Fewer than five percent of the laws enacted so far this year by state governments had anything to do with real estate. But when you consider that still totals 1,629 different pieces of legislation, it's no wonder that the housing finance business is crying "Uncle."

"Just keeping track in an enormous task," says Carol Smith of Countrywide Home Loans, a national lender which employs 20 people full-time just to obtain, renew and maintain the licenses of its loan officers and others covered by the various states' rules and regulations.

And, of course, as Smith pointed out at the American Association of Residential Mortgage Regulators' annual conference in San Diego recently, the cost of all this "gets passed on" to borrowers.

The Countrywide Vice President says the only alternative for her firm would be to switch to a complex and expensive telephone routing system that would place callers on hold for long periods until they can be transferred to loan counselors who are licensed in the states where the borrowers reside.

"We're damned if we do and damned if we don't," she said during an update on state and federal legislation.

Noting that 17 states adopted or amended their licensing laws so far this year, Smith, who is in charge of production compliance for the big Calabasas, Calif.-based lender, said "it would be easier for us and less expensive for borrowers" if state and local ordinances were more uniform.

States "are taking a shotgun approach when a rifle is what's needed" to reign in the bad guys, she said. "And the result is that legitimate business is being driven away."

Washington attorney Robert Lotstein touched on the same theme during the session, pointing out that lenders are having an extremely difficult time finding certainty during what has become a very confusing time.

Lenders are "looking for a bright-line test so they understand how to do business across the states without being preyed upon themselves by the class-action bar," Lotstein told the conference.

The 33 state and local predatory lending laws currently on the books are so ambiguous that they are "nothing more than invitations to litigation," said the managing partner of Lotstein Buckman LLP. "That's no good for anyone."

Maybe so, but AARMR, which speaks for regulators of mortgage lenders, brokers and servicers in 43 states, says its member are not about to hand over control to Uncle Sam, at least not without a fight.

Joining state attorneys general and other state officials, the group has registered its strong opposition to the Comptroller of the Currency's proposed rule to exempt national banks and their operating subsidiaries from state laws designed to end abusive lending practices.

Asking Comptroller John Hawke to withdraw the plan, AARMR said the proposal "would result in a radical change in the nation's financial regulatory system without any clear congressional mandate" and without listing any circumstances that would justify such a drastic step.

ARRMR believes the proposal would pre-empt "virtually all state banking, financial services and consumer protection laws for the sole benefit" of national banks and the finance, title, leasing and check cashing companies they own.

"We view the proposal as detrimental to consumers," one that would at the very least blur well-established boundaries of competitive marketplaces, wrote AARMR President Bob Tedcastle, who is chief of financial regulation in Florida.

"States would be deprived completely of their power to regulate not only bank activities but also the activities of their housing subsidiaries."

Tedcastle said his group's "greatest concern" is the extension of pre-emption to nondepository housing creditors.

As the primary regulator for most of these entities, he wrote, AARMR's members see not only the enormous volume of transactions in which such lenders are involved but also "the equally large potential violations of consumer protection statutes."

Noting that many states have found nondepository lenders in violation of their laws and ordered restitution on behalf of aggrieved borrowers, the AARMR president said his members "have grave concern(s) about the protection of our citizens."

"If the proposal is adopted as written, this nation will see lenders restructure as operating subsidiaries of national banks to hide behind the shield of pre-emption to enjoy less oversight and to avoid certain consumer protection restrictions," he warned.

Tedcastle also questioned the OCC's ability to take or investigate the large volume of complaints state regulators handle on a daily basis.

Published: November 26, 2003

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.