The American Bankers Association submitted comments to the Conference of State Bank Supervisors last week urging that state regulators align prudential standards for nonbank mortgage servicers with those of the federal banking agencies. ABA wrote that CSBS’ effort to develop comprehensive safety and soundness standards for nonbank mortgage servicers and investors would promote stronger protections for mortgage borrowers and investors, while enhancing the stability of the nation’s mortgage finance system.
The association added that “as a general matter, firms that provide financial services should receive equivalent regulation and oversight as do banks. This mitigates both, regulatory arbitrage and systemic risk, helping to ensure that activities important to market functioning will continue through periods of stress.”
The COVID-19 pandemic confirmed the need for the expanded oversight and regulation proposed by the CSBS, ABA wrote, adding that “going forward, it is imperative to ensure that all mortgage servicing operations understand and manage their liquidity and other risks to ensure they are able to remain financially and operationally robust during periods of stress.”