By Prashant Gopal
Feb. 18 (Bloomberg) — 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.”

By Joe Sabo and Thom Weidlich – Jan 22, 2011 6:11 PM ET

Merscorp Inc., the parent company of Mortgage Electronic Registration Systems Inc., said R.K. Arnold has retired as chief executive officer and president, and Paul Bognanno will take the job on an interim basis.

Bognanno, former chairman of Radian Guaranty Inc., will lead the search process for a permanent replacement, Reston, Virginia-based Merscorp said in an e-mailed statement.

The MERS system, which Arnold helped develop, has come under fire in courts on the role it has, if any, in home foreclosures. It’s an electronic database of more than half of all the outstanding residential mortgages in the U.S. Merscorp has said it was created by the mortgage industry in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage assignments.

According to its website, MERS is owned by the largest lenders in the country including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., in addition to Fannie Mae and Freddie Mac.