It was a week or so ago when the federal mortgage market regulators distributed a new set of rules for the subprime home loan segment. It was good news, proving that the government is taking the issue seriously. But we have to remember one thing, it was only for the federally regulated lenders. They only originate about 35% of all mortgages. What about the rest? The vast majority of action is handled by mortgage brokers and non-regulated lenders. Excluding them left a large void in the rather complex system.
Well, now we have the answer to that. The Conference of State Bank Supervisors announced just yesterday that it will release new guidance next week for mortgage lenders not regulated by the federal government. The new rules are expected to emulate the federal ones. For detailed discussion on them, click here. The lending industry as a whole is slowly being brought behind the same set of regulations, an entirely welcome development.
However, the process is still incomplete. And that is regrettable. So far only 27 states and the District of Columbia intend to implement the new rules. The others are sitting on the fence for one reason or another which severely weakens the effort. They haven't rejected the directive outright, either. So, they are still studying and debating it when the marketplace really could use a common approach to solve its problems.