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.