AARMR No Protection For Savanah Scares

Conference provides opportunity for regulators to interact, discuss common topics

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Regulator conferences have been on hold for almost two years. But in late November, the American Association of Residential Mortgage Regulators (“AARMR”) held their Annual Conference in Savannah Georgia. The city is called the most haunted city in the United States. While Savannah proved to be a pleasant host, but evening walks were not the only source of scary stories.

The AARMR Conference provided an opportunity for regulators from more than thirty states to interact with their industry associates with a cumulative number of in-person attendees in the mid-180s. The conference kicked off with a welcome reception on the evening of November 30th and the first full day of sessions was held on December 1st. The full day of events was highlighted by three state hot topic sessions.

Common topics of note were unlicensed activity as well as use of unlicensed independent contractors for processing support. Advertising issues including missing state required notices and missing NMLS numbers were also mentioned. Several mentions of recent examination trends for failure to comply with state specific requirements including record keeping, state specific disclosures and the degrading quality of financial reporting. Several examiners agreed about the concern to increasing errors in Mortgage Call Reports. Common to all sessions were brief discussions about the dramatic increase in number of licenses on the NMLS and system issues delaying renewal work.

The highlight of the hot topic sessions were announcements from Maryland and Kansas that their departments would be introducing legislation to eliminate branch licensing. Regulators reinforced that companies still need to know where their originators are conducting business and will notify the regulator where their branches are located. However, the full details of the bills and how each state would handle the offset of the loss of branch licensing revenue was not fully discussed.

Examining Exams

Examinations were a featured theme beyond the hot topic sessions with several states discussing the use of the State Examination System (“SES”) during hot topics as well as specific session on lessons learned from the One Company, One Exam (“OCOE”) pilot that was ongoing. States shared that they were still testing the SES or just onboarding to the system. This fact was evident in the discussion of the challenges learned from the use of the SES and the OCOE process. Several states were onboarded to the SES just before the OCOE and that weekly training events were still being held for examiners during the examination.

Clearly the discussion showed that the regulators understood that the OCOE pilot was putting tremendous pressures on to the company being examined, though the company name was never mentioned. New examiners and recently onboarded states provided many challenges to the company and process. The lessons learned would be brought back and the process evaluated before the next OCOE was attempted.

Industry panel sessions and the attendee round table finished out the conference. Topics discussed were NMLS system delays, branch licensing flexibility, state CRA requirements and more. AARMR has announced plans for a full conference in August of 2022 in Indianapolis.