MEDIA RELEASE / March 2, 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

CSBS AND AARMR SUPPORT INTERAGENCY STATEMENT ON SUBPRIME LENDING

WASHINGTON—The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) offer their strong endorsement of the proposed Interagency Statement on Subprime Mortgage Lending. 

The statement, proposed by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA) and supported by the FFIEC’s State Liaison Committee, outlines clear and effective management practices, underwriting standards, and consumer protection provisions that institutions should follow when marketing and selling certain adjustable-rate mortgage (ARM) products to subprime borrowers.

As the products and practices of the residential mortgage industry continue to evolve, state and federal financial regulators are concerned about decreasing underwriting standards and inadequate consumer protection provisions.  In particular, regulators are concerned that borrowers may not fully understand the characteristics and risks of the loan products they have purchased.

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

CSBS and AARMR believe a coordinated effort among federal and state regulatory agencies is necessary to provide effective supervision of the residential mortgage industry.  This commitment to provide consistent supervision of the mortgage industry is most clearly illustrated by the parallel Guidance on Nontraditional Mortgage Product Risks developed by CSBS and AARMR which has been adopted by 26 states plus D.C. and applies to state-licensed mortgage providers.

The Agencies have issued the proposed statement for public comment. CSBS and AARMR are particularly interested in comments regarding the applicability of the statement to state-licensed and supervised residential mortgage brokers and companies. CSBS and AARMR intend to develop a parallel statement for state supervisors to use with state-supervised entities.

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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.

CSBS Information Contacts:

Michael Stevens mstevens@csbs.org, CSBS Senior Vice President, Regulatory Affairs (202) 728-5701

Catherine Woody cwoody@csbs.org, CSBS Assistant Vice President, Regulatory Affairs (202) 728-5733

AARMR Information Contacts:

David A. Saunders, dsaunders@aarmr.org, AARMR Executive Director (202) 521-3999

George Kinsel, ghkinsel@dllr.state.md.us, AARMR President (410) 230-6086

Leslie Pettijohn, leslie.pettijohn@occc.state.tx.us, AARMR Treasurer (512)-936-7640