2023 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) No mortgage banker, mortgage broker or exempt  organization  shall
conduct  business with any person, partnership, association, corporation
or other entity which it knows or should  have  known  is  acting  as  a
mortgage   banker  or  a  mortgage  broker  without  being  licensed  or
registered  as  required  by  this  article.  A   person,   partnership,
association,  corporation  or  other entity who provides non-residential
subordinate loans shall  be  exempt  from  this  paragraph.  A  mortgage
banker, mortgage broker or exempt organization shall promptly notify the
department of any such unlicensed or unregistered operations.
(f)  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.