JOINT FAVORABLE REPORT
AN ACT CONCERNING MORTGAGE SERVICERS, CONNECTICUT FINANCIAL INSTITUTIONS, CONSUMER CREDIT LICENSES, THE FORECLOSURE MEDIATION PROGRAM AND MINOR REVISIONS TO THE BANKING STATUTES.
Joint Favorable Substitute
SPONSORS OF BILL:
REASONS FOR BILL:
To require notification when a loan production office will be permanently closed, clarify that business and industrial development corporation licenses are not transferable or assignable, increase certain fees and expand the definition of automated teller machines so that machines equipped with telephone or televideo device is not considered a branch.
In addition to the original bill the substitute language:
● Expands the jurisdiction of the Connecticut Bankers' Bank to include New Jersey and Pennsylvania. (Originally SB 399)
● Brings mortgage servicing companies under the jurisdiction of the Department of Banking. (Originally HB 5352)
● Authorizes the Banking Commissioner to use the Nationwide Mortgage Licensing System and Registry (NMLS) for licensing or registration of any person engaged in a financial services industry within the jurisdiction of the commissioner. (Originally HB 5268)
● Extends the sunset date for the foreclosure mediation program to 2018
● Adds LCO technical revisions to the Banking Statutes. (Originally HB 5267)
RESPONSE FROM ADMINISTRATION/AGENCY:
Commissioner Howard F. Pitkin, Department of Banking testified that using NLMS represents a unique opportunity for smarter more effective regulation, the systems' chief benefit being the ability to identify those licensees who may be violators in other states. He also discussed the mortgage servicer provisions, stating that the industry is largely unregulated, bringing them under the jurisdiction of the Department will allow them to enforce regulatory standards on an industry that has experienced a number of problems and bad practices.
NATURE AND SOURCES OF SUPPORT:
Martin J. Geitz, President and Chief Executive of Simsbury Bank testified in favor of mortgage servicer provisions because it will require non-bank mortgage servicers meet the same standards as banks currently regulated by the Department of Banking, ensuring that consumers enjoy the same protections irrespective of the type of servicer.
Jeff Gentes, CT Fair Housing Center testified in favor of mortgage servicer regulation. In the past two years large banks have sold many of their servicing rights for troubled loans to nonbank servicers. Currently, nearly half of all of the Center's outstanding cases concern misdeeds by nonbank servicers. Providing regulation for these services will prevent more preventable foreclosures and help bring delinquent loans current more quickly.
Peter T. Garland, Bankers' Bank Northeast testified in favor of expanding the jurisdiction of the Bankers' Bank. Bankers' Banks aggregate the products and services of community banks and credit unions giving them the purchasing power of larger institutions, which helps to create efficiencies and better allows them to compete. Due to industry consolidation the Bank is looking to grow its client base. More clients and new products and services will lead to a stronger, larger and more profitable financial institution.
NATURE AND SOURCES OF OPPOSITION:
Reported by: Adam Skowera
Date: April 9, 2014