuing authority for digital certificates • Policy reinforces standards for eClosing process • Signing methodologies (SPeRS) • Registration timeframes (Investors) • Solutions for modifications, addendums, riders, etc. • Enforceability and transferability of eNotes (SPeRS)

16. Potential Future Initiatives • Working with Countrywide and Stewart Title to facilitate timely delivery of lien releases to counties for our members • Working with Fannie Mae, Freddie Mac, Countrywide and other members to provide standardized delivery of electronic documents from one member to another.

17. Questions? More information is available from the MERS Web Site (WWW.MERSINC.ORG) under the “MERS® eRegistry” Tab.