Who Regulates Your Lender?
Home owners experiencing problems with their lenders can find the who-regulates-whom system confusing. The answer depends on whether the lender is a federally regulated and insured commercial bank or savings bank, or if it is a state-regulated mortgage company that is not affiliated with one of those banks.
So, who regulates your lender?
- The Federal Deposit Insurance Corp.’s Institution Directory lists the banks the FDIC regulates.
- If your lender is not listed with the FDIC, chances are it is state regulated.
Lenders feel the heat
In 2007, several states passed tougher laws and regulations on mortgage lending, including licensing of mortgage lenders, and on information they must provide to borrowers during loan closings. Many states also passed laws that raised the fines lenders pay for some mortgage frauds.
State regulators are taking steps they say will improve their systems for sharing information on nonbank mortgage lenders, which will ultimately benefit the borrowers by weeding out questionable lenders.
The biggest change is a new, standardized Internet-based system for licensing non-bank mortgage lenders and their loan officers, called the Nationwide Mortgage Licensing System, or NMLS. It makes it faster and easier for regulators to find information about mortgage lenders’ history and operations in other states.
The Conference of State Bank Supervisors and the Washington-based American Association of Residential Mortgage Regulators launched the NMLS for regulators Jan. 2.
Though not yet available for consumers, the system will help state regulators screen companies that apply for mortgage lending licenses.
New regulations were also published by the U.S. Department of Housing and Urban Development (HUD) on January 1, 2010. These new rules reform the Real Estate Settlement Procedures Act (RESPA) of 1974 and have a significant impact on good faith estimates (GFEs).
Related posts:
