As the results of yesterday's election indicate, the tide at the state level has turned, with Democrats now constituting the majority of governors, having picked up 6 governorships in Arkansas, Colorado, Maryland, Massachusetts, New York and Ohio and losing none of their incumbents. Going into Election Day this year, Republicans controlled 28 of the 50 state governorships, while Democrats controlled 22. This year, of the 36 states that held gubernatorial elections, 22 had Republican governors and 14 had Democratic governors. Democrats now control 28 of the 50 governorships while the Republicans control 21. There is one race that is still too close to call in Minnesota, where the Republican incumbent Governor leads the vote count by a very small margin.

In addition to the races for Governor, 46 states conducted elections for state house and state senate seats. Before yesterday's election, Republicans controlled both chambers in 20 states, while Democrats controlled both the house and senate in 19 states; control of the state legislatures was split in 10 states; and one state, Nebraska, has a unicameral state legislature that is non-partisan.

Following yesterday's elections, Democrats now control both houses in 23 states, Republicans control 16 states, and control is split in 10 states. This represents a pick-up for Democrats of 4 states where control has shifted. Control of the state legislative chambers is firmly in the hands of the Democrats, who wrested control from the Republicans in all but one of the legislative chambers that changed hands outright. The Democrats now control the legislatures in more states than they have since 1994, which was the last time that so many chamber switches went one way.

Democrats won approximately 275 more state legislative seats, adding up to new majorities in nine chambers across the nation: the Iowa House and Senate (which was previously tied), the Indiana House, the Minnesota House, the Michigan House, the New Hampshire House and Senate, the Oregon House and the Wisconsin Senate. Republicans gained a few seats in the Oklahoma Senate and Montana Senate to tie those chambers, but Democrats will likely control the Oklahoma Senate because the lieutenant governor, who casts deciding votes, is a Democrat. The Montana House is the only chamber that changed control in favor of Republicans.

There were also 30 states that held elections for Attorneys General. Going into yesterday's elections, the Democrats held 28 and Republicans held 22 of the 50 state Attorneys General. The results produced a victory for Democrats, as they picked up a net of 3 Attorneys General, winning 20 of the 30 races. They now hold 31 of the state Attorneys General offices, while Republicans hold 19. Party control of Attorneys General offices switched in 5 states where the Democrats won 4 (Delaware, Kansas, Nevada and Ohio) and the Republicans won 1 (Wisconsin). There are three new notable Attorneys General notable: California's new Attorney General is Jerry Brown, the former Governor and Mayor of Oakland, CA; New York's new Attorney General is Andrew Cuomo, the former HUD Secretary; and Delaware's new Attorney General Beau Biden III, is the son of Delaware's current Senator Joseph Biden.

WHAT DOES ALL THIS MEAN FOR MBA'S AGENDA AT THE STATE LEVEL?

The results of yesterday's state elections are not likely to alter the issues that MBA has faced in recent years at the state level. This past year we saw both Republican and Democratic Governors and state legislators take strong pro-consumer stances against the mortgage lending industry. We saw legislation to increase regulation particularly with regard to non-prime lending and the licensing of mortgage loan originators, in Ohio, New York, Tennessee and Rhode Island.

Even though Democrats made some significant gains there was only a slight change in the number of the state legislatures where party control of one or both chambers switched. There is a good chance that we will continue to see enactment of burdensome legislation and the climate for the mortgage banking industry will remain the same in the majority of states. It will now be even more important for MBA and the state member mortgage banking associations to increase efforts to educate state policy makers about the real estate finance industry. Both state associations and MBA must increase their presence and visibility to ensure that the real estate finance industry's voice is heard.

WHAT IS LIKELY TO HAPPEN TO KEY ELEMENTS OF MBA AGENDA?

Predatory Lending - It is likely, especially in the states where there has been a change in the Governor or a significant change in control of the state legislature that we will see consumer advocate groups press for more burdensome predatory lending legislation. We can expect that this legislation will continue to receive strong bi-partisan support in the states.

Mortgage Loan Originator Licensing - We also expect to see bi-partisan legislation to expand the corporate licensure of mortgage bankers to include licensing or registration of the employees. This will be very probable in states that have agreed to participate in the recently announced Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) Residential Mortgage Licensing System project. In those states, the mortgage banking regulator will need to seek legislative authorization to participate in the system. When such legislation is introduced, it could present an opportunity to extend the reach of the state's authority to regulate the mortgage banking industry beyond corporate licensure.

Implementation of State Non-Traditional Product Guidance - CSBS and AARMR have announced that they will be issuing a "template" based on the federal non-traditional product guidance. It is likely that in many states we could see this "template" introduced as legislation to regulate the type of products that mortgage lenders may offer. It is also likely that, in some states, this legislation could go beyond the "template" and result in increased regulation and risk to mortgage lenders by limiting product offerings and subjecting them to significant penalties for non-compliance.

Mortgage Fraud Against Lenders - Several states are considering legislation similar to Georgia's recently enacted Mortgage Fraud law. The proposed law would make mortgage fraud against lenders a separate and distinct crime, which would aid prosecutors in investigating and prosecuting cases of mortgage fraud. It would also impose strong criminal penalties for violations of the law.