As the rest of the housing industry recovers, a little-known firm with a key role in U.S. mortgage finance remains stuck in limbo, wrestling with regulators, lawsuits and the departures of senior employees, Bloomberg News reported today. The turbulence feeds uncertainty about the fate of Mortgage Electronic Registrations Systems Inc. (MERS), which documents the ownership and resale of about half of U.S. home loans. A breakdown could force clients such as Fannie Mae and Bank of America Corp. to make costly changes to their loan businesses. Management hasn’t completed fixes promised in a broad 2011 U.S. settlement designed to stop foreclosure abuses, according to two people briefed on MERS’ operations. Regulators rejected one of the firm’s consultants as unqualified and are examining why four employees hired to help with reforms — including the chief legal officer — recently quit. The closely held Reston, Va.-based firm, a unit of Merscorp Holdings Inc., is also facing scores of lawsuits and state probes that challenge its business model as well as the legality of its filings in hundreds of county courthouses.
