2023 New York Laws › BNK - Banking › Article 2 - Department of Financial Services; Superintendent of Financial Services; Supervisory and Regulatory Powers › 14-B - Power of the Superintendent of Financial Services to Prescribe Minimum Rate of Interest on Mortgage Escrow Accounts.

§ 14-b. Power of the superintendent of financial services to prescribe
  minimum   rate  of  interest  on  mortgage  escrow  accounts.    1.  The
  superintendent shall have the power to prescribe, from time to time  but
  not  more  often  than once in every three month period, by regulation a
  minimum rate of, and method or  basis  of  computing,  interest  that  a
  mortgage  investing  institution shall be required to pay on each escrow
  account maintained with respect to a mortgage on a  one  to  six  family
  residence  occupied  by  the  owner  or  on  any  property  owned  by  a
  cooperative apartment corporation, as defined in subdivision  twelve  of
  section  three hundred sixty of the tax law, (as such subdivision was in
  effect on December thirtieth, nineteen hundred sixty),  and  located  in
  this  state,  which  rate  shall  be  greater  than the rate of interest
  required to be  paid  under  section  5-601  or  5-602  of  the  general
  obligations law.
2.  In  making  such  determination  the superintendent shall consider
  pertinent economic and cost factors including, but not limited  to:  (i)
  current  yields  on  short term investments, (ii) current dividend rates
  paid on regular savings accounts throughout this state, (iii)  currently
  prevailing  interest  rates  on  conventional  and insured or guaranteed
  mortgage loans in this state, (iv) cost factors  in  maintaining  escrow
  accounts  and (v) such other pertinent economic or cost factors that the
  superintendent  shall   deem   to   be   appropriate.   Prior   to   the
  superintendent's  prescription of any such minimum rate of interest, the
  superintendent shall issue a statement  in  writing  setting  forth  the
  economic  and  cost  data  and criteria upon which such determination is
  based. Prior to making such determination, the superintendent may invite
  presentation, by interested persons, of information and data relating to
  economic and cost factors relevant to such minimum rate of interest.
3.  The  superintendent  may  promulgate  such  regulations   as   the
  superintendent  deems  necessary  and proper to implement and define the
  provisions of this section. The superintendent may prescribe the minimum
  rate of interest from time to time, but not more often than once in  any
  three-month period, and shall provide reasonable notice to the public of
  any  change  in  the  rate  of  interest,  of the effective date of such
  change, which shall be not less than seven days following  the  adoption
  of  such  change  by  the  superintendent, and of any rule or regulation
  adopted pursuant to this subdivision.
4. In no event shall  interest  be  required  to  be  paid  on  escrow
  accounts  where  (i)  there  is a contract between the mortgagor and the
  mortgage investing  institution,  entered  into  before  the  date  this
  subdivision shall have become a law which contains an express disclaimer
  of  an  obligation  on the part of the mortgage investing institution to
  pay interest on such accounts, or (ii)  the  payment  of  such  interest
  would  violate any federal law or regulation, or (iii) such accounts are
  maintained with a mortgage servicing company,  neither  affiliated  with
  nor  owned  in  whole  or in part by the mortgage investing institution,
  under a written contract, entered into before the date this  subdivision
  shall  have  become  a  law, which contract does not permit the mortgage
  investing institution to earn or receive a return from the investment of
  such accounts.
5. "Mortgage investing institution" as used in  this  section  and  in
  section  5-601  or  5-602  of the general obligations law shall mean and
  include any bank, trust company, national bank,  savings  bank,  savings
  and  loan  association,  federal  savings  and loan association, private
  banker, credit union, investment  company,  insurance  company,  pension
  fund,  mortgage  company or other entity which makes, extends or holds a
  mortgage on any one to six family residence occupied by the owner or any
  property owned by a cooperative apartment  corporation,  as  defined  in

  subdivision  twelve  of  section three hundred sixty of the tax law, (as
  such subdivision was in effect on December thirtieth,  nineteen  hundred
  sixty), and located in this state.
6.  "Escrow  account"  as used in this section and in section 5-601 or
  5-602 of the general obligations law shall mean any account  established
  pursuant  to  an  agreement between a mortgagor and a mortgage investing
  institution  whereby  the  mortgagor  pays  to  the  mortgage  investing
  institution  or  his  designee  amounts  to  be  used for the payment of
  insurance premiums, water rents or any similar charges, and  shall  also
  include real property tax escrow accounts as defined in title three-A of
  article nine of the real property tax law.
7.  "One  to  six  family  residence"  as  used in this section and in
  section 5-601 or  5-602  of  the  general  obligations  law  shall  mean
  property  used  primarily  for  residential  purposes  for  one  to  six
  families, including property held in  condominium  form,  and  which  is
  occupied in whole or in part by the owner.
8.  If  any  provision  of  this  section,  or the application of such
  provision to any individual, company, corporation or circumstance, shall
  be held invalid, the remainder of this section, and the  application  of
  such  section  to individuals, companies, corporations, or circumstances
  other than those to which it is held  invalid,  shall  not  be  affected
  thereby.