RI Enacts Capital and Governance Requirements for Nonbank Mortgage Servicers

The State of Rhode Island recently enacted House Bill No. 7867 (HB 7867), which establishes capital, liquidity, and corporate governance requirements for covered mortgage servicers. 

HB 7867 generally defines “covered mortgage servicers” as nonbank mortgage servicers with servicing or subservicing portfolios of at least 2,000 one-to-four-unit residential mortgage loans that operate in two or more states, districts, or United States territories.  The legislation excludes certain wholly owned loans, loans serviced in the interim before sale, and reverse mortgages from the portfolio calculation and exempts non-profit servicers, housing finance agencies, and servicers that solely own or conduct reverse mortgage servicing.

Covered mortgage servicers in Rhode Island must now align with FHFA eligibility standards for enterprise single family seller/servicers, including minimum net worth, capital ratios, and sufficient allowable assets to support ongoing liquidity needs for normal business operations. 

HB 7867 further mandates certain corporate governance requirements, including independent board oversight, comprehensive risk management frameworks, and regular internal and external audits to ensure accountability and to promote financial stability for covered mortgage servicers.

These provisions are now in effect.