Magazine article American Banker

Viewpoint: Crucial Questions Need Answers in Licensing Project

Magazine article American Banker

Viewpoint: Crucial Questions Need Answers in Licensing Project

Article excerpt

On Oct. 4 the Conference of State Bank Supervisors announced the formation of a limited-liability company to administer a national mortgage licensing system that has been in the works for some 21 months. This is the latest development in a joint effort between the CSBS and the American Association of Residential Mortgage Regulators that aims to establish a uniform system of licensing for mortgage lenders across the country.

The mortgage lending industry has committed to assisting in this project to realize an objective it shares with the regulators: the establishment of a solid, functional, and well-run national licensing system. On several occasions the American Financial Services Association and other trade groups have voiced concerns about aspects of the project, in the hope that these concerns would be incorporated into the planning.

With this latest announcement, however, it's clear that the bank supervisor group and the mortgage regulator group are moving full speed ahead to implement the licensing project, even though the industry's concerns have yet to be addressed. We still lack answers to many important questions:

* The proposed database for maintaining the program would contain a large amount of personal information, including the Social Security numbers of borrowers and mortgage lending professionals. How would this information be protected?

* The program is estimated to cost $4.3 million to establish and $6.5 million each year to run. While the CSBS intends to have the states pay for the start-up cost, licensees are to pay for the annual cost through initial registration and annual filings. Where will all this money go?

* The database would be managed by a third-party vendor with no prior relationship to those regulated at the state level. If there is a security breach, loss of data, or another type of program failure, who will be held accountable? …

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