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Committee on Financial Institutions Texas House of Representatives

Committee on Financial Institutions Texas House of Representatives. Impact of House Bill 716 and Mortgage Fraud Task Force. Testimony by: Robert Bacon, Deputy Commissioner Texas Department of Banking January 23, 2008. Texas State Chartered Banks.

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Committee on Financial Institutions Texas House of Representatives

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  1. Committee on Financial InstitutionsTexas House of Representatives Impact of House Bill 716 and Mortgage Fraud Task Force Testimony by: Robert Bacon, Deputy Commissioner Texas Department of Banking January 23, 2008

  2. Texas State Chartered Banks • Texas state chartered banks control approximately 15% of the assets of all types of federally insured depository institutions operating in the state. • Texas state chartered banks hold a relatively minor percentage of mortgages in their loan portfolios, and very few institutions originate subprime mortgages. • A relatively small number of Texas state chartered banks are involved in originating mortgage loans for sale to a third party or in the secondary market. • Texas state chartered banks are not reflecting an overall high or abnormal number of delinquent mortgage loans. House Committee on Financial Institutions January 2008

  3. OVERVIEW – Texas State Chartered Banks Compared to All FDIC Insured Depository Institutions House Committee on Financial Institutions January 2008

  4. Trends – Texas State Chartered Banks House Committee on Financial Institutions January 2008

  5. Trends – Nationwide All Institutions (State and Federal, Banks and Savings Institutions) House Committee on Financial Institutions January 2008

  6. Banking Department’s Communication with Texas State Chartered Banks House Committee on Financial Institutions January 2008

  7. Reports to Finance Commission The Department regularly keeps the Finance Commission apprised of the subprime mortgage lending issue. State chartered banks are not heavily involved in subprime mortgage lending and therefore have not experienced high past due or foreclosure volumes in mortgage loans. Bankers are concerned with the ancillary effects of subprime mortgage lending nationwide relating to a general tightening of underwriting standards on prime mortgage loans and slowdown in the economy overall. One money service transmitter, licensed by the Department and based in another state, is raising additional capital to compensate for significant losses associated with mortgage related investments. • Bank & Trust Division Memorandum - October 5, 2007 • Bank & Trust Division Memorandum - November 29, 2007 House Committee on Financial Institutions January 2008

  8. Federal Regulatory Initiatives House Committee on Financial Institutions January 2008

  9. Summary • Mortgage fraud is a national and state issue that involves thousands of individuals but affects millions of home owners and citizens. • Texas state chartered banks do not originate a high percentage of the mortgage loans funded in Texas and have not been involved in a material number of mortgage fraud cases. • Reports to the Department about mortgage fraud or potential mortgage fraud are low over the last four years – less than six. • Texas state chartered banks are aware of and Departmental examiners are checking for compliance with obtaining the mortgage fraud notice statement. • Federal initiatives are being formulated to address subprime mortgage lending through stronger loan underwriting and improved consumer disclosures, including advertising. House Committee on Financial Institutions January 2008

  10. Attachments • Texas Bank Report, Issue 2008-1 • Regulatory Guidance – 3008, Issued January 14, 2008 • Department of Banking Mortgage Fraud Website • Department of Banking Residential Mortgage Fraud Report Form • Bank & Trust Division Memorandum of October 5, 2007, Subprime and Nontraditional Mortgage Market Risk • Bank & Trust Division Memorandum of November 29, 2007, Subprime and Nontraditional Mortgage Market Risk • Federal Reserve Bank – Highlights of Proposed Rule to Amend Home Mortgage Provisions of Regulation Z • Federal Deposit Insurance Corporation FIL-77-2007, Servicing for Mortgage Loans Supplemental Information • Federal Deposit Insurance Corporation FIL-76-2007, Servicing for Mortgage Loans • Federal Deposit Insurance Corporation FIL-62-2007, Subprime Mortgage Lending House Committee on Financial Institutions January 2008

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