COUNCIL ON BANKING
MINUTES OF FEBRUARY 5, 2009 MEETING
In attendance: Robert V.A. Harra, Jr., Council Chairman; Edward A. Reznick, Council Member; Joseph E. Chippie, Council Member; Clinton W. Walker, Council Member; Stephen C. Nelson, Council Member; Richard H. Derrickson, Council Member; Robert A. Glen, State Bank Commissioner; Francis S. Babiarz, Deputy Bank Commissioner; and David Bakerian, public observer.
Public notice of the meeting was published in the News Journal and the Delaware State News prior to the meeting. The meeting was held at Buena Vista State Conference Center.
1.The meeting was called to order by Chairman Harra at approximately 11:50 a.m.
2.Minutes of the June 23rdmeeting had been distributed prior to the current meeting, and after review, were approved.
3.Chairman Harra welcomed Council Member Richard H. Derrickson as a new member of the Council.
4.Commissioner Glen reported to the Council on the following legislation that was being prepared for introduction into the current General Assembly.
a.(1)A new mortgage loan originator licensing bill was being prepared to replace the existing statute passed at the last General Assembly session. The current statute had been passed approximately one month before the enactment of a federal lawthat required different licensing standards. Under the federal statute, if a state did not enact a statute by July 31, 2009that met the new federal standards, the U.S. Department of Housing and Urban Development would then licensethe mortgage loan originators in that state. In response to that legislation, a model state act was prepared jointly by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The current proposal was drafted using this model act. The proposed bill will bring Delaware into compliance with the federal standards. The current proposal has fewer exemptions, a testing requirement, more extensive pre-licensing and continuing education requirements, and a more stringent standard for felony convictions.
(2)The office budget is not expected to change under this proposal, but because of an expected increase in the number of licensees, the amount of the supervisory assessment paid by banks would be reduced by the amount paid by the new licensees. Although new positions have been authorized, they will be not be filled because of the hiring freeze,but an increased amount of office space has been leased.
b.A bill to impose fee limits for mortgage loan modification services by licensed mortgage brokers and lenders has also been drafted. This bill would amend Chapters 21 and 22 and prohibit “upfront” fees,as well as limit the amount of total fees for such services. This would close a loophole that exists under statutes that prohibit up front fees for such services, but currently exempt licensees under Chapter 21 and 22.
c.A bill involving technical corrections to Title 5 may also be developed because a Department of Defense analysis has indicated that the State of Delaware currently does not have adequate authority to enforce the Talent Amendment relating to loans to military personnel and their dependents. The Commissioner’s Office currently has been examining all Delaware licensees engaged in such lending and has enforced compliance with that law. The proposal would clarify Title 5 to ensure that the Commissioner had adequate authority to enforce compliance with federal law.
d.As for other bills, the Governor’s Office may be proposing a bill relating to homeowners in foreclosure, but no proposals have been circulated as yet. A bill limiting lender-required real property insurance has also been proposed.
5.Commissioner Glen reported that there was no significant change in the budget for his office from the previous year.
a.Expenditures amount to approximately $3.5 million, all but $600,000 of which is for personnel costs. The Commissioner’s Office currently has 40 authorized positions, of which two are vacant pre-existing positions and two are newly authorized but unfilled. Those four vacancies are one bank examiner, one administrative assistant, and two license investigators. Currently, the Office employs two temporary employees and two casual/seasonal employees.
b.The Commissioner then distributed the current budget bill, and explained its entries.
c.In response to a question, the Commissioner stated that travel by examiners during exams is paid by the examinees as part of the examination cost.
d.The Commissioner noted that Senate Bill 19 had already passed and that this legislation transferred approximately $16,000 from the Commissioner’s Regulatory Revolving Fund to the State’s General Fund. This amount represented interest on money in the Regulatory Revolving Fund. This had also occurred the previous fiscal year.
6.The Commissioner next reported on the bank franchise tax. He indicated that although not all bank franchise tax returns had yet been filed, revenue had decreased and refunds had increased. In addition,the December estimates for DEFAC had decreased significantly from earlier estimates. The December gross income estimate was approximately $113 million, with refunds of approximately $9 million, leaving approximately $104 million net. The actual amount of collections for fiscal year 2008 was $129.7 million.
7.The Commissioner next reported that because recentconsumer education efforts had been linked to the Lieutenant Governor’s Foreclosure Taskforce, consumer outreach was still awaiting direction since the new Lieutenant Governor had not yet indicated his plans for that group. In addition, Deputy Commissioner Gerard Kelly who was in charge of consumer education,was nowalso supervising the new loan originator licensing program.
8.Chairman Harra commented that he believed that removal of the $417,000 cap on mortgages from “Fannie Mae” and “Freddie Mac” would be an appropriate item to add to federal stimulus program and stated that he would be contacting Delaware’s congressional delegation to make that suggestion.
9.Chairman Harra also suggested that the next meeting be held in the beginning of May.
10.The meeting then adjourned at 1:10 p.m.
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