Locke Lord QuickStudy: Prudential Regulations Proposed for Non-Bank Mortgage Servicers

On March 25, 2015, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) proposed a slew of new prudential regulations at the state level specific to non-bank mortgage servicing companies. The goals of the new regulations include: providing better protections for borrowers, investors and other stakeholders; increasing regulatory oversight over these entities; and improving transparency and other standards for the non-bank mortgage servicing industry at the state level.

State regulators are proposing a set of Baseline Prudential Regulatory Standards, which will be applied across the board to all non-bank mortgage servicing companies licensed by and operating in the states.  The Baseline Prudential Regulatory Standards cover the following eight specific areas of prudential regulation: capital; liquidity; risk management; data standards; data protection; corporate governance; servicing transfer requirements; and change-of-control requirements. Additionally, the state regulators also propose a set of Enhanced Prudential Standards, which would be applied to larger, more complex non-bank mortgage servicing companies.  Such enhanced measures include prudential regulations requiring additional planning, modeling, metrics and audit for: capital, liquidity; stress testing; and living will/recovery and resolution plans. 

The press release from the CSBS and AARMR, including a link to the full set of Baseline and Enhanced Prudential Standards can be found here. 

Locke Lord has a dedicated team of compliance and litigation lawyers who have significant experience handling various aspects of consumer finance, including mortgage servicing. Locke Lord lawyers regularly advise financial institutions on regulatory compliance matters, new product development and represent clients in regulatory enforcement matters, class actions and various lawsuits in the U.S. and abroad.  Visit our Consumer Finance Regulatory Practice Group website at or contact any members of the practice group below:

Thomas J. Cunningham  |  312-443-1731  |  tcunningham@lockelord.com
Simon A. Fleischmann  |  312-443-0462  |  sfleischmann@lockelord.com
Robert T. Mowrey  |  214-740-8505  |  rmowrey@lockelord.com
Thomas G. Yoxall  |  214-740-8683 |  tyoxall@lockelord.com