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 41.3 - Prohibited acts and practices

Current through Register Vol. 46, No. 28, July 10, 2024
The following acts and practices are prohibited in the making
				  of a high cost home loan.
(a) No
				lending without counseling disclosure and list of counselors and consumer and
				home ownership counseling notice.
(1) A lender
				or mortgage broker must deliver, place in the mail, fax or electronically
				transmit the following notice in at least 12-point type to the borrower at the
				time of application: "You should consider financial counseling prior to
				executing loan documents. The enclosed list of counselors is provided by the
				New York State Banking Department." In the event that the lender or broker does
				not know whether the borrower's application is a high cost home loan
				application, such disclosure must be made as soon as the lender determines that
				it is a high cost home loan application. In the event of a telephone
				application, the disclosures must be made immediately after receipt of the
				application by telephone. Such disclosure shall be on a separate form. In order
				to utilize an electronic transmission, the lender or broker must first obtain
				either written or electronically transmitted permission from the borrower. A
				list of approved counselors, available from the New York State Banking
				Department, shall be provided to the borrower by the lender or the mortgage
				broker at the time that this disclosure is given. The lender or mortgage broker
				may provide to the borrower the entire list of counselors or those portions of
				the list which pertain to both the geographic area in which the borrower
				resides and any adjacent area or areas.
(2) Within three days after determining that
				the loan is a high cost home loan, but no less than 10 days before closing, a
				lender or mortgage broker shall not make or arrange a high cost home loan
				unless either the lender or the mortgage broker has delivered to the borrower
				in writing, either placed in the mail, faxed or electronically transmitted, the
				following notice in at least 12-point type:
"CONSUMER CAUTION AND HOME OWNERSHIP COUNSELING NOTICE
If you obtain this loan, which pursuant to New York State Law
				  is a High-Cost Home Loan, the lender will have a mortgage on your home. You
				  could lose your home, and any money you have put into it, if you do not meet
				  your obligations under the loan.
You should shop around and compare loan rates and fees.
				  Mortgage loan rates and closing costs and fees vary based on many factors,
				  including your particular credit and financial circumstances, your earnings
				  history, the loan-to-value requested, and the type of property that will secure
				  your loan. The loan rate and fees could vary based on which lender or mortgage
				  broker you select. Higher rates and fees may be related to the individual
				  circumstances of a particular consumer's application.
You should consider consulting a qualified independent credit
				  counselor or other experienced financial adviser regarding the rate, fees, and
				  provisions of this mortgage loan before you proceed. The enclosed list of
				  counselors is provided by the New York State Banking Department.
You are not required to complete any loan agreement merely
				  because you have received these disclosures or have signed a loan application.
				  If you proceed with this mortgage loan, you should also remember that you may
				  face serious financial risks if you use this loan to pay off credit card debts
				  and other debts in connection with this transaction and then subsequently incur
				  significant new credit card charges or other debts. If you continue to
				  accumulate debt after this loan is closed and then experience financial
				  difficulties, you could lose your home and any equity you have in it if you do
				  not meet your mortgage loan obligations.
Property taxes and homeowner's insurance are your
				  responsibility. Not all lenders provide escrow services for these payments. You
				  should ask your lender about these services.
Your payments on existing debts contribute to your credit
				  ratings. You should not accept any advice to ignore your regular payments to
				  your existing creditors. Accordingly, it is important that you make regular
				  payments to your existing creditors."
If the notice required by this paragraph is given to the
				  borrower separately from counseling notice required by paragraph (1) of this
				  subdivision, then the list of counselors so enclosed in the counseling notice
				  disclosure shall be enclosed also with this disclosure notice. Such disclosure
				  shall be on a separate form. In order to utilize an electronic transmission,
				  the lender or broker must first obtain either written or electronically
				  transmitted permission from the borrower.