New York Banking Regulator Concerned With Mortgage Servicing Rights Transfers

Mortgage Servicing NYDFS

On February 12, New York State Department of Financial Services (DFS) Superintendent Benjamin Lawsky released excerpts of remarks he delivered to the New York Bankers Association, which focused on the “troubling trend” of “the rapid and dramatic growth of so-called ‘non-bank mortgage servicers.’” Mr. Lawsky explained that because banks are being given “less credit” for mortgage servicing rights (MSRs) with respect to capital, they are offloading MSRs to non-bank mortgage servicers rather than building up additional capital. Further, he expressed concern that non-bank mortgage services are often more lightly regulated, and indicated that regulators need to intervene on the front end of MSR transactions to prevent undue harm to homeowners before it occurs. Mr. Lawsky indicated that the DFS will have more to say on the topic in the coming weeks and months.