MEDIA RELEASE / October 24, 2007

Conference of State Bank Supervisors
1155 Connecticut Avenue NW, 5th Floor, Washington, DC 20036

CSBS Says Mortgage Reform Legislation at Federal Level Should Build On, Not Undermine, States’ Initiatives in Mortgage Supervision

WASHINGTON D.C. — In testimony today before the House Financial Services Committee, Massachusetts Commissioner of Banks Steven L. Antonakes said any new mortgage reform legislation should embrace state-federal efforts to better coordinate their supervisory efforts while building on state regulators’ expertise and experience in consumer protection.

Testifying on behalf of the Conference of State Bank Supervisors (CSBS) at a hearing on the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915), Antonakes said states have been active in mortgage regulation since the 1980s, when the first states passed mortgage broker licensing laws.

“All 50 states, plus the District of Columbia, have now adopted some form of regulatory oversight of the residential mortgage industry,” he said.

“We appreciate that the bill acknowledges and builds from work that is already being done in the states to protect consumers,” Antonakes said. He added that CSBS sees the need for improvement in the existing supervisory framework.

Antonakes commended sponsors of the bill for incorporating the states’ forthcoming mortgage licensing system and regulatory database, noting that CSBS had initiated the development of such a system four years ago. The core of the system is a database, which will house all pertinent information on state-licensed mortgage brokers, lenders and originators and serve as the foundation for states’ mortgage supervisory efforts. The system will launch on January 2, 2008.

“Ten weeks from today, our Nationwide Mortgage Licensing System (NMLS) goes live. The system seeks to improve the efficiency and effectiveness of the U.S. mortgage market, to fight fraud and predatory lending, to increase accountability among mortgage professionals, and to unify and streamline state licensing safeguards,” he said.

“All state-to-state coordinated supervision will be linked to the NMLS; therefore it is absolutely vital that any federal legislation support this system because of its essential role in our supervisory coordination,” Antonakes said.

Antonakes also urged the Committee to make sure that the states are included in any new federal rule-making processes for mortgage providers and suggested the Federal Financial Institutions Examination Council (FFIEC), already in place with a voting state representative, would be the most appropriate forum for developing new rules.

“Proper supervision of the residential mortgage market will require a coordinated effort from both state and federal authorities,” he said, noting three major regulatory initiatives currently under way, including:

• The publication of interagency guidelines for nontraditional and subprime lending and the subsequent issuance of parallel guidance for state-supervised entities, followed by state-developed model examination procedures to test and monitor providers’ adoption of these guidelines;
• The development of a multi-state protocol for examination and enforcement alliances to build upon the success of previous state predatory lending enforcement cases; and
• The development a state-federal pilot examination program which brings state examiners together with examiners from the various federal financial regulators to conduct simultaneous examinations of mortgage companies whose separate charters cross federal and state jurisdiction.

“States have acted to pass licensing laws and laws against predatory lending, and these laws now serve as models for the legislative proposals we are discussing today,” Antonakes said. “This role of states as models for federal action is a long-standing benefit of our dual banking system, and one CSBS has discussed on many occasions,” he added.

Antonakes’s testimony may be found at http://www.csbs.org/AM/Template.cfm?Section=Mortgage_Industry_Issues&Template=/TaggedPage/TaggedPageDisplay.cfm&TPLID=11&ContentID=6039

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The Conference of State Bank Supervisors is the nationwide regulatory organization for state banking, representing the bank regulators of the 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands. The CSBS is responsible for defending state authority to determine banking structure and the products and services state-chartered institutions can offer and for improving the quality of state bank supervision by providing department performance evaluation and accreditation programs and supervisory education/training programs for state banking department personnel.

CSBS Information Contact:

John Ryan, jryan@csbs.org , CSBS Executive Vice President, (202) 728-5724