"Federal regulators found several problems in the MERS system during their investigation last year. The company did not invest enough resources, staff or training to properly handle rising caseloads and failed to implement the needed oversight, according to a study. MERS signed consent orders with regulators in April pledging to make corrections.
But the real risks to Fannie come from potential new rules regulators or lawmakers may enact. Foreclosure costs increased dramatically in the first quarter as home values continued to fall, pushing loss severities at the already struggling mortgage giant up higher.
"If investigations or new regulation or legislation restricts servicers’ use of MERS, our counterparties may be required to record all mortgage transfers in land records, incurring additional costs and time in the recordation process," Fannie said in its filing."
I have always wondered why the banks dumped the loans into Fannie Mae.
What does Fannie Mae mean by "our COUNTERparties?"