Report Shows Progress Being Made to Improve Supervision of Reverse Mortgages

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) published the first report on multi-state examination efforts to improve supervision of the mortgage industry. 

The Multi-State Mortgage Committee Report to State Regulators identified the following key steps states have taken over the past year:

  • The states formed the Multi-State Mortgage Committee in December 2008 to represent the states in the coordination of examinations of the largest multi-state mortgage companies.
  • All 50 states plus D.C. and Puerto Rico have adopted the nationwide protocol for information sharing and coordination of multi-state exams.
  • The states have begun the first comprehensive multi-state examination of a mortgage company and anticipate expanding this effort significantly next year.

This progress of the coordination of multi-state examination efforts builds on the states’ success in developing a nationwide mortgage licensing system in January 2008.  Forty-six states are scheduled to participate in the nationwide licensing system by January 2010, with all states expected to participate by 2011 said a company statement. 

Currently, over 11,000 companies and 66,469 loan originators are licensed in the nationwide system.

“This initiative is about uniformity in approach and modernization of processes. States have been hard at work for nearly two years delivering an examination format that is not only effective, but efficient for regulators and stakeholders,” said Steve Antonakes, Massachusetts Commissioner of Banks.

“This report is the latest demonstration of the major steps states have taken to work together to improve supervision in the mortgage industry,” said Mark Pearce, AARMR President and Deputy Commissioner of Banks for North Carolina.  “These efforts have significantly improved our ability to protect consumers from abusive practices in the mortgage industry,” said Pearce.

According to the report, CSBS/AARMR released the Reverse Mortgage Examination Guidelines (RMEGs) in December 2008 as a uniform tool for the review of institutions originating and funding reverse mortgages. CSBS/AARMR set forth three general uses for the RMEGs:

  • A set of examination guidelines that regulators can use to determine whether entities in the reverse mortgage loan industry are operating in an appropriate manner.
  • Uniform standards applicable for multi‐state examinations and enforcement actions or for review by one state of another state’s Report of Examination.
  • Consistent and uniform guidelines for use by institution and broker in‐house compliance and audit departments.
  • As with the MEGs, the MMC will incorporate the RMEGs into the MMC Uniform Examination Manual.

The RMEGs were developed as collaborative effort of several states working under the Reverse Mortgage Regulators Committee.

Multi-State Mortgage Committee

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