ABA Supports Proposed State Standards for Nonbank Servicers

ABA strongly supports a set of prudential regulatory standards for nonbank mortgage servicers recently proposed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Servicers, the association said in a comment letter yesterday.

“Nonbank servicers face many of the same risks as bank servicers, but are not subject to comparable safety and soundness, data protection, or corporate governance standards,” ABA said. “The absence of a consistent regulatory framework for these entities jeopardizes the stability of the mortgage finance system and creates risk for consumers and taxpayers.”

ABA noted that particular areas of concern include capital reserves, liquidity, financing transactions of mortgage servicing rights, taxpayer risk, servicer bankruptcy and data security. The standards — which would address these concerns, as well as corporate governance, risk management and changes in control — are intended to improve consumer protection and regularize supervision across jurisdictions.