N.Y. Banking Law § 595-c: Regulation of dealings of mortgage brokers and home improvement contractors

§ 595-c. Regulation of dealings of mortgage brokers and home

improvement contractors. 1. No home improvement contractor nor any

agents or salespersons thereof shall represent, act as an agent for, or

advertise, promote or arrange for the services of a mortgage broker or

its affiliate while soliciting home improvement contracts nor receive

anything of value from a mortgage broker or its affiliate for the

referral of a borrower to a mortgage broker. The staff of a home

improvement contractor shall not act on behalf of a mortgage broker in

any transaction.

2. Where a mortgage broker has solicited, processed, placed or

negotiated a mortgage loan, a home improvement contractor shall not be

paid directly but instead may receive payment from the proceeds of a

home improvement loan payable solely to the borrower or, at the election

of the borrower, through an independent third party escrow agent in

accordance with the terms established in a written agreement signed by

the borrower, the lender and the contractor prior to disbursement. A

mortgage broker shall not offer a homeowner different loan terms

contingent on the homeowner executing an agreement for payment through

an independent third party as described in the preceding sentence. Any

such agreement shall contain a clear and conspicuous disclosure: YOU ARE

NOT REQUIRED TO EXECUTE THIS AGREEMENT. YOU MAY INSTEAD RECEIVE PAYMENT

DIRECTLY. (NAME OF MORTGAGE BROKER) MAY NOT OFFER YOU DIFFERENT TERMS ON

YOUR LOAN TO SIGN THIS AGREEMENT. The provisions of this subdivision

shall not apply to a home improvement loan insured by the federal

housing administration under section 203(k) of the National Housing Act,

12 U.S.C. 1709(k), or to amounts added to a federal housing

administration insured mortgage under the energy efficiency mortgage

program originally established under section 106 of the Energy Policy

Act of 1992, as from time to time amended.

3. A mortgage broker shall not permit a home improvement contractor to

be a cosigner or to act as a guarantor for a mortgage loan for home

improvement.

4. For the purpose of this section, "home improvement contractor",

means, with respect to any home improvement, a person, firm or

corporation which owns or operates a home improvement business or who

undertakes, offers to undertake or agrees to perform any home

improvement for a fee and for whom the total price for all labor,

materials and other items is equal to or greater than two hundred

dollars. Home improvement contractor does not include a person, firm,

corporation, landlord, cooperative corporation, condominium board of

managers, joint tenant or co-tenant that owns, in whole or in part, the

property to be improved.

5. This section shall not annul, alter, affect or exempt any person

subject to the provisions of this section from complying with the laws,

ordinances, rules or regulations of any locality or other governmental

body, relating to home improvement contracts, except to the extent that

such laws, ordinances, rules or regulations are inconsistent with any

provision of this section, but no such law, ordinance, rule or

regulation shall be considered inconsistent, if it affords greater

protection to the homeowner from persons subject to this section.