Editor's Note: This story has been updated to reflect the correct launch date of the State Examination System.
As the Consumer Financial Protection Bureau (CFPB) and other federal financial regulators pull back from some areas of supervision, state regulators are stepping up to fill the void in many respects. Dodd Frank Update took note of multiple expert perspectives on what some states are doing to align their efforts.
This knowledge has led to trepidation among financial services providers, operating at a national scale, about potentially having answer to 50 separate regulatory regimes throughout the country.
However, state regulators have been working to address these concerns through collaboration and industry engagement to establish a standardized network by which they can share information and data about their supervisory activities and align their efforts.
Nanci Weissgold, Esq., co-chair of the financial services group at Alston & Bird, LLP, facilitated a discussion on this topic with attendees at the Mortgage Bankers Association’s Compliance and Risk Management Conference in Washington, D.C., during a session titled, “State of the States – Navigating Regulatory Shifts in Housing Finance.”
The purpose of such a network is to provide consistency for the benefit of service providers and regulators conducting state-level supervision across the country. It also allows state regulators more easily combine available resources to ramp up their capacity to take on additional oversight responsibilities.
Combining resources to build capacity
Addressing the elephant in the room – the greatly reduced supervisory activity by the CFPB – Kirsten Anderson, deputy administrator of division of financial regulation for the Oregon Department of Consumer and Business Services, said efforts to collaborate on a coordinated approach to examinations, share exam data and stay in constant communication will be key to their efforts to pick up the slack for the bureau.
“It is such a great way that we are using our resources, because I would have to go to the state legislature to get approval to hire more people and to have more authority to spend funds,” she said. “I don't really get the ability to go and say, ‘Oh, I lost my full federal partner, and there is a void in the space here so maybe I need to do something more.’ But what I can do is rely on this network of supervision of all the states where we work together and we take our resources and we amplify them by using them in the most efficient way. That’s what these types of systems do and what the network of supervision is all about.”
Anderson noted that the ability to share data between states quickly and efficiently represents great strides that make examiners’ lives easier than they once were, which they should not take for granted.
“Because of technology advances, we can be sharing our information in a much quicker and more efficient way,” she said. “Network supervision is about using this network in all the states where we work together, and we take our resources and we amplify them by using them efficiently.”
Cross-state standardization efforts
Tony Vasile, senior vice president of nonbank supervision and enforcement at the Conference of State Bank Supervisors (CSBS), elaborated on his organization’s efforts to build up common standards and practices across states to help with coordination.
“We’ve been working on building standard examination programs for the states to use, within our systems, outside of our systems, wherever they are,” Vasile said. “Part of that is defining what the right information requests are, what the right exam procedures are, and there is a lot to build out with these programs.”
Over the past few years, states have been working on condensing data from their unique systems for sharing and accepting information into four extended mortgage exam programs, tailored to account for specific business activities.
CSBS launched the State Examination System (SES) in March 2020, which serves as the supervisory component of the Nationwide Multistate Licensing System / Registry. By allowing states to access exam data on one centralized platform, CSBS wants to help states familiarize themselves with each other’s work.
“States have been working on standard examination procedures that tie directly to these information and data requests,” Vasile explained. “Those were just launched in the state examination system on Sept. 13. We’re really working on building up common standards and common practices so it becomes easier for states to accept exam results and leverage them before moving on to the next example.”
Vasile emphasized that CSBS has come a long way over the last three years after battling with a series of technical challenges pertaining to compliance technology being utilized by examiners in the field. From that experience came an interesting revelation.
“We learned that it wasn’t a technology issue; it was a data issue,” he said.
In July 2022, MISMO, the mortgage industry standards and maintenance organization, set out to address this issue, establishing a work group to develop its standardized Mortgage Compliance Dataset.
“As soon as that working group was stood up, that’s when CSBS decided to become a member of MISMO,” Vasile said. “We strongly support the work, and we understand that it is a very diverse ecosystem with respect to the loan origination systems, the document providers and companies with their own proprietary software systems. There’s a lot to think about here, but we believe it’s going to help on both the regulator side of the equation and the industry side of the equation, saving time in the examination compliance process.”
Sharing examination data
While the idea of aligning examination standards across the country appears to have significant upsides in terms of simplicity and efficiency, it has presented new concerns for industry stakeholders.
With states sharing supervision data concerned with one another, some have asked whether it would only be a matter of time before a problem uncovered by one examiner would be then scrutinized by regulators from every other state.
Kat Hyland, deputy commissioner of financial regulation for the Maryland Department of Labor, explained that the purpose of sharing supervisory data between states is to avoid instances where states end up duplicating efforts by devoting resources to the same issue.
She noted that Maryland has become an active participant in SES work groups over the past year, trying out new products and collaborating in-person with colleagues in Washington, D.C., and Virginia to discuss effective strategies for developing examination procedures and sharing data about larger exams to avoid duplicating efforts.
“We have very aggressively adopted full use of SES at a higher performing level, and we have accepted a number of exams,” Hyland said. “We have shortened exam situations, and we really cut into our seemingly perpetual backlog.”
Multi-state examinations
When mortgage-related exam issues escalate into multi-state matters, they are often referred to the aptly-named Mortgage Multi-State Committee (MMC) – a group of state financial regulators formed by a partnership between the CSBS and the American Association of Residential Mortgage Regulators.
Michelle Rogers, global chair of financial services at Cooley LLP, noted where her clients encounter an issue that ends up before the MMC, because the experts they tend to come in contact with are different than those they typically encounter.
“When you get to an enforcement process, including through the MMC, you are not dealing necessarily with people who live in the dirty details of loan originator compensation and RESPA,” Rogers said. “You’re getting a lawyer who is a practiced enforcement lawyer. We are seeing a challenge with how we continue to balance our relationship with our state regulators, while being responsive to those MMC concerns.”
Rogers said the difficulty in educating her clients about these differences and how to navigate them has a been a significant challenge. The same is true amid growing tension she has seen around attorney–client privilege pertaining to state exams, especially with respect to cyber incidents and multi-state enforcement.
“The issue isn’t so much that we are concerned that the states are going to share information,” she said. “We very much trust that process. We are stuck, because if the plaintiff’s attorney finds out that you shared with a third party, you have now arguably selectively waived your privilege with your attorney.”
Anderson acknowledged that this was a blind spot for many regulators and committed to further work.
“There is a privilege issue here that is separate from confidentiality,” Anderson said. “If that is truly the case, then we need to start talking about that internally and figure out what we can do.”
For institutions, adapting “with confidence” in this environment means:
- Designing exam-ready data and systems aligned to SES standards and MISMO data structures.
- Building playbooks for how to respond when one state finds a significant issue — including when and how to self-disclose.
- Rehearsing response scenarios for cyber and other high-litigation events that balance regulator expectations with privilege preservation.
- Tracking which states have adopted the CSBS model standards and how that affects prudential oversight of nonbank servicing.
Vasile suggested that regulators are working from “a methodology to the madness” in multi-state scheduling and supervision. He added that companies choosing to mirror that discipline in their compliance strategies will be best positioned to navigate the next wave of state-driven oversight.
This article originally appeared in October Research’s 2026 State of the Industry report along with other insightful articles about matters affecting the real estate industry.