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Last updated on September 8th, 2021 at 03:22 pm
On Tuesday the Conference of State Bank Supervisors (CSBS) board of directors issued the model standards, which may be adopted voluntarily by states after taking into account public feedback on a proposal that was issued in 2020.
The standards are similar to the capital and liquidity requirements proposed by the Federal Housing Finance Agency for mortgages serviced for Fannie Mae and Freddie Mac.
Even if the FHFA’s standards apply only to Fannie and Freddie, the CSBS standards have taken nonagency mortgages into account.
In a press release John Ryan, the bank supervisor group’s president and CEO said that the standards provide states with uniform financial conditions and corporate governance requirements for nonbank mortgage servicers and side by side preserving local accountability to consumers.
The CSBS said that the standards were made to provide increased transparency and risk management requirements to ensure that the nonbank servicers will maintain the financial capacity of serving consumers and investors in case of a liquidity crisis.
Net worth requirements of $2.5 million in the capital along with 25 basis points of the unpaid principal balance of residential mortgage loans serviced was set by the CSBS.
If they stick to the FHFA’s requirements for seller-servicers the nonbanks can meet the minimum net worth requirements. Organizations servicing less than 2,000 loans will not be included.
The standards can be adopted by states through legislation or regulation. The CSBS is working with states to make sure that the implementation is uniform.
A large number of nonbanks are now servicing 60% of government-backed loans the CSBS created the standards, it noted that a decade ago the figure was only 6%.
Even if the CSBS does not have the authority to make rules or regulations, the national group of financial regulators from all the 50 states, the District of Columbia, and some U.S. territories joined together to streamline state supervision.
Reference Source: AS Report
