Are Regulators Driving Banks Out of Mortgage Servicing?
Banks are calling for regulators to revisit Basel III rules that significantly restrict banks' ability to hold mortgage servicing rights, especially among smaller institutions. The rules may create an environment that makes it more difficult for banks to hold servicing assets, says Robert Davis, an executive vice president at the American Bankers Association. The issue centers around a provision in the Basel package of rules that limits mortgage-servicing assets to 10 percent of a bank's tier-one common equity, with additional holdings deducted from the tier-one capital account. Assets below that cap eventually would be risk weighted at 250 percent, and combined holdings of mortgage servicing and several other assets are limited to 15 percent. Although there is currently little chance of tangible legislative action on this issue, Rep. Blaine Luetkemeyer (R-Mo.) recently introduced a bill to delay the requirements from taking effect for smaller institutions until the banking agencies complete a study on the impact on the mortgage-servicing market.
From "Are Regulators Driving Banks Out of Mortgage Servicing?"
American Banker (03/04/14) Finkle, Victoria
Banks are calling for regulators to revisit Basel III rules that significantly restrict banks' ability to hold mortgage servicing rights, especially among smaller institutions. The rules may create an environment that makes it more difficult for banks to hold servicing assets, says Robert Davis, an executive vice president at the American Bankers Association. The issue centers around a provision in the Basel package of rules that limits mortgage-servicing assets to 10 percent of a bank's tier-one common equity, with additional holdings deducted from the tier-one capital account. Assets below that cap eventually would be risk weighted at 250 percent, and combined holdings of mortgage servicing and several other assets are limited to 15 percent. Although there is currently little chance of tangible legislative action on this issue, Rep. Blaine Luetkemeyer (R-Mo.) recently introduced a bill to delay the requirements from taking effect for smaller institutions until the banking agencies complete a study on the impact on the mortgage-servicing market.
From "Are Regulators Driving Banks Out of Mortgage Servicing?"
American Banker (03/04/14) Finkle, Victoria
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