Statement by John W. Ryan
Conference of State Bank Supervisors
President and CEO

We believe today’s announcement of the state-federal foreclosure settlement with five large mortgage servicers establishes a significant threshold in the six-year long mortgage crisis.  The settlement included 45 state regulatory agencies plus the District of Columbia, as vital participants in the examination and negotiation processes.

When allegations of questionable practices such as ‘robo-signing’ first came to light, state financial regulators joined together to conduct comprehensive examinations of servicers.  The coordinated state examination was conducted under the leadership of the Multi-State Mortgage Committee (MMC), a body created by state financial regulators in 2008 through CSBS and the American Association of Residential Mortgage Regulators. Through techniques that included interviews of borrowers and extensive loan documentation research, state regulators were able to provide documentation demonstrating the extent of actual harm to borrowers.  The MMC was also the single point of contact during the servicing examinations for the state regulators, and provided a seamless line of communication with the state attorneys general during the course of the examinations.    I am pleased this valuable work and expertise of state regulators were recognized today by U.S. Attorney General Eric Holder and Iowa Attorney General Tom Miller.

This settlement is the culmination of years of work by state mortgage regulators and state attorneys general.  State officials first formed the State Foreclosure Prevention Working Group in 2008 to develop a uniform data reporting format to collect comparative data to measure the extent of the foreclosure problem and servicers’ efforts to respond to it.  The working group issued several reports and called for systematic, long-term solutions to efficiently deal with subprime mortgage loans and help prevent foreclosure.  If the largest servicers would have addressed our collective concerns and the early warning signs, I believe today’s action would not have been necessary and the housing market would likely be in far better shape.

The settlement announced today is a model of how coordinated state-federal supervision should work.  State regulators, because of their proximity to the market and their consumers, are able to identify emerging trends and threats.  By then joining with their federal counterparts, we have the ability to achieve comprehensive and effective solutions. 

For details of the settlement click here.