Source: http://www.dfs.ny.gov/legal/interpret_opinion/banking/lo090605.htm
Timestamp: 2013-05-22 07:36:14
Document Index: 769092667

Matched Legal Cases: ['art 41', 'art 41', '§ 1605', '§ 226', '§ 6', '§ 6']

NYS DFS - Banking Interpretations - Banking Law: Letter of June 5, 2009
NYSBL 6-LGen. Reg. Part 41June 5, 2009
Relevant Banking Law and Regulations The test for whether a mortgage loan made on a property located in this state is a high-cost home loan is prescribed in Section 6-L of the New York Banking Law (the "High-Cost Law") and its implementing regulation, 3 NYCRR, Part 41. According to 6-L (1)(d), a mortgage loan would be considered a "high-cost" loan if the terms of the loan exceed one of the thresholds in Section 6-L (1)(g). Under clause (ii) of that paragraph, the "total points and fees" paid in connection with the loan may not exceed five percent of the total loan amount if the total loan amount is fifty thousand dollars or more.1 "Points and fees" include: "(i) all items listed in 15 U.S.C § 1605(a)(1) through (4); (ii) all charges for items listed under § 226.4(c)(7) of title 12 of the code of federal regulations; (iii) all compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its name in a table-funded transaction ... ; and (iv) the cost of all premiums financed by the lender ....”2
Analysis and Conclusion In order to reach a proper conclusion on the issue raised, it is important to identify some concepts commonly accepted by the mortgage industry. In a recent article, the Mortgage Bankers Association notes that a Servicing Release Fee or Service Release Premium has commonly been accepted as a fee received by a lender after the initial closing and funding of the mortgage loan.3 The article states that this accepted concept or practice may have provided a rationale for not requiring lenders to disclose any Service Release Premium.4 The Department of Housing and Urban Development ("HUD"), in a document entitled HUD RESPA FAQ's by Industry, points out that the sale of servicing after the initial funding is considered a Secondary Market Transaction.5 In contrast, a table-funded transaction is not a secondary market transaction, but rather a closing "at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the loan funds.6
New York Banking Law § 6-L (1)(g)(ii) New York Banking Law § 6-L (1)(f) Mortgage Bankers Association -Preliminary Information on HUD's Forthcoming RESPA Rule (November 12, 2008) Id.
http://www.hud.gov/offices/hsg/ramh/resindus.cmf Moreno v. Summit Mortgage Corporation, 364 F. 3d 574 (5th Cir. 2004).
A New York mortgage broker cannot make a loan, including a table-funded loan, except in the case of brokers who are FHA loan correspondents making FHA loans. A New York mortgage banker may make any loan, including a table-funded loan, because it is a licensed mortgage banker. However, when doing so, it is treated as acting in a brokerage capacity. AccessibilityContact UsDisclaimerPrivacy PolicySite Map