In the nearly five years since they were first proposed, only 11 states have fully adopted the Conference of State Bank Supervisors' prudential standards for nonbank mortgage servicers.
Yet because of multistate examinations, these rules apply to 99% of nondepository mortgage servicers.
The standards first
"The prudential standards in the model framework as well as the individual state adoption to date applies to all investor types — there are no exemptions to coverage by investor," explained Kevin Byers, CSBS, senior director of nonbank supervision and enforcement.
Even with that small number, because of multistate examinations, 99% of the nonbank market is covered under this regulatory formation, Byers added.
"It's important to remember that states can adopt this framework through a variety of ways — legislation, regulation, guidance or exam procedures," Byers continued. "It gives them the ability to accept and leverage each other's work."
If anything, roughly double the number of states required have already adopted this framework to have "this fulsome market coverage," Byers explained.
Those that have fully put this on their books are: Connecticut, Maryland, Georgia, Arkansas, Wisconsin, Iowa, Minnesota, North Dakota, Montana, Colorado and Nevada.
Oregon and Washington have partially enacted the CSBS standards, according to a map on its website.
North Carolina is in process of adopting these, while New York has comparable standards.
New York's new law applies to servicers
On June 18, New York also
"Too many New Yorkers are being taken advantage of by mortgage servicers charging unnecessary high fees, debt collectors stealing Social Security benefits, and health insurance companies with unfair billing practices," James commented in a press release.
"The FAIR Business Practices Act will close loopholes that make it easy for New Yorkers to be cheated out of their time and hard-earned money," she added.
The new law would keep mortgage servicers, along with auto lenders and student loan servicers, from "deceptively steering people into higher cost loans," the AG press release said.
The impetus for the standards was the shift in servicing activities to nonbanks from depositories.
The changing role of federal oversight
The
"Numerous states have indicated their existing statutes allow for the prudential standards framework without new legislation and are implementing exam procedures only, and additional states have indicated a desire to pursue a legislative approach," said Byers.
"While we always welcome more state adoption, given the nationwide nature of financial condition and corporate governance requirements in the prudential standards framework, ensuring a networked approach to supervision is a critical operational component to ensuring broader coverage of the standards themselves."
