CSBSAARMR National Mortgage Database Presentation to NAMB by MitchBurroughs

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									CSBS/AARMR
National Mortgage Database
National Association of Mortgage Brokers   March 2006




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Conference of State Bank Supervisors
•   Established in 1902
•   Professional organization
•   Advocate of dual banking system
•   Represents state banking regulators
    – 6,000 state-chartered banks (75% of all charters)
    – 33% of all bank assets
    – 37 state mortgage regulators
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American Association of
Residential Mortgage Regulators
• Professional organization
• Advocate of regulatory information exchange
• Represents state mortgage regulators




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Topics of Discussion
• Evolution of mortgage industry regulation
• National mortgage licensing system
• System benefits to industry




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Mortgage Regulation
• Mortgage industry changed dramatically in 20 years
• S&L industry replaced by brokers and lenders
• Number of state mortgage regulators
   – 1993: 18
   – 2006: 48 (all but AK & CO)



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Mortgage Regulator Survey
• State 2006 survey of 50 agencies with over:
    – 110,000 companies
    – 60,000 branches
    – 275,000 individuals
•   Application processing: 43 manual; 5 electronic
•   Fingerprinting: 18 FBI; 30 State databases
•   Credit reports: 25 states
•   Credit scores: 7 states                           6
Mortgage Regulator Survey
•   Testing/CE: 14/23 agencies
•   Experience required: 21 agencies
•   Minimum financial requirements: 31 agencies
•   Renewals: annual, bi-annual: 34/11 agencies
•   Annual/periodic reports: 36 states


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Industry Licensing Process
• No standard licensing software
• Manual, inefficient process
   – Applications
   – Amendments
   – Tracking licenses, regulatory changes & CE
• Requires significant resources

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Description ─ Mortgage licensing system
• Two primary goals:
  – Provide uniform mortgage application for every agency
  – Develop comprehensive licensing/supervisory repository




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Description ─ Mortgage licensing system
• System objectives:
  –   Streamline the licensing process
  –   Reduce the regulatory burden
  –   Provide increased accountability/consumer protection
  –   Reduce fraud



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Description ─ Mortgage licensing system
• Initiative does not contemplate:
   – Reciprocity
   – Uniform legislation
   – Who should/should not be licensed




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Who is working on Licensing System?
•   CSBS
•   AARMR
•   State agency task force and working group
•   Industry Representatives (lenders, brokers)
•   NASD (vendor)


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Mortgage Regulatory Taskforce
•   Chuck Cross, WA
•   Peter Hildreth, NH
•   Eric McClure, MO
•   Robert Braswell, GA
•   Don Saxon, FL
•   Jeffrey Vogel, WY
•   Gavin Gee, ID
                                13
State Working Group
•   California        •   New Hampshire
•   Connecticut       •   New York
•   Florida           •   North Carolina
•   Georgia           •   Oregon
•   Idaho             •   Pennsylvania
•   Iowa              •   South Dakota
•   Louisiana         •   Tennessee
•   Massachusetts     •   Texas
•   Maryland          •   Virginia
•   Montana           •   Washington       14
National Association of Securities Dealers
• Self regulatory organization (SRO) to securities
  industry
• Developed & operates 2 state licensing systems:
   – Securities ─ Central Registration Depository (CRD)
   – Investment Advisors Registration Depository (IARD)
• Contract to develop system specifications

                                                          15
Uniform Mortgage Applications
•   Company (mortgage lenders and brokers)
•   Branch locations
•   Control person
•   Individuals (loan officers)
•   Plus ─ state specific requirements (e.g., surety bond)


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Centralized functions
•   License application processing
•   License fee collection
•   Document collection (fin. statements, SOS, etc.)
•   Call center
•   Fingerprinting, criminal checks
•   Background checks
•   Surety bond and CE reporting
                                                       17
Licensing System Benefits ─ Company
• System generated reports
   – Standard and custom reports
   – Lists of company, branches, LOs, etc.
   – Consistent data across participating agencies
• Payment of licensing fees
   – ACH
   – Prepaid accounts
   – Credit card                                     18
Licensing System Benefits ─ Regulators
• Access to comprehensive repository
   – More licensee accountability
   – License information
   – Criminal and administrative sanctions
• Improved timeliness:
   –   Online application
   –   Centralized processing
   –   Applications are complete when received
   –   Approvals                                 19
Licensing System Costs
• Development cost born by state agencies ($4.3million)
• Operating cost:
   – License processing fee:
      • Application (company, branch & individual)
      • Annual renewal
   – Cost/benefit


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Ongoing & Next Steps
•   Information gathering
•   Beta testing of uniform application forms
•   Identify possible regulatory or legislative changes
•   FBI fingerprinting through system
•   System design
•   System development

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Timeline by Quarter
                2005                                            2006                                           2007

 1          2          3          4          1              2          3           4          1            2           3           4


 Working group dev/ Uniform Mortgage Forms (co,
          branch, indiv, control person)



                                                     Dev. Annual Renewal Form


                                 NASD high-level          NASD
                                    business             contract               NASD system development and deployment
                                  requirements             neg.


                                                                                Beta test MU Forms


                                                  FBI & NASD fingerprint
                                                        discussions


                                              Identify and make regulatory and legislative changes by state to participate in system
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Conference of State Bank Supervisors

        CSBS
        1155 Connecticut Avenue NW
        Suite 500
        Washington, DC 20036
        202-728-5711
        www.csbs.org


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