MEDIA RELEASE / July 17, 2007

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

American Association of Residential Mortgage Regulators
1255 23rd Street, NW, Suite 200, Washington, DC 20037

National Association of Consumer Credit Administrators
P.O. Box 20871, Columbus, Ohio 43220-0871

State Financial Regulators Issue Joint Statement On Sub-prime Lending For State-Licensed Mortgage Lenders

WASHINGTON D.C. — The Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), and the National Association of Consumer Credit Administrators (NACCA) today issued a Statement on Sub-prime Lending to state agencies that regulate residential mortgage brokers and companies.

The Statement was developed in response to the federal financial regulatory agencies' Statement on Sub-prime Mortgage Lending that was released June 29. At that time, state regulators endorsed the statement and announced plans to issue a similar statement to cover lenders not regulated by the federal financial regulatory agencies.

The three state regulatory groups encourage the state regulatory agencies to adopt the guidance and issue it for use by their regulated entities.

The state regulatory organizations will be orchestrating a campaign to implement the guidance in all states. The following 26 mortgage regulators have stated they intend to expedite implementation: Alabama, California, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Vermont, Washington, and Wyoming.

"With our enhanced role on the Federal Financial Institutions Examination Council, the states were in a much better position for rapid adoption," stated Steven L. Antonakes, Massachusetts Commissioner of Banks and Chairman of the FFIEC's State Liaison Committee. "We believe this is the type of coordinated policy development Congress intended when they granted the states a vote on the FFIEC."

"We believe a coordinated effort among federal and state regulatory agencies is necessary to provide consistent and effective overall supervision of the mortgage industry," added Jeff Vogel, Wyoming State Bank Commissioner and current Chairman of CSBS.

The CSBS/AARMR/NACCA statement substantially mirrors the federal interagency statement agreed upon by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration, and supported by the FFIEC's State Liaison Committee. The interagency statement outlines clear and effective management practices, underwriting standards, and consumer protection provisions those institutions should follow when marketing and selling certain adjustable-rate mortgage (ARM) products to sub-prime borrowers.

However, the state mortgage regulators modified the statement to address issues particular to non-depository mortgage lenders and brokers who originate loans but do not hold them in portfolio. These lenders are generally licensed and regulated by the states.

In conjunction with the 2006 Interagency Guidance on Nontraditional Mortgage Product Risks, the statement offers sound underwriting and consumer protection principles that institutions and all residential mortgage providers should consider when making residential mortgage loans.

"The Subprime Statement will be an important tool for state mortgage regulators working to protect consumers in the subprime lending market," said AARMR Vice President David Bleicken.

Beyond the Statement on Sub-prime Mortgage Lending, state regulators also plan to issue Examination Guidance for state supervisors to use in evaluating state-licensed mortgage lenders' compliance with the new requirements on lending to sub-prime borrowers. The guidelines will be released on Tuesday, July 24.

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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.

AARMR is the national organization representing state residential mortgage regulators. AARMR's mission is (a) promote the exchange of information between and among the executives and employees of the various states who are charged with the responsibility, pursuant to the laws of the individual states, for the administration and regulation of residential mortgage lending, servicing and brokering; (b) assist in resolving conflicts of jurisdiction in relation to mortgage lending, servicing, and brokering; (c) promote a better understanding of mortgage regulation; (d) develop model legislation applicable to the administration and regulation of mortgage lending, servicing and brokering; (e) increase the knowledge and ability of those engaged in the administration and enforcement of mortgage regulation and those engaged in mortgage lending, servicing or brokering by organizing and sponsoring lectures, seminars, and training programs and by providing a forum for the exchange of information; and (f) do everything necessary, proper, advisable or convenient for the accomplishment of the Corporation's purposes and goals.

The National Association of Consumer Credit Administrators represents the officials of the states and territories of the United States of America and of the Dominion of Canada, or their associates, who, by law, are vested with authority and duty to administer laws which require regulation or supervision of consumer credit agencies in the United States of America and the Dominion of Canada.

CSBS Information Contacts:

AARMR Information Contacts:

NACCA Contact: