Agencies announce pilot project to improve supervision of lendersMortgagePress.comFederal mortgage regulation
Three federal agencies and two associations of state regulators
will cooperate in an innovative pilot project to conduct targeted
consumer-protection compliance reviews of selected non-depository
lenders with significant sub-prime mortgage operations.
The collaborative state/federal pilot is scheduled to begin in
the fourth quarter of this year and will focus on non-depository
subsidiaries of bank and thrift holding companies, as well as
Mortgage Brokers doing business with, or working for, these
entities. Additionally, the states will conduct coordinated
examinations of independent state-licensed sub-prime lenders and
their associated Mortgage Brokers. The agencies will select a
sample of entities under their respective supervisory or other
authorities for review or investigation. The agencies will also
share information about the reviews and investigations, take action
as appropriate, collaborate on the lessons learned and seek ways to
better cooperate in ensuring effective and consistent reviews of
these institutions.
The agencies collaborating on the effort are the Board of
Governors of the Federal Reserve System, the Office of Thrift
Supervision, the Federal Trade Commission, and state agencies
represented by the Conference of State Bank Supervisors and the
American Association of Residential Mortgage Regulators. By joining
together in applying a coordinated review program, the regulatory
agencies will be better positioned to evaluate and more
consistently assess sub-prime mortgage lending practices across a
broad range of mortgage lenders and other participants within the
industry.
The agencies will evaluate the companies' underwriting
standards, as well as senior management oversight of the
risk-management practices used for ensuring compliance with state
and federal consumer protection regulations and laws, including the
Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the
Truth in Lending Act, the Real Estate Settlement Procedures Act,
the Federal Trade Commission Act, and the Home Ownership and Equity
Protection Act. The agencies will initiate appropriate corrective
or enforcement action as warranted by the findings of the reviews
or investigations.
At the conclusion of the reviews, the agencies will analyze the
results and determine whether the project is to be continued. If
so, the agencies will determine the focus of future reviews at that
time.
For more information, visit www.federalreserve.gov,
www.ots.treas.gov, www.ftc.gov, www.csbs.org or www.aarmr.org.
