DISB Adopts Regulatory Guidance on Nontraditional Mortgage Products
DISB adopted in December 2006 a set of regulatory guidelines that cover how nontraditional mortgages are marketed by District-licensed mortgage lenders and brokers.
“These guidelines are designed to level the playing field in the mortgage market to protect consumers from taking on high-risk mortgages without having a full understanding of the terms of such loans,” Commissioner Thomas E. Hampton said. Developed in cooperation with the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR), the guidance applies to state-licensed mortgage lenders and brokers. It will be used to promote consistent regulation in the mortgage market and to simplify how residential mortgage providers can offer nontraditional mortgage products in a way that clearly discloses the risks borrowers may assume.
The CSBS/AARMR guidance parallels final guidance released Sept. 29 by the federal banking agencies including the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration. The federal interagency guidance applies to federally insured financial institutions and their affiliates. To promote consistency, CSBS/AARMR’s guidance substantially mirrors the federal interagency guidance, except for the deletion of sections inapplicable to non-depository institutions.
Hampton added that the goal of CSBS and AARMR is for all states to adopt the guidelines so that consumers will see equal protection, and that all originators of residential mortgages will be subject to similar supervisory guidance. This guidance is for all District-licensed mortgage lenders and brokers. The regulatory guidance may be found on DISB’s website at http://disb.dc.gov or CSBS’ website at http://www.csbs.org/Content/NavigationMenu/RegulatoryAffairs/FederalAgencyGuidanceDatabase/CSBS-AARMR_FINAL_GUIDANCE.pdf*. For more information, e-mail DISB’s Banking Bureau contacts: Financial Institutions Examination Officer Edna Boateng at edna.boateng@dc.gov or Policy Analyst Evelyn Carmen at evelyn.carmen@dc.gov.
DISB Oversight and Budget Hearing was Feb. 26
The Committee on Public Service and Consumer Affairs, chaired by Councilmember Mary Cheh (D, Ward 3), scheduled an oversight hearing for DISB on Monday, Feb. 26 at 2:30 pm, Room 412 at the Wilson Building, 1350 Pennsylvania Ave., NW.
DISB’s Subcommittee Meetings
DISB Commissioner Thomas E. Hampton scheduled subcommittee meetings of the Insurance Advisory Council at DISB’s office at 810 First St., NE, Suite 701.
- Life Subcommittee, Feb. 13, 2 pm to 4 pm
- Fraud Subcommittee, Feb. 15, 1-3 pm
- Personal Lines Subcommittee, Feb. 21, 10 am to 12 pm
- Producer Subcommittee, Feb. 22, 2–3 pm
- Commercial Lines Subcommittee, Feb. 23, 10 am to 12 pm
- Health Subcommittee, Feb. 28, 10 am–12 pm
Commissioner Hampton meets with Delegations from China and London
DISB Commissioner Thomas E. Hampton met with a group of Chinese business and real estate regulators from the Fujian province on Jan. 10 to discuss insurance regulation in the United States, and how insurance makes an impact on economic development. The group expressed interest in learning how surety bonding is regulated in the District of Columbia. On Jan. 25, Hampton met with a delegation from London Metropolitan University. Besides helping them understand insurance in the United States, the discussion also focused on how states coordinate insurance regulation.
Captive Breakfast Series held Feb. 27
The Captive Insurance Council of the District of Columbia hosted its breakfast series, Captives and the Capital Markets—The Growing Use of Captives for Insurance Securitization, on Feb. 27, 8 am to 9:30 am at The University Club, 1135 16th St., NW. Participants listened to Joel Chansky and Steven Shreiber of Milliman Inc. as they discussed captives and the capital markets. The discussion covered what kinds of transactions are being done, what is fueling this growth, and on-shore vs. off-shore considerations.
Updates to DISB Fraud Cases:
Former District government attorney sentenced for fraud
A Springfield, Va., man and former DC government attorney for nearly 30 years, was sentenced Jan. 19, for interstate transportation of stolen property in a scheme to defraud clients in his private law practice by stealing their insurance settlement checks. The US District Court for the District of Columbia sentenced the perpetrator to eight consecutive weekends of intermittent imprisonment in DC jail. Then, he will serve 180 days of home detention with electronic monitoring. His sentence will be followed by two years of supervised probation including a substance abuse program and drug testing. In addition, the accused must reimburse the defrauded insurance carriers and a District resident a sum of $26,100. In addition, he has been disbarred from the practice of law in the District of Columbia for five years. Starting in the 1990s, the accused ran a private law practice in northwest Washington, DC He represented clients in small civil tort cases, taking them on a contingency fee basis, receiving a percentage of the overall settlement or jury award. Often, he paid medical bills for his client out of the settlements. Usually, he made demands on insurance companies, settling the cases with the insurance company, typically out of state, which would send settlement checks to his law office requiring his and his clients’ signatures. From early 2000 through 2001, the accused engaged in a scheme to defraud clients by settling lawsuits with insurance companies on their behalf, without telling them about the settlement. He had the companies send the settlements to him and forged the clients’ signatures on the checks and deposited the money into his law firm bank account. He failed to pay his clients or their medical bills. The Enforcement & Investigation Bureau of the DC Department of Insurance, Securities and Banking led the investigation, with the assistance of the Federal Bureau of Investigation. The case was prosecuted by the US Attorney’s Office.
Owner of DC dental clinic sentenced for $164,000 fraud
The owner of a local dental clinic was sentenced early February to six months community confinement and six months home detention as part of three years supervised release and ordered to pay restitution of $164,000 and a fine of $40,000 for submitting false claims for payment to private insurance companies. The woman, of McLean, Va., was sentenced by the Honorable Henry H. Kennedy Jr. in the US District Court for the District of Columbia. In November 2006, she pleaded guilty to the charge of health care fraud. The defendant is the owner, president, vice president, secretary and treasurer of the dental clinic in northwest Washington, DC. She employed licensed dentists to perform dental procedures and services to patients. Between 2000 and 2004, she submitted or caused to be submitted false claims for payment to private insurance companies, including Aetna and Metlife, for dental work performed or allegedly performed by dentists in her clinic. Aetna and Metlife are health care benefit programs, in that they are private plans or contracts, affecting commerce, under which medical benefits or services are provided to individuals. These claims were false because they asserted that dental procedures had been performed on patients when, in fact, no such procedures were performed, or because they sought payment for the same procedures that already had been billed to and paid by another insurance company. Aetna and Metlife paid for false claims by mailing checks to the woman’s dental clinic. The Enforcement and Investigation Bureau of the DC Department of Insurance, Securities and Banking jointly investigated this case with the US Attorney’s Office, the Federal Bureau of Investigation’s Washington Field Office and the District of Columbia Department of Health.