N.Y. Banking Law § 589: Declaration of policy

§ 589. Declaration of policy. The origination, funding and servicing

of residential mortgage loans and the types of entities involved in

residential mortgage lending has undergone significant changes in recent

years, due in part to developments in the general economy, specifically

interest rate volatility, the sophistication of the national secondary

market for mortgage loans and the market for mortgage-backed securities.

The recent trend toward deregulation in the financial services industry

has accelerated the evolution of residential mortgage lending,

dramatically increasing the types of mortgage loans offered and the

manner in which they are advertised and marketed to consumers.

Depository institutions, traditionally the major source of residential

mortgage financing for individuals, now compete for capital and

customers with mortgage bankers and other financial service

organizations. Residential mortgage lenders of every type have

increasingly relied on non-financial intermediaries, such as mortgage

brokers, to make loans available to consumers. These developments have

raised questions as to whether all entities engaging in this banking

function operate under appropriate regulatory scrutiny and as to whether

all residential mortgage lenders are conducting their business in the

best interests of New York homeowners and potential homeowners.

The activities of lenders and their agents offering financing for

residential real property have a direct and immediate impact upon the

housing industry, the neighborhoods and communities of this state, its

homeowners and potential homeowners. The legislature finds that it is

essential for the protection of the citizens of this state and the

stability of the state's economy that reasonable standards governing the

business practices of mortgage lenders and their agents be imposed. The

legislature further finds that the obligations of lenders and their

agents to consumers in connection with making, soliciting, processing,

placing or negotiating of mortgage loans are such as to warrant the

uniform regulation of the residential mortgage lending process,

including the application, solicitation, making and servicing of

mortgage loans. Consistent with the purposes of promoting mortgage

lending for the benefit of our citizens by responsible providers of

mortgage loans and services and avoiding requirements inconsistent with

legitimate and responsible business practices in the mortgage lending

industry, the purpose of this article is to protect New York consumers

seeking a residential mortgage loan and to ensure that the mortgage

lending industry is operating fairly, honestly and efficiently, free

from deceptive and anti-competitive practices.