Merscorp Inc., operator of the electronic mortgage-registration system under criticism by consumer advocates amid a probe into lender foreclosure errors, replaced Bill Hultman as its corporate secretary.
General Counsel Sharon Horstkamp is taking over the job, Karmela Lejarde, a spokeswoman for the Reston, Virginia-based company, said in an e-mail today. Hultman remains a senior vice president and corporate division manager, she said.
Merscorp has made a series of changes as courts debate what role it has, if any, in home foreclosures. Chief Executive Officer and President R.K. Arnold, who hired Hultman in 1998, retired last month. The company also is examining reforms, including a proposed rule change on the company’s website Feb. 16 that would stop members from foreclosing in its name.
“They’re trying to clean up their house,” said Christopher L. Peterson, a law professor at the University of Utah in Salt Lake City who has written law-review articles critical of the company. “I’m not sure Hultman was the problem. It seems to me the problem is the business model.”
Lejarde declined to comment on the reason for the change in Hultman’s role. A telephone message left for Hultman wasn’t immediately returned.
Merscorp’s Mortgage Electronic Registration Systems Inc. contains more than half of all U.S. home mortgages. Members, which include the nation’s largest banks, log changes on the private database rather than filing mortgage assignments with county records offices each time loans change hands.
Consumer advocates have said that MERS masks the real owner of a loan and is subject to lapses and mistakes. The company’s role in the mortgage system has been highlighted after attorneys generals in all 50 states began investigating claims that banks and loan servicers used faulty documentation in foreclosures.
“With the MERS System, mortgage data is more accurate and title information more reliable,” the company said in an e-mail last month. “The MERS process creates accountability and transparency, helps keep costs low, reduces the risk of errors in recordkeeping and makes it easier to keep track of the lien if a loan is sold to other banks and investors.”
The company, which has been criticized for giving certifying authority to employees with little knowledge of MERS or the documents they’re signing, said this week that the company has created an “enhanced” process for testing and appointing certifying officers.
Hultman, as corporate secretary, deputized thousands of employees of member banks to sign documents on behalf of Merscorp as “vice presidents” or “assistant secretaries,” he said a November 2009 deposition in an Alabama case. The role also includes keeping minutes of board meeting and signing affidavits, he said.
Federal regulators will ask Merscorp. to make changes, and “we’re going to spend money to make those changes,” Hultman said during a Feb. 8 hearing of an Arizona State Senate committee.