New York Codes, Rules and Regulations › Title 3 - BANKING › Chapter I - GENERAL REGULATIONS OF THE SUPERINTENDENT › Part 83 - Shared Appreciation Mortgage Modification › Section 83.11 - Prohibitions

Current through Register Vol. 46, No. 28, July 10, 2024
(a) No waiver
				of legal claims and defenses.
A holder shall not require that a mortgagor waive his/her
				  legal claim and/or defense as a condition of obtaining a shared appreciation
				  mortgage modification agreement, or entering into a shared appreciation
				  agreement.
(b) No
				modification or deferral fees.
The holder may not charge a mortgagor any fees to modify,
				  renew, extend, or amend a high-cost home loan (as defined by section 6-l  of the Banking Law) or to defer any
				  payment due under the terms of a high-cost home loan if, after the
				  modification, renewal, extension or amendment, the loan is still a high-cost
				  home loan or, if no longer a high-cost home loan, the annual percentage rate
				  has not been decreased by at least two percentage points. For purposes of this
				  subdivision, fees shall not include interest that is otherwise payable and
				  consistent with the provisions of the loan documents.
(c) No unfair or deceptive business
				practices.
The holder shall not engage in any unfair or deceptive
				  business practices, or misrepresent or omit any material information in
				  connection with negotiation, execution or consummation of a shared appreciation
				  mortgage modification agreement or shared appreciation agreement. Such
				  practices include, but are not limited to, misrepresenting the amount of
				  appreciation to which the holder is legally entitled to receive, omitting
				  material information on the upfront cost of the modified mortgage, or failing
				  to adequately make any of the disclosures required under section
				  83.7  of this
				  Part.
(d) Refusal to
				communicate with mortgagor's representative.
The holder of the modified mortgage loan shall not refuse to
				  communicate with an authorized representative of the mortgagor after such
				  representative has provided written authorization signed by the mortgagor,
				  provided that the holder may establish procedures to verify that the
				  representative is in fact authorized to act on behalf of the
				  mortgagor.
(e) Collection of
				appreciation in violation of the Law.
No shared appreciation agreement or shared appreciation
				  mortgage modification agreement document shall contain any term that grants the
				  holder of the modified mortgage loan the right to receive a share of the
				  appreciation in value other than that provided for in section
				  83.6 
				  of this Part.
(f)
				Consummation of a shared appreciation transaction without counseling.
No holder shall execute or consummate a shared appreciation
				  mortgage modification agreement or shared appreciation agreement unless such
				  holder has obtained documentation, in writing, that the terms of the shared
				  appreciation mortgage modification and shared appreciation agreement have been
				  explained to the mortgagor by an attorney representing such mortgagor or by a
				  counselor from a government approved housing counseling
				  agency.
(g) Prepayment
				penalty.
No shared appreciation agreement shall include terms that
				  require a mortgagor to pay a penalty upon prepayment of the modified mortgage
				  loan.
(h) Appraisal
				independence.
No holder shall engage in practices that unduly influence the
				  independence of a licensed appraiser. For purposes of this subdivision, such
				  prohibited practices include, but are not limited to:
(1) any action undertaken by the holder, or
				any other person with an interest in the underlying transaction, to directly or
				indirectly compensate, coerce, extort, collude, instruct, bribe or intimidate a
				person or other entity conducting or involved in an appraisal, or attempts to
				compensate, coerce, extort, collude, instruct, induce, bribe or intimidate such
				person, for the purpose of causing the appraised value assigned under the
				appraisal to the property to be based on any factor other than the independent
				judgment of the licensed appraiser;
(2) mischaracterizing or suborning any
				mischaracterization of the appraised value of the property securing the
				extension of the mortgage loan;
(3)
				seeking to influence an appraiser or otherwise to encourage a targeted value in
				order to facilitate the making or pricing of the transaction; and
(4) withholding or threatening to withhold
				timely payment for an appraisal report when the appraisal report or services
				are provided for in accordance with the contract between the holder and the
				licensed appraiser and/or his employer.