New York Codes, Rules and Regulations › Title 3 - BANKING › Chapter III - SUPERINTENDENT'S REGULATIONS › Subchapter B - NON-BANKING ORGANIZATIONS › Part 419 - SERVICING MORTGAGE LOANS: BUSINESS CONDUCT RULES › Section 419.10 - Servicing prohibitions and the duty of fair dealing

Current through Register Vol. 46, No. 28, July 10, 2024
(a) A servicer is prohibited from:
(1) engaging in unfair, or deceptive or
				  abusive business practices or misrepresenting or omitting any material
				  information in connection with the servicing of a mortgage loan, including, but
				  not limited to, misrepresenting the amount, nature or terms of any fee or
				  payment due or claimed to be due on the loan, the terms and conditions of the
				  servicing agreement or the borrower's obligations under the loan;
(2) requiring funds to be remitted by means
				  more costly to the borrower than a bank or certified check or attorney's check
				  from an attorney's account;
(3)
				  refusing to communicate with an authorized representative of the borrower who
				  provides a written authorization signed by the borrower, provided that the
				  servicer may adopt procedures, not including the collection of the
				  representative's social security number, reasonably related to verifying that
				  the representative is in fact authorized to act on behalf of the
				  borrower;
(4) commencing a
				  residential foreclosure action against a borrower:
(i) if a borrower submits a complete loss
				  mitigation application to a servicer before the servicer has commenced a
				  residential foreclosure action against the borrower, unless:
(a) the servicer has sent the borrower a
				  notice pursuant to section 419.7(f)(2)  of this Part that the borrower is not
				  eligible for any loss mitigation option and the appeal process in section
				  419.7(h)  of this Part is not applicable, the borrower has not requested an
				  appeal within the applicable time period for requesting an appeal, or the
				  borrower's appeal has been denied;
(b) the servicer has complied with section
				  419.7(f)(1)  of this Part and the borrower rejects all loss mitigation options
				  offered by the servicer;
(c) the
				  borrower is more than 30 days in default under a trial or permanent
				  modification agreement; or
(d) the
				  foreclosure is based on a borrower's violation of a due on sale
				  clause.
(ii) if a
				  borrower submits an incomplete loss mitigation application to a servicer before
				  the servicer has commenced a residential foreclosure action against the
				  borrower, unless the borrower has not provided the servicer with the documents
				  necessary for a complete loss mitigation application within 15 days (excluding
				  legal public holidays, Saturdays and Sundays) after the servicer has provided
				  the notice required by section 419.7(d)(2)(ii)  of this Part. A servicer is only
				  required to comply with the requirements of this subparagraph for a single
				  incomplete loss mitigation application for a borrower's mortgage
				  loan;
(5) moving for a
				  judgment of foreclosure and sale, or conducting a foreclosure sale when:
(i) a borrower is in compliance with the
				  terms of a trial loan modification, forbearance, or repayment plan;
				  or
(ii) a short sale or
				  deed-in-lieu of foreclosure has been approved by all parties (including, for
				  example, first lien investor, junior lien holder and mortgage insurer, as
				  applicable), and proof of funds or financing has been provided to the servicer;
				  or
(iii) a borrower has submitted a
				  complete loss mitigation application after a servicer has commenced a
				  residential foreclosure action against the borrower but more than 37 days
				  before a foreclosure sale, unless:
(a) the
				  servicer has sent the borrower a notice pursuant to section 419.7(f)(2)  of this
				  Part that the borrower is not eligible for any loss mitigation option and the
				  appeal process in section 419.7(h)  of this Part is not applicable, the borrower
				  has not requested an appeal within the applicable time period for requesting an
				  appeal, or the borrower's appeal has been denied;
(b) the servicer has complied with section
				  419.7(f)(1)  of this Part and the borrower rejects all loss mitigation options
				  offered by the servicer; or
(c) the
				  borrower is more than 30 days delinquent under a trial or permanent
				  modification agreement;
(6) failing to provide the borrower with the
				  notice required by Real Property Actions and Proceedings Law section
				  1304 at least 90 days before commencing
				  legal action against the borrower or in the case of a residential cooperative,
				  failing to provide the debtor with the notice required by Uniform Commercial
				  Code section 9-611 at least 90 days before disposing of the debtor's
				  cooperative interest; and
(7)
				  failing to make the filings with the superintendent as required by Real
				  Property Actions and Proceedings Law section
				  1306 and in accordance with the rules
				  prescribed by the superintendent.