N.Y. BNK Law § 590 — New York Code / Act BNK / Article 12-D / Section 590
Licensing
Status: in_force

§ 590. Licensing. 1. Definitions. (a) "Mortgage loan" shall mean a\nloan to a natural person made primarily for personal, family or\nhousehold use, secured by either a mortgage or deed of trust on\nresidential real property, any certificate of stock or other evidence of\nownership in, and proprietary lease from, a corporation or partnership\nformed for the purpose of cooperative ownership of residential real\nproperty or, if determined by the superintendent by regulation, shall\ninclude such a loan secured by a security interest on a manufactured\nhome;\n  (b) "Residential real property" shall mean real property located in\nthis state improved by a one-to-four family dwelling used or occupied,\nor intended to be used or occupied, wholly or partly, as the home or\nresidence of one or more persons, but shall not refer to unimproved real\nproperty upon which such dwellings are to be constructed;\n  (c) "Making a mortgage loan" shall mean for compensation or gain,\neither directly or indirectly, advancing funds, offering to advance\nfunds, or making a commitment to advance funds to an applicant for a\nmortgage loan or a mortgagor as a mortgage loan;\n  (d) "Soliciting, processing, placing or negotiating a mortgage loan"\nshall mean for compensation or gain, either directly or indirectly,\naccepting or offering to accept an application for a mortgage loan,\nassisting or offering to assist in the processing of an application for\na mortgage loan, soliciting or offering to solicit a mortgage loan on\nbehalf of a third party or negotiating or offering to negotiate the\nterms or conditions of a mortgage loan with a lender on behalf of a\nthird party;\n  (e) "Exempt organization" shall mean any insurance company, banking\norganization, foreign banking corporation licensed by the superintendent\nor the comptroller of the currency to transact business in this state,\nnational bank, federal savings bank, federal savings and loan\nassociation, federal credit union, or any bank, trust company, savings\nbank, savings and loan association, or credit union organized under the\nlaws of any other state, or any instrumentality created by the United\nStates or any state with the power to make mortgage loans. Subject to\nsuch regulations as may be promulgated by the superintendent, "exempt\norganization" may also include any subsidiary of such entities;\n  (f) "Licensee" or "mortgage banker" shall mean a person or entity who\nor which is licensed pursuant to section five hundred ninety-one of this\nchapter to engage in the business of making mortgage loans in this\nstate;\n  (g) "Registrant" or "mortgage broker" shall mean a person or entity\nregistered pursuant to section five hundred ninety-one-a of this chapter\nto engage in the business of soliciting, processing, placing or\nnegotiating mortgage loans for others, or offering to solicit, process,\nplace or negotiate mortgage loans for others;\n  (h) "Mortgage loan servicer" or "servicer" shall mean a person or\nentity registered pursuant to subdivision two of this section to engage\nin the business of servicing mortgage loans for property located in this\nstate;\n  (i) "Servicing mortgage loans" shall mean receiving any scheduled\nperiodic payments from a borrower pursuant to the terms of any mortgage\nloan, including amounts for escrow accounts under section six-k of this\nchapter, title three-A of article nine of the real property tax law or\nsection ten of 12 U.S.C. 2609, and making the payments to the owner of\nthe loan or other third parties of principal and interest and such other\npayments with respect to the amounts received from the borrower as may\nbe required pursuant to the terms of the mortgage service loan documents\nor servicing contract. In the case of a home equity conversion mortgage\nor reverse mortgage as referenced in section six-h of this chapter,\nsections two hundred eighty and two hundred eighty-a of the real\nproperty law or 24 CFR 3500.2, servicing includes making payments to the\nborrower.\n  2. Necessity for license.  (a) No individual, person, partnership,\nassociation, corporation or other entity shall engage in the business of\nmaking mortgage loans without first obtaining a license from the\nsuperintendent in accordance with the licensing procedure provided in\nthis article and such regulations as may be promulgated by the\nsuperintendent. The licensing provisions of this subdivision shall not\napply to: (i) any exempt organization; (ii) any entity or entities which\nshall be exempted in accordance with regulations promulgated by the\nsuperintendent hereunder; or (iii) any individual, person, partnership,\nassociation, corporation or other entity which makes not more than three\nsuch loans in a calendar year, nor more than five in a two year period,\nprovided that no such mortgage loans have been made which were\nsolicited, processed, placed or negotiated by a mortgage broker,\nmortgage banker or exempt organization.\n  (b) No person, partnership, association, corporation or other entity\nshall engage in the business of soliciting, processing, placing or\nnegotiating a mortgage loan or offering to solicit, process, place or\nnegotiate a mortgage loan in this state without first being registered\nwith the superintendent as a mortgage broker in accordance with the\nregistration procedure provided in this article and by such regulations\nas may be promulgated by the superintendent. The registration provisions\nof this subdivision shall not apply to any exempt organization, mortgage\nbanker or mortgage loan servicer. No real estate broker or salesman, as\ndefined in section four hundred forty of the real property law, shall be\ndeemed to be engaged in the business of a mortgage broker if he does not\naccept a fee, directly or indirectly, for services rendered in\nconnection with the solicitation, processing, placement or negotiation\nof a mortgage loan. No attorney-at-law who solicits, processes, places\nor negotiates a mortgage loan incidental to his legal practice shall be\ndeemed to be engaged in the business of a mortgage broker. The\nregistration provisions of this subdivision shall not apply to any\nperson or entity which shall be exempted in accordance with regulations\npromulgated by the superintendent hereunder.\n  (b-1) No person, partnership, association, corporation or other entity\nshall engage in the business of servicing mortgage loans with respect to\nany property located in this state without first being registered with\nthe superintendent as a mortgage loan servicer in accordance with the\nregistration procedure provided by such regulations as may be prescribed\nby the superintendent. The superintendent may refuse to register a\nmortgage loan servicer on the same grounds that the superintendent may\nrefuse to issue a registration certificate to a mortgage broker pursuant\nto subdivision two of section five hundred ninety-two-a of this article.\nThe registration provisions of this subdivision shall not apply to any\nexempt organization, mortgage banker, or mortgage broker or any person\nor entity which shall be exempted in accordance with regulations\nprescribed by the superintendent hereunder; provided that such exempt\norganization, mortgage banker, mortgage broker, or exempted person\nnotifies the superintendent that it is acting as a mortgage loan\nservicer in this state and complies with any regulation applicable to\nmortgage loan servicers, promulgated by the superintendent. The\nsuperintendent may require all registrations and notifications to be\nmade through the Nationwide Mortgage Licensing System and Registry. An\napplication to become a registered mortgage loan servicer or any\napplication with respect to a mortgage loan servicer shall be\naccompanied by a fee as prescribed pursuant to section eighteen-a of\nthis chapter. Any fee established pursuant to this subdivision may be\ncollected by and include a processing fee charged by the Nationwide\nMortgage Licensing System and Registry. Any such processing fees shall\nnot be remitted to the superintendent and shall not be deemed revenue\npursuant to this chapter or the state finance law.\n  (c) A licensee registrant or mortgage loan servicer may apply for\nauthority to open and maintain one or more branch offices.\n  (d) No person or entity engaged in the building and sale of\nresidential real property, or a financing subsidiary thereof, shall be\ndeemed to be making a mortgage loan, as defined in paragraph (c) of\nsubdivision one of this section, or soliciting, processing, placing or\nnegotiating a mortgage loan, as defined in paragraph (d) of subdivision\none of this section, if and only if such person, entity or financing\nsubsidiary shall make, solicit, process, place or negotiate a mortgage\nloan with respect to residential real property it has built through a\nlicensee or exempt organization which is acting as its agent in\ncompliance with this article and regulations promulgated hereunder.\n  3. Rules and regulations. In addition to such powers as may otherwise\nbe prescribed by this chapter, the superintendent is hereby authorized\nand empowered to promulgate such rules and regulations as may in the\njudgement of the superintendent be consistent with the purposes of this\narticle, or appropriate for the effective administration of this\narticle, including, but not limited to:\n  (a) Such rules and regulations in connection with the activities of\nmortgage brokers, mortgage bankers, mortgage loan servicers and exempt\norganizations as may be necessary and appropriate for the protection of\nconsumers in this state;\n  (b) Such rules and regulations as may be necessary and appropriate to\ndefine improper or fraudulent business practices in connection with the\nactivities of mortgage brokers, mortgage bankers, mortgage loan\nservicers and exempt organizations in making mortgage loans;\n  (c) Such rules and regulations under this article regarding the\norigination, sale or servicing of manufactured home loans as may be\nnecessary and appropriate for the protection of consumers;\n  (d) Such rules and regulations as may define the terms used in this\narticle and as may be necessary and appropriate to interpret and\nimplement the provisions of this article; and\n  (e) Such rules and regulations as may be necessary for the enforcement\nof this article.\n  The superintendent is hereby authorized and empowered to make such\nspecific rulings, demands and findings as the superintendent may deem\nnecessary for the proper conduct of the mortgage lending industry.\n  4. Exemptions from provisions of article. No person shall be subject\nto the licensure or registration provisions of this article if he or she\nis employed by an exempt organization, a licensee or registrant, or a\nmortgage loan servicer to assist in the performance of the business\nactivities described in this article for the exempt organization,\nlicensee or registrant, or a mortgage loan servicer or is engaged in\nregulated activities as an associate or affiliate of a registrant, a\nlicensee, a mortgage loan servicer or exempt organization which has\nfiled an undertaking of accountability with the superintendent.\n  No employee of an exempt organization shall be subject to the\nlicensure or registration provisions of this article due to such\nemployee's assisting in the performance of the business activities of a\nmortgage banker that is controlled by the exempt organization or\naffiliated with the exempt organization through common ownership or\ncontrol.\n  5. Activities of mortgage brokers, mortgage bankers, mortgage loan\nservicers and exempt organizations. (a) Mortgage brokers may not make\nmortgage loans in this state;\n  (b) Mortgage brokers shall solicit, process, place and negotiate\nmortgage loans with a mortgage banker licensed pursuant to the\nprovisions of this article or exempt organization as defined herein or\npursuant to regulations as promulgated by the banking board or\nprescribed by the superintendent and in conformity with the provisions\nof this chapter, such rules and regulations as may be promulgated by the\nsuperintendent thereunder and all applicable federal laws and the rules\nand regulations promulgated thereunder;\n  (c) Mortgage bankers and exempt organizations shall make mortgage\nloans in conformity with the provisions of this chapter, such rules and\nregulations as may be promulgated by the superintendent thereunder and\nall applicable federal laws and the rules and regulations promulgated\nthereunder;\n  (d) Mortgage loan servicers shall engage in the business of servicing\nmortgage loans in conformity with the provisions of this chapter, such\nrules and regulations as may be promulgated by the superintendent\nthereunder and all applicable federal laws and the rules and regulations\npromulgated thereunder.\n  (e) No mortgage banker, mortgage broker or exempt organization shall\nconduct business with any person, partnership, association, corporation\nor other entity which it knows or should have known is acting as a\nmortgage banker or a mortgage broker without being licensed or\nregistered as required by this article. A person, partnership,\nassociation, corporation or other entity who provides non-residential\nsubordinate loans shall be exempt from this paragraph. A mortgage\nbanker, mortgage broker or exempt organization shall promptly notify the\ndepartment of any such unlicensed or unregistered operations.\n  (f) Nothing in this section shall be construed to limit any otherwise\napplicable state or federal law or regulations.\n  5-a. Mortgage brokers and federal housing administration-insured\nmortgage loans. (a) Notwithstanding the provisions of this section, a\nmortgage broker may enter into agreements with federally-approved\nsponsors and make mortgage loans, which are insured by the federal\nhousing administration, for sale or transfer to such sponsors, provided\nthat such mortgage broker:\n  (i) meets all federal requirements as a loan correspondent and\nreceives and maintains federal approval;\n  (ii) prior to making any such federal housing administration-insured\nmortgage loans, receives the superintendent's approval;\n  (iii) maintains the superintendent's approval;\n  (iv) enters into agreements only with federally-approved sponsors who\nare licensed mortgage bankers or exempt organizations;\n  (v) promptly notifies the superintendent when it enters into an\nagreement with a federally-approved sponsor and when any such agreement\nterminates. The federally-approved sponsor shall also promptly notify\nthe superintendent when any such agreement with a mortgage broker\nterminates;\n  (vi) maintains a written agreement with its federally-approved\nsponsors to fund all federal housing administration-insured mortgage\nloans that the mortgage broker makes;\n  (vii) issues a lock-in agreement or commitment only after receiving\napproval for such agreement or commitment from its federally-approved\nsponsors; and\n  (viii) maintains at all times the federal net worth requirement.\n  (b) A federally-approved sponsor is responsible to the superintendent\nfor the actions of any mortgage broker which is its loan correspondent\nin regard to the making of a mortgage loan insured by the federal\nhousing administration.\n  (c) If a mortgage broker's federal approval is surrendered, suspended\nor revoked, the authorization granted pursuant to this subdivision shall\nimmediately cease and the mortgage broker shall immediately notify the\nsuperintendent of the surrender, suspension or revocation.\n  (d) The approval of the superintendent pursuant to paragraph (a) of\nthis subdivision may be immediately suspended or revoked in the sole\ndiscretion of the superintendent if it is found that the making of\nfederal housing administration-insured mortgage loans under this section\nby a mortgage broker is inconsistent with the provisions of section five\nhundred eighty-nine of this chapter.\n  (e) Notwithstanding the provisions of this section and sections five\nhundred ninety-three-a and five hundred ninety-five-a of this chapter,\nthe superintendent may establish regulations to implement this\nsubdivision, and may impose requirements and conditions on mortgage\nbrokers which supplement or exceed federal requirements.\n  6. The superintendent is hereby authorized and empowered, consistent\nwith the declaration of policy set forth in this article, to exempt by\nrule or regulation from any or all of the provisions of this article any\nor all licensees or exempt organizations as defined in paragraph (e) of\nsubdivision one of this section with respect to credit line mortgages,\ninstallment loans and home improvement loans.\n