State Regulators Issue Subprime Guidance

The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators have issued new subprime lending guidance for state-licensed mortgage lenders and brokers that mirrors the guidance recently issued by federal banking regulators.The two state regulatory groups had previously announced their intention to promote uniform application of the subprime guidance, which requires lenders to underwrite subprime adjustable-rate mortgages at the fully indexed rate. So far, 26 state mortgage regulators have said they will expedite adoption of the subprime guidance. To enhance the subprime lending guidance, the state regulators are planning to issue model examination guidelines that will provide a uniform standard for multistate examinations and enforcement actions. The state regulators also plan to offer training problems for examiners that will be open to quality control personnel and internal auditors at mortgage companies. After the examination guidance is issued later this month, "we will be rolling out a training program," CSBS vice president Chuck Cross said. The organizations can be found online at http://www.csbs.org and http://www.aarmr.org.