Securitization and Federal Regulation of Mortgages for Safety and Soundness Page: 3 of 6
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CRS-3
through Regulation Z of the Truth in Lending Act (TILA).1 Non-bank mortgage
originators using the securitization channel are subject to federal consumer protection
regulation, but may escape federal safety and soundness regulation. The FFIEC
guidances on real estate lending, subprime lending, and alternative mortgages apply,
therefore, to only a portion of the mortgage market.
Table 1. Regulators of Banking Institutions
Charter and Safety/Soundness Consumer
License Examination Protection
National Banks OCC OCC FRB & OCC
State Member Banks State FRB & State FRB & State
Insured Federal Savings OTS OTS FRB & OTS
Associations
Insured State Savings State OTS & State FRB, OTS, & State
Associations
NoI-nree Bas State FDIC & State FRB, FDIC, & State
Non-FDIC-insured State State State FRB, FTC, & State
Banks
Federal Credit Unions NCUA NCUA FRB & NCUA
State Credit Unions State State FRB, FTC, & State
Bank Holding Companies FRB FRB FRB & FTC
FDIC - Federal Deposit Insurance Corporation
FRB - Federal Reserve Board
FTC - Federal Trade Commission
NCUA - National Credit Union Administration
OCC - Office of the Comptroller of the Currency
OTS - Office of Thrift Supervision
During the period 1997-2006, the share of mortgages securitized grew significantly,
increasing from 49.2% in 1997 to 67.7% in 2006. In dollar terms, the value of mortgages
securitized grew from $423 billion in 1997 to $2 trillion in 2006. The growth of this
securitization channel may have facilitated more lending by institutions not subject to
federal bank examiners, although some of the increase in securitization share came from
regulated banks also selling to the secondary market.
The GSEs and Federal Influence on Non-Bank Underwriting
The absence of federal regulation of non-banks using securitization does not
necessarily mean that there is no federal influence on non-bank underwriting. Many'TILA is found at 15 USC 1601 et seq, Regulation Z is 12 CFR Part 226.
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Securitization and Federal Regulation of Mortgages for Safety and Soundness, report, September 17, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc821314/m1/3/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.