New York Codes, Rules and Regulations › Title 3 - BANKING › Chapter I - GENERAL REGULATIONS OF THE SUPERINTENDENT › Part 82 - Alternative Mortgage Instruments › Section 82.10 - Bridge loans

Current through Register Vol. 46, No. 28, July 10, 2024
(a) A lender
				may make a first-lien mortgage loan on the terms and conditions listed in
				subdivisions (b) and (c) of this section, provided that the borrower occupies
				the property at the time the loan is made and provided that the proceeds of the
				loan are used or are to be used by the borrower to finance the purchase of
				replacement residential property, as such use is ascertained by the lender
				prior to processing of the application by means of a copy of a contract
				executed by the loan applicant for the purchase of the replacement property and
				by any additional means that the lender may require.
(b) A bridge loan, as defined in subdivision
				(a) of this section, may be made by a lender for maximum term of one year. A
				bridge loan may be made, at the option of the lender, without any required
				repayment of either principal or interest during the term of the loan, provided
				that no compounding of interest occurs. In addition, the period for the loan
				may be divided into two terms, in which event, prior to commencement of the
				additional term, the borrower may be required to pay off any interest
				accumulated over the first term.
(c) All bridge loans shall be offered under
				the following terms and conditions:
(1) The
				loan shall be due and payable upon the closing of the borrower's sale of the
				property securing the loan.
(2) The
				loan may be prepaid by the borrower at any time, without penalty.
(3) The notification provisions of section
				82.5  of this Part
				shall apply to the loan throughout its duration.
(4) The disclosure provisions of section
				82.6  of this Part
				shall apply, except that the alternative disclosures for balloon-payment loans
				contained in section
				82.6(b) 
				of this Part shall be stated as:
(i) In the
				case where the lender is offering a single term loan, or where the lender will
				offer an extension of the loan, which extension was not provided for at the
				commencement of the loan:
THE TERM OF THE LOAN IS [MONTHS] [ONE YEAR]. AS A RESULT, YOU
				  WILL BE REQUIRED TO REPAY THE ENTIRE PRINCIPAL BALANCE AND ANY ACCRUED INTEREST
				  THEN OWING [MONTHS] [ONE YEAR] FROM THE DATE ON WHICH THE LOAN IS MADE.
THE LENDER HAS NO OBLIGATION TO REFINANCE THIS LOAN AT THE
				  END OF ITS TERM. THEREFORE, YOU MAY BE REQUIRED TO REPAY THE LOAN OUT OF ASSETS
				  YOU OWN OR YOU MAY HAVE TO FIND ANOTHER LENDER WILLING TO REFINANCE THE
				  LOAN.
(ii) In the case
				where the lender is offering a loan divided into two terms:
THE TERM OF THE LOAN IS MONTHS. AT MATURITY, MONTHS FROM THE
				  DATE ON WHICH THE LOAN IS MADE, AND IN THE EVENT A REFINANCING IS REQUIRED, THE
				  LOAN WILL BE EXTENDED AT [AN INTEREST RATE TO BE DETERMINED AT THE SOLE
				  DISCRETION OF THE LENDER] [THE SAME RATE] [THE SAME RATE TO BE DETERMINED BY
				  MOVEMENT IN INDEX]. SUCH INTEREST RATE MAY BE HIGHER THAN THE INTEREST RATE TO
				  BE PAID ON THIS LOAN.
In cases where the lender will extend the loan for a second
				  term at the same rate of interest, the last sentence of the above disclosure
				  shall be omitted.
(5) Whether the loan is offered for one term
				or two terms, fees and points may be taken only once at the inception of the
				loan, and the borrower may not be charged more than three points at that time.
				For purposes of this section:
(i) permissible
				fees are limited to a property appraisal fee and the fees and expenses for
				obtaining a credit history of the applicant. Any amount collected in excess of
				the actual cost of the credit report fee and property appraisal fee must be
				returned at or prior to closing; and
(ii) a point is one percent of the principal
				amount of the loan, which may be charged only at the time of closing of the
				bridge loan.
(6) The
				loan shall be at a fixed rate of interest within each term of the
				loan.