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Earlier this year the US Supreme Court released its highly anticipated decision in the case of Watters v. Wachovia. The impact of this decision will be felt throughout the mortgage industry and by consumers across the country. National Banks have long been exempt from state laws governing their banking activities, however this ruling will also exempt the state chartered subsidiaries of national banks from these laws as well. In addition, the ruling would give the OCC (Office of the Comptroller of the Currency) exclusive regulatory authority which effectively strips out State regulators. Granted the mortgage industry is heavily regulated at both the state and federal level, however many of the strongest and most important consumer protection laws have been enacted by the states and are enforced by the stat regulators. Today, mortgage industry participants do not compete on a level playing field. Mortgage brokers, lenders, banks and credit unions are all subject to different sets of laws, regulations and standards. The state laws requiring licensing, education, criminal background checks, and more for mortgage brokers cannot be enforced against national banks, and now state-chartered mortgage companies have an opportunity to escape state regulation as well. In order for consumers to receive real protection and not just the illusion of protection, they must be able to freely and confidently choose a mortgage distribution channel without worrying about the standards a particular entity is being held to. Your comments are warmly welcomed mrf@safehabcap.com.
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