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It isn't often that you get the top state banking regulators from New York, New Jersey, and Pennsylvania in thesame room together. In fact, setting aside this year, Bob Levy, who heads the New Jersey mortgage banking and brokertrade groups, can remember only one other time in the past 25 years he's gotten all three for his yearly RegionalConference of Mortgage Bankers Associations.
But there were Stephen M. Goldman, New Jersey commissioner, Stephen Kaplan, Pennsylvania secretary, and RichardH. Neiman, New York superintendent (each state has a different title for essentially the same job), on the daistogether at the Trump Taj Mahal in Atlantic City at this year's regional conference.
Not surprisingly, the three regulators were more in agreement than disagreement in their remarks to a conferenceluncheon. All spoke, for instance, about the subprime mortgage crisis and what they are doing in their respectivestates to mitigate a crisis on its way to being the worst one of all time.
Mr. Goldman said of the mortgage crisis "we are far from being done with this," and he added, "it'simportant for people to be vigilant."
| New Jersey has a homeownership preservation effort under way, a public-private venture, to provide access to |
New Jersey delinquencies are rising "quite significantly," he said, despite the fact that the state'seconomy is in far better shape than those of states like California, Michigan, or Florida.
The state is taking three approaches to fighting the subprime fallout: enhancing consumer education, helping outconsumers under duress, and regulation.
New Jersey has a homeownership preservation effort under way, a public-private venture, to provide access to counselingand raise consumer knowledge on industry issues. It will run forums in hard-hit areas of the state and run a consumerhotline.
Mr. Goldman noted that consumer mortgage complaints doubled in 2007, and that his office took 720 enforcement actionsand collected $600,000 in penalties and fines.
On the regulation side, the commissioner feels enforcing underwriting is key to making sure repayment is actuallycoming from the borrower.
Mr. Kaplan, noting the paradigm shifts in the business, said "what a difference a year makes!" He remarkedon "the sheer speed of it all. It happened really quickly."
A state study of mortgage practices in Pennsylvania is "troubling," he said, as it showed "too manypeople getting loans they could never repay."
Reforms are now working their way through the legislature, he said. "I bet we're going to have this reformperhaps as soon as later this spring."
| Two key elements will be plain language in every packet of loan documents so borrowers know what they are getting, |
Two key elements will be plain language in every packet of loan documents so borrowers know what they are getting,and being able to document the borrower's ability to repay.Some things being considered include licensing of mortgage originators, barring prepayment penalties on mortgagesless than $200,000, and increased penalties for appraisal misconduct.
Mr. Neiman said there has been "no more challenging time to become a state regulator" than currently.
Foreclosures in the Empire State are up 10% year to year and have especially impacted Queens and Brooklyn, up 40%,and Nassau/Suffolk counties, up 20%. Two million dollars in lender settlement money has been given to counselingagencies.
The superintendent noted that New York has implemented licensing requirements, and he said "there needs tobe a level playing field." He encouraged the federal government to set national minimum standards.
New York legislation seeks to require foreclosure notices 60 days in advance, and requires foreclosure judges toorder a mandatory settlement conference.
