NY Banking L § 590 (2021)
2021 New York Laws BNK - Banking Article 12-D - Licensed Mortgage Bankers 590 - Licensing.

§ 590.  Licensing.  1.  Definitions.  (a) "Mortgage loan" shall mean a loan to  a  natural  person  made  primarily  for  personal,  family  or household  use,  secured  by  either  a  mortgage  or  deed  of trust on residential real property, any certificate of stock or other evidence of ownership in, and proprietary lease from, a corporation  or  partnership formed  for  the  purpose  of  cooperative ownership of residential real property or, if determined by the superintendent  by  regulation,  shall include  such  a  loan  secured by a security interest on a manufactured home;  (b) "Residential real property" shall mean real  property  located  in this  state  improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly,  as  the  home  or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed;  (c)  "Making  a  mortgage  loan"  shall mean for compensation or gain, either directly or indirectly,  advancing  funds,  offering  to  advance funds,  or  making  a  commitment to advance funds to an applicant for a mortgage loan or a mortgagor as a mortgage loan;  (d) "Soliciting, processing, placing or negotiating a  mortgage  loan" shall  mean  for  compensation  or  gain, either directly or indirectly, accepting or offering to accept an  application  for  a  mortgage  loan, assisting  or offering to assist in the processing of an application for a mortgage loan, soliciting or offering to solicit a  mortgage  loan  on behalf  of  a  third  party  or negotiating or offering to negotiate the terms or conditions of a mortgage loan with a  lender  on  behalf  of  a third party;  (e)  "Exempt  organization"  shall mean any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the comptroller of the currency to transact business in  this  state, national   bank,   federal   savings  bank,  federal  savings  and  loan association, federal credit union, or any bank, trust  company,  savings bank,  savings and loan association, or credit union organized under the laws of any other state, or any instrumentality created  by  the  United States  or  any  state with the power to make mortgage loans. Subject to such regulations as may be promulgated by  the  superintendent,  "exempt organization" may also include any subsidiary of such entities;  (f)  "Licensee" or "mortgage banker" shall mean a person or entity who or which is licensed pursuant to section five hundred ninety-one of this chapter to engage in the business  of  making  mortgage  loans  in  this state;  (g)  "Registrant"  or  "mortgage broker" shall mean a person or entity registered pursuant to section five hundred ninety-one-a of this chapter to  engage  in  the  business  of  soliciting,  processing,  placing  or negotiating  mortgage loans for others, or offering to solicit, process, place or negotiate mortgage loans for others;  (h) "Mortgage loan servicer" or "servicer"  shall  mean  a  person  or entity  registered pursuant to subdivision two of this section to engage in the business of servicing mortgage loans for property located in this state;  (i) "Servicing mortgage loans"  shall  mean  receiving  any  scheduled periodic  payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts under section six-k of  this chapter,  title  three-A of article nine of the real property tax law or section ten of 12 U.S.C. 2609, and making the payments to the  owner  of the loan or other third parties of principal and interest and such other payments  with  respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage service loan documents or servicing contract. In the case of a home equity conversion  mortgage  or  reverse  mortgage  as  referenced  in section six-h of this chapter, sections two hundred  eighty  and  two  hundred  eighty-a  of  the  real property law or 24 CFR 3500.2, servicing includes making payments to the borrower.   2.  Necessity  for  license.   (a) No individual, person, partnership, association, corporation or other entity shall engage in the business of making mortgage  loans  without  first  obtaining  a  license  from  the superintendent  in  accordance  with the licensing procedure provided in this  article  and  such  regulations  as  may  be  promulgated  by  the superintendent.  The  licensing provisions of this subdivision shall not apply to: (i) any exempt organization; (ii) any entity or entities which shall be exempted in accordance  with  regulations  promulgated  by  the superintendent  hereunder; or (iii) any individual, person, partnership, association, corporation or other entity which makes not more than three such loans in a calendar year, nor more than five in a two year  period, provided  that  no  such  mortgage  loans  have  been  made  which  were solicited,  processed,  placed  or  negotiated  by  a  mortgage  broker, mortgage banker or exempt organization.  (b)  No  person, partnership, association, corporation or other entity shall engage in the  business  of  soliciting,  processing,  placing  or negotiating  a  mortgage  loan or offering to solicit, process, place or negotiate a mortgage loan in this state without first  being  registered with  the  superintendent  as  a  mortgage broker in accordance with the registration procedure provided in this article and by such  regulations as may be promulgated by the superintendent. The registration provisions of this subdivision shall not apply to any exempt organization, mortgage banker  or mortgage loan servicer. No real estate broker or salesman, as defined in section four hundred forty of the real property law, shall be deemed to be engaged in the business of a mortgage broker if he does not accept  a  fee,  directly  or  indirectly,  for  services  rendered   in connection  with  the solicitation, processing, placement or negotiation of a mortgage loan. No attorney-at-law who solicits,  processes,  places or  negotiates a mortgage loan incidental to his legal practice shall be deemed to  be  engaged  in  the  business  of  a  mortgage  broker.  The registration  provisions  of  this  subdivision  shall  not apply to any person or entity which shall be exempted in accordance with  regulations promulgated by the superintendent hereunder.  (b-1) No person, partnership, association, corporation or other entity shall engage in the business of servicing mortgage loans with respect to any  property  located in this state without first being registered with the superintendent as a mortgage loan servicer in  accordance  with  the registration procedure provided by such regulations as may be prescribed by  the  superintendent.  The  superintendent  may  refuse to register a mortgage loan servicer on the same grounds that the  superintendent  may refuse to issue a registration certificate to a mortgage broker pursuant to subdivision two of section five hundred ninety-two-a of this article. The  registration  provisions of this subdivision shall not apply to any exempt organization, mortgage banker, or mortgage broker or  any  person or  entity  which  shall  be  exempted  in  accordance  with regulations prescribed by the superintendent hereunder; provided  that  such  exempt organization,  mortgage  banker,  mortgage  broker,  or  exempted person notifies the superintendent  that  it  is  acting  as  a  mortgage  loan servicer  in  this  state and complies with any regulation applicable to mortgage  loan  servicers,  promulgated  by  the   superintendent.   The superintendent  may  require  all  registrations and notifications to be made through the Nationwide Mortgage Licensing System and  Registry.  An application  to  become  a  registered  mortgage  loan  servicer  or any application  with  respect  to  a  mortgage  loan  servicer   shall   be  accompanied  by  a  fee  as prescribed pursuant to section eighteen-a of this chapter. Any fee established pursuant to this  subdivision  may  be collected  by  and  include  a  processing fee charged by the Nationwide Mortgage  Licensing  System and Registry. Any such processing fees shall not be remitted to the superintendent and shall not  be  deemed  revenue pursuant to this chapter or the state finance law.  (c)  A  licensee  registrant  or  mortgage loan servicer may apply for authority to open and maintain one or more branch offices.  (d)  No  person  or  entity  engaged  in  the  building  and  sale  of residential  real  property, or a financing subsidiary thereof, shall be deemed to be making a mortgage loan, as  defined  in  paragraph  (c)  of subdivision  one  of this section, or soliciting, processing, placing or negotiating a mortgage loan, as defined in paragraph (d) of  subdivision one  of  this  section,  if and only if such person, entity or financing subsidiary shall make, solicit, process, place or negotiate  a  mortgage loan  with  respect  to residential real property it has built through a licensee or  exempt  organization  which  is  acting  as  its  agent  in compliance with this article and regulations promulgated hereunder.   3.  Rules and regulations. In addition to such powers as may otherwise be prescribed by this chapter, the superintendent is  hereby  authorized and  empowered  to  promulgate  such rules and regulations as may in the judgement of the superintendent be consistent with the purposes of  this article,  or  appropriate  for  the  effective  administration  of  this article, including, but not limited to:  (a) Such rules and regulations in connection with  the  activities  of mortgage  brokers,  mortgage bankers, mortgage loan servicers and exempt organizations as may be necessary and appropriate for the protection  of consumers in this state;  (b)  Such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with  the activities   of   mortgage  brokers,  mortgage  bankers,  mortgage  loan servicers and exempt organizations in making mortgage loans;  (c) Such rules  and  regulations  under  this  article  regarding  the origination,  sale  or  servicing  of  manufactured home loans as may be necessary and appropriate for the protection of consumers;  (d) Such rules and regulations as may define the terms  used  in  this article  and  as  may  be  necessary  and  appropriate  to interpret and implement the provisions of this article; and  (e) Such rules and regulations as may be necessary for the enforcement of this article.   The superintendent is hereby authorized and  empowered  to  make  such specific  rulings,  demands  and findings as the superintendent may deem necessary for the proper conduct of the mortgage lending industry.   4. Exemptions from provisions of article. No person shall  be  subject to the licensure or registration provisions of this article if he or she is  employed  by  an exempt organization, a licensee or registrant, or a mortgage loan servicer to assist in  the  performance  of  the  business activities  described  in  this  article  for  the  exempt organization, licensee or registrant, or a mortgage loan servicer  or  is  engaged  in regulated  activities  as  an  associate or affiliate of a registrant, a licensee, a mortgage loan servicer  or  exempt  organization  which  has filed an undertaking of accountability with the superintendent.   No  employee  of  an  exempt  organization  shall  be  subject  to the licensure or  registration  provisions  of  this  article  due  to  such employee's  assisting in the performance of the business activities of a mortgage banker  that  is  controlled  by  the  exempt  organization  or affiliated  with  the  exempt  organization  through common ownership or control.    5. Activities of mortgage brokers,  mortgage  bankers,  mortgage  loan servicers  and  exempt  organizations. (a) Mortgage brokers may not make mortgage loans in this state;  (b)  Mortgage  brokers  shall  solicit,  process,  place and negotiate mortgage  loans  with  a  mortgage  banker  licensed  pursuant  to   the provisions  of  this article or exempt organization as defined herein or pursuant  to  regulations  as  promulgated  by  the  banking  board   or prescribed  by  the superintendent and in conformity with the provisions of this chapter, such rules and regulations as may be promulgated by the superintendent thereunder and all applicable federal laws and the  rules and regulations promulgated thereunder;  (c)  Mortgage  bankers  and  exempt  organizations shall make mortgage loans in conformity with the provisions of this chapter, such rules  and regulations  as  may be promulgated by the superintendent thereunder and all applicable federal laws and the rules  and  regulations  promulgated thereunder;  (d)  Mortgage loan servicers shall engage in the business of servicing mortgage loans in conformity with the provisions of this  chapter,  such rules  and  regulations  as  may  be  promulgated  by the superintendent thereunder and all applicable federal laws and the rules and regulations promulgated thereunder.  (e) Nothing in this section shall be construed to limit any  otherwise applicable state or federal law or regulations.   5-a.  Mortgage  brokers  and  federal  housing  administration-insured mortgage loans. (a) Notwithstanding the provisions of  this  section,  a mortgage  broker  may  enter  into  agreements  with  federally-approved sponsors and make mortgage loans,  which  are  insured  by  the  federal housing  administration, for sale or transfer to such sponsors, provided that such mortgage broker:  (i) meets  all  federal  requirements  as  a  loan  correspondent  and receives and maintains federal approval;  (ii)  prior  to making any such federal housing administration-insured mortgage loans, receives the superintendent's approval;  (iii) maintains the superintendent's approval;  (iv) enters into agreements only with federally-approved sponsors  who are licensed mortgage bankers or exempt organizations;  (v)  promptly  notifies  the  superintendent  when  it  enters into an agreement with a federally-approved sponsor and when any such  agreement terminates.  The  federally-approved  sponsor shall also promptly notify the superintendent when  any  such  agreement  with  a  mortgage  broker terminates;  (vi)   maintains  a  written  agreement  with  its  federally-approved sponsors to fund all  federal  housing  administration-insured  mortgage loans that the mortgage broker makes;  (vii)  issues  a  lock-in agreement or commitment only after receiving approval for such agreement or commitment  from  its  federally-approved sponsors; and  (viii) maintains at all times the federal net worth requirement.  (b)  A federally-approved sponsor is responsible to the superintendent for the actions of any mortgage broker which is its  loan  correspondent in  regard  to  the  making  of  a  mortgage loan insured by the federal housing administration.  (c) If a mortgage broker's federal approval is surrendered,  suspended or revoked, the authorization granted pursuant to this subdivision shall immediately  cease  and the mortgage broker shall immediately notify the superintendent of the surrender, suspension or revocation.  (d) The approval of the superintendent pursuant to  paragraph  (a)  of this  subdivision  may  be  immediately suspended or revoked in the sole  discretion of the superintendent if it  is  found  that  the  making  of federal housing administration-insured mortgage loans under this section by a mortgage broker is inconsistent with the provisions of section five hundred eighty-nine of this chapter.  (e)  Notwithstanding  the provisions of this section and sections five hundred ninety-three-a and five hundred ninety-five-a of  this  chapter, the   superintendent   may   establish  regulations  to  implement  this subdivision, and may impose  requirements  and  conditions  on  mortgage brokers which supplement or exceed federal requirements.   6.  The  superintendent is hereby authorized and empowered, consistent with the declaration of policy set forth in this article, to  exempt  by rule or regulation from any or all of the provisions of this article any or  all licensees or exempt organizations as defined in paragraph (e) of subdivision one of this section with respect to credit  line  mortgages, installment loans and home improvement loans.