State mortgage regulators have determined that the level of regulation for non-bank servicers needs to be increased.
In order to better understand the servicing industry, the regulators have conducted an extensive review of the current mortgage servicing industry.
The review was conducted by the Mortgage Servicing Rights Task Force, which was formed last year with regulators from several states including some of the most populated.
Such increased regulations would provide better protection for home loan borrowers and mortgage investors as well as other stakeholders.
So the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators is seeking public comment on Proposed Regulatory Prudential Standards for Non-bank Mortgage Servicers.
Comments will be accepted for 90 days.
“As the regulatory authorities of non-bank mortgage servicers, state regulators are well positioned to design and implement a comprehensive prudential regulatory framework for non-bank mortgage servicers,” the notice stated. “State regulators have experience with and a responsibility for a diverse range of depository and non-depository financial services providers.”
The proposal includes
a set of Baseline Prudential Regulatory Standards. All non-bank servicers would be subject to the standards — which cover eight areas including corporate governance; servicing transfer requirements and capital.
In addition to providing stronger protections for all stakeholders, the proposal will enhance
effective regulatory oversight and market discipline over non-bank mortgage servicers.
Also, transparency, accountability and risk management will be enhanced, as will corporate governance standards.
The proposal additionally includes enhance prudential standards for large, complex non-bank mortgage servicing companies.
Among the nation’s largest non-bank servicers are Nationstar Mortgage LLC, Quicken Loans Inc., Ocwen Financial Corp. and Walter Investment Management Corp.
Combined, the four firms have seen their servicing portfolios grow from less than 0.6 trillion in 2012 to nearly $1.1 trillion as of last year.
“In recent years, non-bank mortgage servicers have grown in size, complexity, and importance,” CSBS President and CEO John W. Ryan stated in an announcement Wednesday. “These firms provide critical services to homeowners and investors, and the mortgage finance system as a whole. State regulators have primary credentialing and licensing authority over these non-bank mortgage servicers, and are working to ensure our regulatory expectations are well-defined and provide for a safe and sound industry.”
