N.Y. Banking Law § 595-a: Regulation of mortgage brokers, mortgage bankers and exempt organizations

§ 595-a. Regulation of mortgage brokers, mortgage bankers and exempt

organizations. 1. Establishment of grounds to impose a fine or penalty.

In addition to such other rules, regulations and policies as the

superintendent of financial services may prescribe to effectuate the

purposes of this article, the superintendent of financial services shall

promulgate regulations and policies governing the establishment of

grounds to impose a fine or penalty with respect to the activities of a

mortgage banker, mortgage broker or exempt organization. Such regulation

shall encompass the following:

(a) The misrepresentation of material facts or the making of false

promises likely to influence, persuade, or induce an applicant for a

mortgage loan or mortgagor to take a mortgage loan, or pursuing a course

of misrepresentation or false promises through agents or otherwise;

(b) The misrepresentation, or concealment of any material factors,

terms or conditions of a transaction to which he is a party, including

the receipt of payment from a third party, pertinent to an applicant for

a mortgage loan or a mortgagor;

(c) The failure to disburse funds in accordance with a written

commitment or agreement to make a mortgage loan;

(d) The failure to account for or deliver to any person any personal

property obtained in connection with a mortgage loan such as money,

fund, deposit, check, draft, mortgage, or other document, or thing of

value, which has come into his hands, and which is not his property, or

which he is not in law or equity entitled to retain;

(e) The improper refusal to issue a satisfaction of mortgage;

(f) Engaging in any transaction, practice, or course of business which

operates a fraud upon any person in connection with the purchase or sale

of any mortgage loan;

(g) Violation of section six-j of this chapter; and

(h) Making a mortgage loan, or indirectly or directly providing for

the making of a mortgage loan, to an equity purchaser, as defined in

section two hundred sixty-five-a of the real property law, if the

mortgage banker, mortgage broker or exempt organization had knowledge

that the equity purchaser was not complying with the provisions of

section two hundred sixty-five-a of the real property law with respect

to such transaction.

2. Restrictions on advertising. In addition to such other rules,

regulations and policies as the superintendent of financial services may

promulgate to effectuate the purposes of this article, the

superintendent of financial services shall prescribe regulations

governing the advertising of mortgage loans, including, without

limitation, the following requirements:

(a) All advertisements by a mortgage broker, mortgage banker or exempt

organization shall contain the name and an office address of such

entity, which in the case of licensees and registrants shall conform to

a name and address on record with the department of financial services;

(b) No licensed mortgage broker or mortgage banker shall advertise its

services in any media, whether print or electronic, without the words

"registered mortgage broker" or "licensed mortgage banker" or similar

words therein;

(c) No mortgage broker, mortgage banker or exempt organization shall

advertise information concerning mortgage loans, including rates,

margins, discounts, points, fees, commissions or other material

information, including material limitations on such loans, unless such

entity is able to make such mortgage loans available to a reasonable

number of qualified applicants;

(d) All advertisements by mortgage brokers must include language

indicating that such brokers may not make loans; and

(e) The term "advertisement" shall not include promotional material

containing fifteen words or less which does not contain references to

specific rates, points, discounts, fees, material loan factors, etc.,

such as imprinted pencils, pens or balloons.

3. Required disclosures. In addition to such other rules, regulations

and policies as the superintendent of financial services may promulgate

to effectuate the purposes of this article, the superintendent of

financial services shall promulgate regulations governing the disclosure

required to be made to applicants for a mortgage loan, including,

without limitation, the following requirements:

(a) Each mortgage broker, mortgage banker and exempt organization

shall provide to each applicant for a mortgage loan at or before the

time of application a disclosure of the fees payable at the time of

application and the conditions under which such fees may be refundable,

and such other disclosures as shall be required by the superintendent of

financial services;

(b) Each mortgage banker and exempt organization shall make available

to each applicant for a mortgage loan at or before the time a commitment

to make a mortgage loan is given a written disclosure, the fees to be

paid in connection with the commitment and the loan, or the manner in

which such fees shall be determined and the conditions under which such

fees may be refundable, and such other disclosures as may be required by

the superintendent of financial services; and

(c) In each lock-in agreement it shall issue, every mortgage banker

and exempt organization shall include a list of all documents typically

required to be produced and conditions typically required to be

satisfied for closing of a mortgage loan based on information provided

by the applicant. In each commitment it shall issue, every mortgage

banker and exempt organization shall include a list of all documents

foreseeably required to be produced and conditions foreseeably required

to be satisfied for closing of a mortgage loan based on information

provided by the applicant. In addition, no later than twelve business

days prior to the expiration of any lock-in period or commitment period,

a mortgage banker or exempt organization shall mail to each applicant

for a mortgage loan a notice indicating the date of such expiration

together with a request that the applicant contact the lender

immediately to discuss the conditions precedent to the closing of such

loan; and

(d) Each mortgage broker, mortgage banker and exempt organization

shall provide such other disclosure as the superintendent of financial

services shall determine by regulation are appropriate to carry out the

purposes of this article.

4. Restrictions on tying. (a) No mortgage banker, mortgage broker or

exempt organization shall, as a condition for the approval of a mortgage

loan, require the use of a particular title insurance company, title

insurance agency or title insurance agent or, for any other type of

insurance, require the use of a particular insurer, agent or broker.

(b) A bank, trust company, savings bank, savings and loan association

or national bank which operates in compliance with the provisions of

paragraph (e) of subdivision seven of section twelve-a of this chapter

and paragraph two of subdivision (a) of section two thousand five

hundred two of the insurance law shall be deemed to be in compliance

with this subdivision.

5. No licensee or registrant engaging in any activities constituting

the business of a distressed property consultant, as described in

section two hundred sixty-five-b of the real property law, shall charge

for or accept payment for real property consulting services as defined

in such section before the full completion of such services.