Should US state nonbank mortgage servicers be subject to “safety and soundness” standards of the type imposed by federal law on insured depository institutions, even though the nonbanks do not solicit and hold customer funds in federally insured deposit accounts or pose a direct risk of a government bailout? Well, state mortgage banking regulators think so. On September 29, 2020, the Conference of State Bank Supervisors, an organization made up of state regulators, released proposed prudential standards for state oversight of nonbank mortgage servicers. The CSBS pointed to a “changed nonbank mortgage market” as the driver of the proposed standards, emphasizing that nonbank mortgage servicers now service roughly 40% of the total single-family residential mortgage market. Comments from interested parties are due by December 31, 2020.
Read more in Mayer Brown’s Legal Update.