Multistate Regulatory Initiatives Mark Pearce President, American Association of Residential Mortgage Regulators Residential Mortgage Regulators Chief Deputy Commissioner of Banks State of North Carolina State of North Carolina
State Licensing of Non-banks LICENSING 2 Multistate Regulatory Initiatives May 2010
States in NMLS 60 60 49 50 45 40 32 30 22 22 20 13 7 7 10 10 0 Jan ‐ 08 J 08 J l 08 Jul ‐ 08 J Jan ‐ 09 09 O t 09 Oct ‐ 09 J Jan ‐ 10 10 J l 10 Jul ‐ 10 3 Multistate Regulatory Initiatives May 2010
NMLS Population Company, 13,531 Branch, 16,446 , Individual, 89,887 4 Multistate Regulatory Initiatives May 2010
State SAFE Legislation Washington Maine Montana Vermont North Dakota Minnesota Oregon Oregon New Hampshire Idaho Wisconsin Massachusetts South Dakota New York Michigan Rhode Island Wyoming Connecticut Iowa Pennsylvania New Jersey Nebraska Nevada Indiana Ohio Delaware Utah Utah Illi Illinois i (DFI & Maryland West (DFI & DRE) SOS) Colorado Virginia District of Columbia California Virginia (DFI, DOC Kansas Missouri Kentucky & DRE) North Carolina Tennessee Oklahoma Arizona South Arkansas New Mexico New Mexico Carolina Carolina Legislation passed Mississippi Georgia Alabama Legislation pending Hawaii Texas (OCCC & SML) No legislation Louisiana Florida Florida Alaska Virgin Islands Puerto Rico 5 Multistate Regulatory Initiatives May 2010
Major SAFE Act Issues • Boundaries of Licensure Requirements – Non-profits (Habitat) – Contract underwriters and processors C t t d it d – Servicers and loss mitigation staff – Loan modification companies – Loan modification companies – De minimis exceptions for various professions or transactions • Avoiding new regulatory gaps in interpretations of SAFE Act among federal regulators – Example: Definition of “employee” for non-bank licensing and bank registration 6 Multistate Regulatory Initiatives May 2010
Multistate Examination and Enforcement EXAMINATION AND EXAMINATION AND ENFORCEMENT 7 Multistate Regulatory Initiatives May 2010
Cooperative Protocol Washington Maine Montana Vermont North Dakota Minnesota Oregon New Hampshire Idaho Wisconsin Massachusetts South Dakota New York Michigan Rhode Island Wyoming Connecticut Iowa Iowa P Pennsylvania l i New Jersey Nebraska Nevada Ohio Delaware Indiana Illinois Utah DFI/SOS West Maryland DFI/DOB Colorado Virginia California District of Columbia Virginia Kansas Missouri Kentucky North C Carolina li Tennessee Oklahoma Arizona South Arkansas New Mexico Carolina Georgia Alabama Hawaii Mississippi Texas Texas OCCC/SML Louisiana Alaska Florida Ratified 2009 2008 Agreement Puerto Rico 8 Multistate Regulatory Initiatives May 2010
The MMC • Multistate Mortgage Committee – Composed of 10 State representatives appointed by AARMR and CSBS AARMR and CSBS – Identify largest (and most multi-state) non-bank mortgage companies – Establish examination schedule, common protocol, and multistate examination teams – Two examinations completed with eight more expected T i ti l t d ith i ht t d by end of 2010 – First public report available on CSBS website: First public report available on CSBS website: http://www.csbs.org/Content/NavigationMenu/Home/20 09MMCREPORTTOSTATEREGULATORSFinal.pdf 9 Multistate Regulatory Initiatives May 2010
Increased Use of Data • NMLS annual call report – Enables risk profiles to assist MMC examination priorities priorities • Loan-level data through RegulatorConnect – NC has pilot tested automated compliance review of – NC has pilot tested automated compliance review of loan-level tapes beginning mid-2009 – PA and WA and other regulators notifying licensees of expectations regarding loan-level data capabilities – Integration with lenders’ LOS systems to increase consistency and reduce compliance burdens consistency and reduce compliance burdens 10 Multistate Regulatory Initiatives May 2010
Multistate Enforcement • Taylor Bean & Whitaker (June 2009) – Nontraditional underwriting of 2006 loan book – 14 State regulators participating 14 St t l t ti i ti – $9 million settlement, loan review, improved controls • CitiFinancial (March 2010) • CitiFinancial (March 2010) – Failure to report loans to HMDA – 35 State regulators participating 35 State regulators participating – $1.2 mil settlement, improved controls, fair lending review 11 Multistate Regulatory Initiatives May 2010
Multistate Foreclosure Prevention Efforts FORECLOSURE PREVENTION FORECLOSURE PREVENTION 12 Multistate Regulatory Initiatives May 2010
SFPWG • State Foreclosure Prevention Working Group – Close partnership with State Attorneys General – Met with 20 largest servicers of subprime mortgage M t ith 20 l t i f b i t loans in Fall 2007 – Two years of data collection from 13 servicers (non- Two years of data collection from 13 servicers (non banks’ active and legacy portfolios) – Four public reports, available on CSBS’ website: htt http://www.csbs.org/Content/NavigationMenu/Home/StF // b /C t t/N i ti M /H /StF oreclosureMain.htm 13 Multistate Regulatory Initiatives May 2010
Loss mitigation gap 1 800 1,800 ousands 1,600 1,400 , Tho 1,200 1,000 800 600 400 400 200 0 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb 07 07 08 08 08 08 08 08 09 09 09 09 09 09 10 Seriously Delinquent Loans y q Loss Mitigations in Process g 14 Multistate Regulatory Initiatives May 2010
Principal reductions rare 10% 10% 20% 30% 40% 50% 60% 60% 70% 80% 80% 0% Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Principal Reduction Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sept 08 Oct 08 Nov 08 Dec 08 Payment Reduction Jan 09 Feb 09 Mar 09 Apr 09 May 09 Multistate Regulatory Initiatives Jun 09 Jul 09 Aug 09 Sept 09 Oct 09 Nov 09 Dec 09 May 2010 Jan 10 15
Foreclosures to come… 2,000 2 000 ousands 1,600 Tho 1,200 800 400 0 0 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb 07 07 08 08 08 08 08 08 09 09 09 09 09 09 09 Foreclosed In Foreclosure Seriously Delinquent 16 Multistate Regulatory Initiatives May 2010
North Carolina Initiatives NORTH CAROLINA NORTH CAROLINA INITIATIVES 17 Multistate Regulatory Initiatives May 2010
Foreclosure Prevention • State Home Foreclosure Prevention Project – Servicers required to notify homeowners and State court system 45 days in advance of foreclosure filing for court system 45 days in advance of foreclosure filing for certain subprime loans – NCCOB manages outreach effort to connect seriously delinquent homeowners to one of 34 non-profit housing counseling agencies – NCCOB provides back office support on hard cases NCCOB provides “back office” support on “hard cases” – Results since implementation in November 2008 • 10,000 homeowners received foreclosure prevention p counseling • 4,000 homeowners able to avoid foreclosure • $350 million in economic benefits to investors and neighboring $350 million in economic benefits to investors and neighboring property owners 18 Multistate Regulatory Initiatives May 2010
Recent Rulemaking • Foreclosure and Servicing Rules – Rule 702: Communications Rule – Rule 703: Foreclosure Hold Rule R l 703 F l H ld R l • Origination Practices rules currently “on hold” for further development further development – Proposed Rule 601 related to broker compensation – Proposed Rule 602 related to lenders affiliated with Proposed Rule 602 related to lenders affiliated with homebuilders – Proposed Rule 603 related to early disclosures for standard mortgage products 19 Multistate Regulatory Initiatives May 2010
Current NC Concerns • Non-bona fide discount points • Compliance with FHA guidelines and requirements i t • Origination practices with affiliated manufactured and traditional homeb ilders and traditional homebuilders • Net branching and weak supervision • Ability of servicers to effectively assist Abilit f i t ff ti l i t homeowners seeking loss mitigation assistance • Mortgage fraud M t f d • Reverse mortgage lending 20 Multistate Regulatory Initiatives May 2010
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