New York Codes, Rules and Regulations › Title 3 - BANKING › Chapter I - GENERAL REGULATIONS OF THE SUPERINTENDENT › Part 10 - Payment Of Interest On Mortgage Escrow Accounts And Insurance Draft Escrow Accounts › Section 10.2 - Payment of interest upon sale of a mortgage; qualification for exemptions

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Definitions.
				The term maintains, for purposes of section 14-b  of the Banking Law and section 5-601  of the General Obligations Law,
				shall mean maintains itself or through an agent. The term mortgage investing
				institution, for purposes of section 14-b  of the Banking Law and section 5-601  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 and located in this
				State, or which makes, extends or holds a mortgage on any property owned by a
				cooperative apartment corporation as defined in subdivision 12 of section 360 of the Tax Law (as such subdivision was in effect on December 30, 1960), and
				located in this State, including a governmental or quasi- governmental agency
				and any institution which has sold or assigned such mortgage if it otherwise
				continues to service and maintain the escrow account maintained with respect to
				such mortgage.
(b) In the instance
				of a mortgage on any property owned by a cooperative apartment corporation, no
				interest shall be required to be paid on escrow accounts where there is a
				contract between the mortgagor and the mortgage investing institution, entered
				into before March 30, 1979, which contains an express disclaimer of an
				obligation on the part of the mortgage investing institution to pay interest on
				such accounts.
(c) If a mortgage
				investing institution sells either a mortgage on a one- to six-family residence
				occupied by the owner and located in this State, or a mortgage on any property
				owned by a cooperative apartment corporation as defined in subdivision 12 of
				section 360  of the Tax Law (as such subdivision was in effect on December 30,
				1960), and located in this State to another mortgage investing institution
				(which may include a governmental or quasi- governmental agency as well as any
				subsequent purchaser therefrom), the following principles shall apply to the
				payment of interest on escrow accounts: The mortgage investing institution
				which owns the mortgage shall be obligated to pay interest on such account,
				unless such institution is exempt from the requirement to pay interest on such
				account under proviso (i), (ii) or (iii) of section 14-b (4)  of the Banking Law
				or the provisions of subdivision (b) of this section. In cases where the
				mortgage investing institution owning the mortgage is exempt from payment of
				interest on the escrow account by reason of section 14-b(4)(iii), then interest
				shall be paid by that mortgage investing institution which does in fact have
				possession of such escrow account, unless such latter institution is expressly
				prohibited by the applicable servicing contract from earning or receiving a
				return from the investment of funds of such escrow account. Notwithstanding the
				foregoing, with respect to any mortgage or class of mortgages, the mortgage
				investing institution owning a mortgage and the mortgage investing institution
				having possession of the escrow account may by mutual agreement establish which
				institution shall pay interest on such account.
(d) The exemption under section 14-b (4)(iii)  of the
				Banking Law shall apply only if:
(1) the date
				of the servicing contract as well as the mortgage in question predate April 1,
				1974; and
(2) the servicing
				contract expressly precludes the mortgage investing institution owning such
				mortgage from earning or receiving a return from the investment of funds of
				such escrow accounts, or if the contract, though silent on the question,
				effectively does not permit such institution from earning or receiving such
				return.