A group of state bank regulators is forming a task force to develop new mortgage servicing standards for non-bank firms, according to an announcement released Wednesday.
In its announcement, the Conference of State Bank Supervisors (CSBS) said it established the task force as a response to the explosive growth of non-bank servicers like Ocwen Financial and Nationstar Mortgage, both of which have moved to snap up servicing rights from depository firms and climb the ranks of the nation's biggest outfits.
As regulatory standards have become more burdensome, more of the country's largest banking firms have offloaded parts of their mortgage servicing rights (MSR) portfolios to these non-bank companies, who operate in a less stringent environment.
These movements—and the growth of the companies taking over that business—have captured the attention of some financial supervisors already, including Benjamin Lawsky, New York's superintendent of financial services, whose office has gone after Ocwen and Nationstar with allegations of borrower abuses and improper business practices.
With the founding of its new task force, CSBS says it hopes to analyze recent growth and developments at non-bank servicers, including corporate governance, operational risk, and changes to financial capacity they've experienced since the mortgage crisis. Through its study, the group seeks to come up with recommendations for prudential standards
"These firms provide a critical function in our housing finance system," CSBS said in its release. "It is important for the states to understand how this growth should inform changes to the regulatory framework."
Throughout the process, CSBS says it will engage with industry participants, federal agencies, and other stakeholders.
"There have been significant changes in mortgage finance following the mortgage crisis," said CSBS President and CEO John W. Ryan. "As the industry continues to change and policy makers contemplate housing finance reform, it is important we provide an appropriate regulatory framework to instill market confidence and ensure consumer protection."
A number of financial regulators and supervisors from various states have been appointed to the task force, including representatives from South Dakota, Texas, Minnesota, and Massachusetts, among others. Lawsky is absent in the list, though New York's Department of Financial Services will be represented by Executive Deputy Superintendent Dan Burnstein.
The group anticipates delivering an initial report to CSBS' board of directors in early December.