The banking regulator many in the housing industry fear more than the Consumer Financial Protection Bureausays that he is not taking his eye off nonbank mortgage servicers, and in fact he plans to go a lot deeper.
New York State Department of Financial Servicessuperintendent Benjamin Lawsky opened the second day of the Mortgage Bankers Association’s Secondary Markets Conference & Expo (#secondary14) on Tuesday, telling attendees he has grave concerns about the rise and growth of nonbanks who are snapping up mortgage servicing rights even as traditional banks are leaving the space in droves.
(Sidenote: The day started badly for Lawsky, as he was initially turned away by a guard from entering the MBA convention because he didn’t have convention credentials.)
“Recently…there has been an evolution in the mortgage servicing industry. Regulators are – appropriately, in the wake of the financial crisis – putting in place stronger capital requirements for big banks. In particular, they are giving those banks less credit for the – often distressed – mortgage-servicing rights on their balance sheets,” Lawsky said in prepared remarks. “Rather than building up stronger capital buffers in response, many large banks are instead offloading those MSRs to nonbank mortgage servicers – which are often more lightly regulated.”