Accordingly, the activities of mortgage bankers operating in New York fall within the purview of Section 296-a. The Banking Department's examinations of mortgage bankers now include enhanced procedures designed to test for compliance with the fair lending statute. A finding of noncompliance can result in a fine, return of fees and interest paid by affected consumers, suspension of operations, or revocation of the mortgage banker license.
Discriminatory treatment can take many forms.
For mortgage bankers, a more likely source of fair lending violations, and one that will receive due attention during the examination, arises out of the practice of taking overages. An overage occurs when a lender encourages or permits a loan officer to impose a higher number of points or a higher interest rate on a loan to certain borrowers than is imposed for the same product offered to other borrowers. Overages are typically shared by the lender and the loan officer as a means of increasing compensation. Lenders have indicated that the ability to charge overages affords them the opportunity to provide an incentive to its loan officers. Be advised that the Banking Department will review lender policies during examinations, to determine whether overages are taken and, more importantly, to assess whether such practices have resulted in lending discrimination.