New York Codes, Rules and Regulations › Title 3 - BANKING › Chapter I - GENERAL REGULATIONS OF THE SUPERINTENDENT › Part 41 - Restrictions And Limitations On High Cost Home Loans › Section 41.1 - Definitions

Current through Register Vol. 46, No. 28, July 10, 2024
The following definitions shall apply for the purpose of this
				  Part.
(a) Lender means a mortgage banker licensed pursuant to
				  article 12-D of the Banking Law or an exempt organization as defined in
				  paragraph (e) of subdivision one of section 590 of such article. The mortgage
				  banker or exempt organization to whom the obligation is initially payable,
				  either on the face of the note or contract, or by agreement when there is no
				  note or contract, shall be deemed to be the lender.
(d) Bona fide loan discount points means loan discount points
				  knowingly paid by the borrower and funded through any source for the purpose of
				  reducing, and which in fact result in a bona fide reduction of, the interest
				  rate or time-price differential applicable to the loan, provided the amount of
				  the interest rate reduction purchased by the discount points is reasonably
				  consistent with established industry norms and practices for secondary mortgage
				  market transactions. For purposes of this Part and section 6-l (1)(c)  of the Banking
				  Law, it shall be presumed that a point is a bona fide loan discount point if it
				  reduces the interest rate by a minimum of 25 basis points or 1/4 of a point
				  provided all other terms of the loan remain the same.
(e) High cost home loan means a residential mortgage loan,
				  including an open- end line of credit but not including a reverse mortgage
				  transaction, in which:
(1) the principal amount of the loan does not exceed the
				  lesser of:
(i) the conforming loan size limit for a comparable dwelling
				  as established from time to time by the Federal National Mortgage Association;
				  or
(ii) $300,000;
(2) the borrower is a natural person;
(3) the debt is incurred by the borrower primarily for
				  personal, family or household purposes;
(4) the loan is secured by a mortgage or deed of trust on
				  real estate upon which there is located or there is to be located a structure
				  or structures, intended principally for occupancy of from one to four families,
				  which is or will be occupied by the borrower as the borrower's principal
				  dwelling;
(5) the property is located in New York State; and
(6) the terms of the loan exceed one or more of the following
				  thresholds:
(i) the loan is secured by a first mortgage on the borrower's
				  principal dwelling and the annual percentage rate at consummation, including
				  without limitation any points and/or bona fide discount points, will exceed by
				  more than eight percentage points the yield on United States Treasury
				  securities having comparable periods of maturity to the loan maturity measured
				  as of the 15th day of the month immediately preceding the month in which the
				  application for the residential mortgage loan is received by the lender;
				  provided, however, if the terms of such loan offer any initial or introductory
				  rate, and the annual percentage rate is less than such rate that will apply
				  after the end of the period of such initial or introductory rate, then the
				  annual percentage rate for purposes of determining the application of this
				  threshold to such loan shall be the rate which applies after such initial or
				  introductory period; or
(ii) the loan is secured by a junior mortgage on the
				  borrower's principal dwelling and the annual percentage rate at consummation,
				  including without limitation any points and/or bona fide discount points, will
				  exceed by nine or more percentage points the yield on United States Treasury
				  securities having comparable periods of maturity to the loan maturity measured
				  as of the 15th day of the month immediately preceding the month in which the
				  application for the residential mortgage loan is received by the lender;
				  provided, however, if the terms of such loan offer any initial or introductory
				  rate, and the annual percentage rate is less than such rate that will apply
				  after the end of the period of such initial or introductory rate, then the
				  annual percentage rate for purposes of determining the application of this
				  threshold to such loan shall be the rate which applies after such initial or
				  introductory period; or
(iii) the total points and fees payable exceed:
(a) five percent of the total loan amount if such amount is
				  $50,000 or more; or
(b) six percent of the total loan amount if such amount is
				  $50,000 or more and the loan is a purchase money loan guaranteed by the Federal
				  Housing Administration or the U.S. Department of Veterans' Administration;
				  or
(iv) in determining the applicable yield on United States
				  Treasury securities pursuant to subparagraphs (i) and (ii) of this paragraph,
				  the lender may utilize the yield published by the Banking Department on its
				  website or the yield as determined by reference to section 226.32(a) of title 12 of the Code of Federal Regulations and the official staff commentary
				  thereto, provided that the lender notes in the loan file which yield is being
				  utilized and uses that yield consistently. This publication may be viewed at
				  the New York City office of the New York State Banking Department located at
				  the address stated in Supervisory Policy G1 of this Title and the Department of
				  State located at 41 State Street, Albany, NY 12231.
(f) Total loan amount means the principal of the loan minus
				  those points and fees as defined in subdivision (h) of this section that are
				  included in the principal amount.
(g) Borrower refers to a natural person and shall be deemed
				  to include a co-borrower or co- signer obligated to repay a high cost home
				  loan.
(h) Points and fees means:
(3) all compensation paid directly or indirectly to a
				  mortgage broker not otherwise included as points and fees pursuant to
				  paragraphs (1) and (2) of this subdivision. Any payments to finance premiums
				  for any credit life, credit disability, credit unemployment, or credit property
				  insurance, or any other life or health insurance, or any debt cancellation or
				  suspension agreement or contract, whether or not interest is charged, shall
				  constitute points and fees for purposes of this Part and section 6-l  of the Banking Law. Credit property
				  insurance shall not be deemed to include insurance coverage for fire,
				  miscellaneous property, or water damage, as defined pursuant to section 1113  of the Insurance Law, placed upon such
				  mortgaged property. Payments for title insurance premiums related to such
				  mortgaged property and payments for premiums for insurance required by the
				  lender that guarantees payment of all or part of the outstanding principal loan
				  amount upon the default of the borrower, which shall include but not be limited
				  to private mortgage insurance, the Federal Housing Administration mortgage
				  insurance premium fee, and the U.S. Veterans Administration funding fee, or any
				  fee charged by the Federal National Mortgage Association or the Federal
				  Mortgage Assistance Corporation that provides for a similar guarantee of such
				  payment, shall not constitute points and fees for purposes of this Part and
				  section 6-l  of the Banking Law. Any payments for a
				  mortgage recording tax shall not constitute points and fees for purposes of
				  this Part and section 6-l  of the Banking Law.
(i) Scheduled monthly payments means minimum sums required to
				  be paid with respect to all of the borrower's debts that are reported on a
				  nationally recognized consumer credit bureau report and the monthly mortgage
				  payment due under the high cost home loan (ignoring any reduction arising from
				  a lower introductory rate) plus one twelfth of the annualized cost of real
				  estate tax and insurance premium payments during the immediately preceding 12
				  months. Scheduled monthly payments shall not include any debts that are
				  consolidated with or paid off by the high cost home loan.
(j) Unconscionable means oppressive or unreasonably harsh or
				  unfair, considering all of the circumstances of the loan transaction as such
				  term unconscionable is described in the Official Comment and New York
				  Annotations for section 2-302  of the Uniform Commercial Code.
For purposes of this Part, the singular shall include the
				  plural.
[FN*] For information regarding the United States Code (USC
				  or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see
				  Supervisory Policy G 1.
[FN*] For information regarding the United States Code (USC
				  or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see
				  Supervisory Policy G 1.