NY Banking Law, Article 12-D, Licensed Mortgage Bankers

Section 589. Declaration of policy. 590. Licensing. 590-a. Junior mortgage loans. 591. Application for a mortgage banker`s license; fees. 591-a. Application to register as a mortgage broker; fees. 592. Application process to receive license to engage in the business of mortgage banking. 592-a. Application process to register as a mortgage broker. 593. License provisions. 593-a. Registration provisions. 594. Changes in officers and directors. 594-a. Annual fees. 594-b. Changes in control. 595. Grounds for suspension or revocation of license, or suspension or deletion of name from mortgage broker roll. 595-a. Regulation of mortgage brokers, mortgage bankers and exempt organizations. 596. Superintendent authorized to examine; expenses. 597. Books and records; reports. 598. Additional penalties for violation of this article; civil, criminal; liquidated damages. 599. Separability of provisions. S 589. Declaration of policy. The origination, funding and servicing of residential mortgage loans and the types of entities involved in residential mortgage lending has undergone significant changes in recent years, due in part to developments in the general economy, specifically interest rate volatility, the sophistication of the national secondary market for mortgage loans and the market for mortgage-backed securities. The recent trend toward deregulation in the financial services industry has accelerated the evolution of residential mortgage lending, dramatically increasing the types of mortgage loans offered and the manner in which they are advertised and marketed to consumers. Depository institutions, traditionally the major source of residential mortgage financing for individuals, now compete for capital and customers with mortgage bankers and other financial service organizations. Residential mortgage lenders of every type have increasingly relied on non-financial intermediaries, such as mortgage brokers, to make loans available to consumers. These developments have raised questions as to whether all entities engaging in this banking function operate under appropriate regulatory scrutiny and as to whether all residential mortgage lenders are conducting their business in the best interests of New York homeowners and potential homeowners. The activities of lenders and their agents offering financing for residential real property have a direct and immediate impact upon the housing industry, the neighborhoods and communities of this state, its homeowners and potential homeowners. The legislature finds that it is essential for the protection of the citizens of this state and the stability of the state`s economy that reasonable standards governing the business practices of mortgage lenders and their agents be imposed. The legislature further finds that the obligations of lenders and their agents to consumers in connection with making, soliciting, processing, placing or negotiating of mortgage loans are such as to warrant the uniform regulation of the residential mortgage lending process, including the application, solicitation, making and servicing of mortgage loans. Consistent with the purposes of promoting mortgage lending for the benefit of our citizens by responsible providers of mortgage loans and services and avoiding requirements inconsistent with legitimate and responsible business practices in the mortgage lending industry, the purpose of this article is to protect New York consumers seeking a residential mortgage loan and to ensure that the mortgage lending industry is operating fairly, honestly and efficiently, free from deceptive and anti-competitive practices. S 590. Licensing. 1. Definitions. (a) "Mortgage loan" shall mean a loan to a natural person made primarily for personal, family or household use, primarily secured by either a mortgage on residential real property or certificates of stock or other evidence of ownership interests in, and proprietary leases from, corporations or partnerships formed for the purpose of cooperative ownership of residential real property; (b) "Residential real property" shall mean real property located in this state improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed; (c) "Making a mortgage loan" shall mean for compensation or gain, either directly or indirectly, advancing funds, offering to advance funds, or making a commitment to advance funds to an applicant for a mortgage loan or a mortgagor as a mortgage loan; (d) "Soliciting, processing, placing or negotiating a mortgage loan" shall mean for compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, assisting or offering to assist in the processing of an application for a mortgage loan, soliciting or offering to solicit a mortgage loan on behalf of a third party or negotiating or offering to negotiate the terms or conditions of a mortgage loan with a lender on behalf of a third party; (e) "Exempt organization" shall mean any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the comptroller of the currency to transact business in this state, national bank, federal savings bank, federal savings and loan association, federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state, or any instrumentality created by the United States or any state with the power to make mortgage loans. Subject to such regulations as may be promulgated by the banking board, "exempt organization" may also include any subsidiary of such entities; (f) "Licensee" or "mortgage banker" shall mean a person or entity who or which is licensed pursuant to section five hundred ninety-one of this chapter to engage in the business of making mortgage loans in this state; (g) "Registrant" or "mortgage broker" shall mean a person or entity registered pursuant to section five hundred ninety-one-a of this chapter to engage in the business of soliciting, processing, placing or negotiating mortgage loans for others, or offering to solicit, process, place or negotiate mortgage loans for others. 2. Necessity for license. (a) No person, partnership, association, corporation or other entity shall engage in the business of making five or more mortgage loans in any one calendar year without first obtaining a license from the superintendent in accordance with the licensing procedure provided in this article and such regulations as may be promulgated by the banking board or prescribed by the superintendent. The licensing provisions of this subdivision shall not apply to any exempt organization nor to any entity or entities which shall be exempted in accordance with regulations promulgated by the banking board hereunder. (b) No person, partnership, association, corporation or other entity shall engage in the business of soliciting, processing, placing or negotiating a mortgage loan or offering to solicit, process, place or negotiate a mortgage loan in this state without first being registered with the superintendent as a mortgage broker in accordance with the registration procedure provided in this article and by such regulations as may be promulgated by the banking board or prescribed by the superintendent. The registration provisions of this subdivision shall not apply to any exempt organization or mortgage banker. No real estate broker or salesman, as defined in section four hundred forty of the real property law, shall be deemed to be engaged in the business of a mortgage broker if he does not accept a fee, directly or indirectly, for services rendered in connection with the solicitation, processing, placement or negotiation of a mortgage loan. No attorney-at-law who solicits, processes, places or negotiates a mortgage loan incidental to his legal practice shall be deemed to be engaged in the business of a mortgage broker. The registration provisions of this subdivision shall not apply to any person or entity which shall be exempted in accordance with regulations promulgated by the banking board hereunder. (c) A licensee or registrant may apply for authority to open and maintain one or more branch offices. (d) No person or entity engaged in the building and sale of residential real property, or a financing subsidiary thereof, shall be deemed to be making a mortgage loan, as defined in paragraph (c) of subdivision one of this section, or soliciting, processing, placing or negotiating a mortgage loan, as defined in paragraph (d) of subdivision one of this section, if and only if such person, entity or financing subsidiary shall make, solicit, process, place or negotiate a mortgage loan with respect to residential real property it has built through a licensee or exempt organization which is acting as its agent in compliance with this article and regulations promulgated hereunder. 3. Banking board. In addition to such powers as may otherwise be prescribed by this chapter, the banking board is hereby authorized and empowered to promulgate regulations consistent with the purposes of this article, including, but not limited to: (a) Such rules and regulations in connection with the activities of mortgage brokers, mortgage bankers and exempt organizations as may be necessary and appropriate for the protection of consumers in this state; (b) Such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of mortgage brokers, mortgage bankers and exempt organizations in making mortgage loans; (c) Such rules and regulations as may define the terms used in this article and as may be necessary and appropriate to interpret and implement the provisions of this article; and (d) Such rules and regulations as may be necessary for the enforcement of this article. The banking board is hereby authorized and empowered to make such specific rulings, demands and findings as it may deem necessary for the proper conduct of the mortgage lending industry. 4. Exemptions from provisions of article. No person shall be subject to the licensure or registration provisions of this article if he or she is employed by an exempt organization, a licensee or registrant to assist in the performance of the business activities described in this article for the exempt organization, licensee or registrant, or is engaged in regulated activities as an associate or affiliate of a registrant, a licensee or exempt organization which has filed an undertaking of accountability with the superintendent. No employee of an exempt organization shall be subject to the licensure or registration provisions of this article due to such employee`s assisting in the performance of the business activities of a mortgage banker that is controlled by the exempt organization or affiliated with the exempt organization through common ownership or control. 5. Activities of mortgage brokers, mortgage bankers and exempt organizations. (a) Mortgage brokers may not make mortgage loans in this state; (b) Mortgage brokers shall solicit, process, place and negotiate mortgage loans only in conformity with the provisions of this article and such rules and regulations as may be promulgated by the banking board or prescribed by the superintendent pursuant to this article; (c) Mortgage bankers and exempt organizations shall make mortgage loans only in conformity with the provisions of this article and such rules and regulations as may be promulgated by the banking board or prescribed by the superintendent pursuant to this article; (d) Nothing in this section shall be construed to limit any otherwise applicable state or federal law or regulations. 5-a. Mortgage brokers and federal housing administration-insured mortgage loans. (a) Notwithstanding the provisions of this section, a mortgage broker may enter into agreements with federally-approved sponsors and make mortgage loans, which are insured by the federal housing administration, for sale or transfer to such sponsors, provided that such mortgage broker: (i) meets all federal requirements as a loan correspondent and receives and maintains federal approval; (ii) prior to making any such federal housing administration-insured mortgage loans, receives the superintendent`s approval; (iii) maintains the superintendent`s approval; (iv) enters into agreements only with federally-approved sponsors who are licensed mortgage bankers or exempt organizations; (v) promptly notifies the superintendent when it enters into an agreement with a federally-approved sponsor and when any such agreement terminates. The federally-approved sponsor shall also promptly notify the superintendent when any such agreement with a mortgage broker terminates; (vi) maintains a written agreement with its federally-approved sponsors to fund all federal housing administration-insured mortgage loans that the mortgage broker makes; (vii) issues a lock-in agreement or commitment only after receiving approval for such agreement or commitment from its federally-approved sponsors; and (viii) maintains at all times the federal net worth requirement. (b) A federally-approved sponsor is responsible to the superintendent for the actions of any mortgage broker which is its loan correspondent in regard to the making of a mortgage loan insured by the federal housing administration. (c) If a mortgage broker`s federal approval is surrendered, suspended or revoked, the authorization granted pursuant to this subdivision shall immediately cease and the mortgage broker shall immediately notify the superintendent of the surrender, suspension or revocation. (d) The approval of the superintendent pursuant to paragraph (a) of this subdivision may be immediately suspended or revoked in the sole discretion of the superintendent if it is found that the making of federal housing administration-insured mortgage loans under this section by a mortgage broker is inconsistent with the provisions of section five hundred eighty-nine of this chapter. (e) Notwithstanding the provisions of this section and sections five hundred ninety-three-a and five hundred ninety-five-a of this chapter, the superintendent may establish regulations to implement this subdivision, and may impose requirements and conditions on mortgage brokers which supplement or exceed federal requirements. 6. The banking board is hereby authorized and empowered, consistent with the declaration of policy set forth in this article, to exempt by rule or regulation from any or all of the provisions of this article any or all licensees or exempt organizations as defined in paragraph (e) of subdivision one of this section with respect to credit line mortgages, installment loans and home improvement loans. S 590-a. Junior mortgage loans. 1. A licensee may make a loan to a natural person upon the security of a mortgage on residential real property which is not a first lien at the rate or rates agreed to by the licensee and the borrower, subject to such regulations as the banking board may prescribe. Such regulations by the banking board may include such restrictions as the banking board finds necessary or proper. For purposes of this section, the term mortgage shall include a lien on an existing ownership interest in certificates of stock or other evidence of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of residential real estate. 2. A contract, note or instrument evidencing or securing a junior mortgage loan shall not contain any acceleration clause which would provide that the junior mortgage loan may be declared due and payable upon the condition that the licensee deems itself insecure with respect to the unpaid balance of such junior mortgage loan; shall not contain clauses which authorize confession of judgment; shall allow the borrower to prepay the loan in whole or in part without penalty, and shall contain the following notice in bold face type, at least ten point size: "DEFAULT IN THE PAYMENT OF THIS LOAN AGREEMENT MAY RESULT IN THE LOSS OF THE PROPERTY SECURING THE LOAN. UNDER FEDERAL LAW, YOU MAY HAVE THE RIGHT TO CANCEL THIS AGREEMENT. IF YOU HAVE THIS RIGHT, THE CREDITOR IS REQUIRED TO PROVIDE YOU WITH A SEPARATE WRITTEN NOTICE SPECIFYING THE CIRCUMSTANCES AND TIMES UNDER WHICH YOU CAN EXERCISE THIS RIGHT." 3. Where the contract, note or instrument evidencing or securing a junior mortgage loan provides for a variable rate of interest, said rate shall be based on a published index that is (a) readily available, (b) independently verifiable, (c) beyond the control of the licensee, and (d) approved by the superintendent. The interest rate of the junior mortgage loan shall be reduced in proportion to any decrease in the index rate. Increases in the interest rate may be made at the option of the licensee. 4. The banking board shall adopt regulations, including but not limited to: (a) providing for disclosure to the borrower by the licensee of the circumstances under which the rate may increase, any limitations on the increase, the effect of an increase and an example of the payment terms that would result from an increase, (b) providing for disclosure to the borrower by the licensee of a history of the fluctuations of the index over a reasonable period of time, and (c) providing for notice to the borrower from the licensee of any rate increase or change in the terms of payment. 5. A line of credit secured by a junior mortgage shall be established in an amount of no less than twenty-five hundred dollars; and shall be repayable in monthly installments. S 591. Application for a mortgage banker`s license; fees. 1. The application for a license to be a mortgage banker shall be in writing, under oath, and in the form prescribed by the superintendent. The application shall contain the name and complete business and residential address or addresses of the applicant. If the applicant is a partnership, association, corporation or other form of business organization, the application shall contain the names and complete business and residential addresses of each member, director and principal officer thereof. Such application shall also include a description of the activities of the applicant, in such detail and for such periods, as the superintendent may require; including: (a) An affirmation of financial solvency noting such capitalization requirements as may be required by the superintendent, and access to such credit as may be required by the superintendent; (b) The fingerprints of the applicant, which may be submitted to the division of criminal justice services and the federal bureau of investigation for state and national criminal history record checks; (c) An affirmation that the applicant, or its members, directors or principals as may be appropriate, are at least twenty-one years of age; (d) Information as to the character, fitness, financial and business responsibility, background and experiences of the applicant. 2. An application shall be accompanied by an investigation fee payable to the superintendent of one thousand dollars. 3. A licensee may apply for authority to open and maintain a branch office by giving the superintendent prior notice of its intention in such form as shall be prescribed by the superintendent. Unless the superintendent denies the application within thirty days of publication of notice of receipt of a completed application, the licensee shall be permitted to open and maintain such branch office. An application to open and maintain a branch office shall be accompanied by an investigation fee of five hundred dollars. 4. As a condition for the issuance and retention of a mortgage banker`s license, and subject to such regulations as the superintendent shall prescribe, applicants for a license shall file with the superintendent a surety bond in form satisfactory to him or her issued by a bonding company or insurance company authorized to do business in this state. The principal amount of such bond shall be in an amount and form prescribed by regulations of the superintendent. Such regulations shall provide for a varying bond amount based upon a licensee`s volume of business and any other relevant factors as determined by the superintendent, but in no case shall such bond be less than fifty thousand dollars nor more than five hundred thousand dollars; provided, however, that if the superintendent determines, in his or her sole discretion, that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such licensee to post a surety bond, or keep on deposit as provided in this subdivision, twice the amount of such bond or deposit as is required consistent with such regulations. In lieu of such bond, an applicant may keep on deposit with such banks, savings banks, savings and loan associations, or trust companies or private bankers or national banks or federal savings banks or federal savings and loan associations in the state of New York as such applicant may designate and the superintendent may approve, interest-bearing stocks and bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States, or of this state, or of a city, county, town, village, school district, or instrumentality of this state or guaranteed by this state, or dollar deposits, or such other assets or letters of credit as the superintendent shall by rule or regulation permit. In the event of the insolvency, liquidation or bankruptcy of such licensee, or the surrender or revocation of such mortgage banker`s license, or where the superintendent takes possession of such licensee, the proceeds of each bond or deposit shall constitute a trust fund to be used exclusively to reimburse consumer fees or other charges determined by the superintendent to be improperly charged or collected and to pay past due banking department examination costs and assessments charged to the licensee, unpaid penalties, or other obligations of the licensee. The superintendent is authorized to promulgate such regulations as are necessary and desirable to define and implement the provisions of this subdivision. Persons and entities licensed prior to the effective date of any regulations of the superintendent prescribing the bonding requirement authorized by this subdivision shall file such bond or establish such deposit within six months of the effective date of such regulations. S 591-a. Application to register as a mortgage broker; fees. 1. An application to become registered as a mortgage broker shall be in writing, under oath, in such form as shall be prescribed by the superintendent, and shall be accompanied by the fingerprints of the applicant. Such fingerprints shall be submitted to the division of criminal justice services for a state criminal history record check, as defined in subdivision one of section three thousand thirty-five of the education law, and may be submitted to the federal bureau of investigation for a national criminal history record check. Such application shall contain the name and complete business and residential address or addresses of the applicant, or if the applicant is a partnership, association, corporation or other form of business organization, the names and complete business and residential addresses of each member, director and principal officer thereof. Such application shall also include an affirmation of financial solvency noting such capitalization requirements as may be required by the superintendent, and such descriptions of the business activities, financial responsibility, educational background and general character and fitness of the applicant as may be required by the superintendent. Such application shall be accompanied by an investigation fee payable to the superintendent of five hundred dollars. 2. A registrant may apply for authority to open and maintain a branch office by giving the superintendent prior notice of its intention in such form as shall be prescribed by the superintendent. Unless the superintendent denies the application within thirty days of publication of notice of receipt of a completed application, the registrant shall be permitted to open and maintain such branch office. An application to open and maintain a branch office shall be accompanied by an investigation fee of two hundred fifty dollars. 3. As a condition for the issuance and retention of a mortgage broker`s registration, and subject to such regulations as the superintendent shall prescribe, applicants for a registration shall file with the superintendent a surety bond or make a deposit, as described in subdivision four of section five hundred ninety-one of this article, in an amount and form prescribed by regulations of the superintendent. Such regulations shall provide for a varying bond amount based upon a registrant`s volume of business and any other relevant factors as determined by the superintendent, but in no case shall such bond be less than ten thousand dollars nor more than one hundred thousand dollars; provided however that if the superintendent determines, in his or her sole discretion, that a registrant has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such registrant to post a surety bond, or keep on deposit as provided in this subdivision, twice the amount of such bond or deposit as is required consistent with such regulations. In the event of the insolvency, liquidation or bankruptcy of such licensee, or the surrender or revocation of such mortgage banker`s license, or where the superintendent takes possession of such licensee, the proceeds of each bond or deposit shall constitute a trust fund to be used exclusively to reimburse consumer fees or other charges determined by the superintendent to be improperly charged or collected and to pay past due banking department examination costs and assessments charged to the registrant, unpaid penalties, or other obligations of the registrant. The superintendent is authorized to promulgate such regulations as are necessary and desirable to define and implement the provisions of this subdivision. Persons and entities registered prior to the effective date of any regulations of the superintendent implementing or modifying the bonding requirement authorized by this subdivision shall file such bond or establish such deposit within six months of the effective date of such regulations. S 592. Application process to receive license to engage in the business of mortgage banking. 1. Upon the filing of an application for a license, if the superintendent shall find that the financial responsibility, experience, character, and general fitness of the applicant and of the members thereof if the applicant is a co-partnership or association, and of the officers and directors thereof if the applicant is a corporation are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of this article, the superintendent shall thereupon issue a license in duplicate to engage in the business of making mortgage loans described in section five hundred ninety of this article in accordance with provisions of this article. If the superintendent shall not so find, the superintendent shall not issue such license, and the superintendent shall notify the applicant of the denial. The superintendent shall transmit one copy of such license to the applicant and file another in the office of the banking department. Upon receipt of such license, a mortgage banker shall be authorized to engage in the business of making mortgage loans in accordance with the provisions of this article. Such license shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as hereinafter provided. The superintendent shall approve or deny every application for license hereunder within ninety days from the filing of a completed application provided, however, that failure to act within the prescribed period shall not be deemed approval of any such application. 2. The superintendent may refuse to issue a license pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person having a relationship with the applicant similar to a consultant, (a) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if committed and prosecuted under the laws of this state or (b) has had a license or registration revoked by the superintendent or (c) has been a director, partner, or substantial stockholder of an entity which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibility in connection with the revocation. The term "substantial stockholder", as used in this subdivision, shall be deemed to refer to a person owning or controlling directly or indirectly ten per centum or more of the total outstanding stock of a corporation.

S 592-a. Application process to register as a mortgage broker. 1. Upon the filing of an application for registration, if the superintendent shall find that the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant is a co-partnership or association, and of the officers and directors thereof if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of this article, the superintendent shall thereupon register the applicant as a mortgage broker on a roll maintained for that purpose at the banking department, and issue a certificate attesting to such registration in duplicate. If the superintendent shall not so find, the superintendent shall not register such applicant, and shall notify the applicant of the denial. The superintendent shall transmit one copy of such certificate to the applicant and file another in the office of the banking department. Upon receipt of such certificate a mortgage broker shall be authorized to engage in the business of placing, processing and negotiating mortgage loans. Such registration shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as hereinafter provided, except that such registration shall expire upon the registrant`s failure to pay the required registration fees for the next succeeding year under section five hundred ninety-four-a of this article by January fifteenth of such year. Such registration shall be reinstated if the registrant pays such registration fee and any applicable late fees within sixty days of such expiration. The superintendent shall approve or deny every application for registration hereunder within ninety days from the filing of a complete application provided, however, that failure to act within the prescribed period shall not be deemed approval of any such application. 2. The superintendent may refuse to issue a certificate pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person having a relationship with the applicant similar to a consultant, (a) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if committed and prosecuted under the laws of this state or (b) has had a license or registration revoked by the superintendent or (c) has been a director, partner, or substantial stockholder of an entity which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibility in connection with the revocation. The term "substantial stockholder", as used in this subdivision, shall be deemed to refer to a person owning or controlling directly or indirectly ten per centum or more of the total outstanding stock of a corporation. S 593. License provisions. Each license issued under this article shall state the address or addresses at which the business is to be conducted and shall state fully the name of the licensee, and the date and place of its incorporation if applicable. A copy of such license shall be prominently posted in each place of business of the licensee. Such license shall not be transferable or assignable. In the event the location at which the business is to be conducted shall be changed, the licensee shall forthwith notify the superintendent who shall thereupon without charge attach to the license an amendment certificate setting forth such changed location. S 593-a. Registration provisions. 1. Each certificate issued to a registered mortgage broker under this article shall state the address or addresses at which the business is to be conducted and shall state fully the name of the registrant, and the date and place of its incorporation if applicable. A copy of such certificate shall be prominently posted in each place of business of the registrant. Such certificate shall not be transferable or assignable. In the event the location at which the business is to be conducted shall be changed, the registrant shall forthwith notify the superintendent who shall thereupon without charge attach to the certificate an amendment certificate setting forth such changed location. 2. In addition to the display of such certificate, each registered mortgage broker shall prominently display a notice printed in the English language, each letter to be at least two inches in height, indicating that the mortgage broker is not empowered to make mortgage loans, and such other notices as required by the banking board. S 594. Changes in officers and directors. Upon any change of any of the executive officers, partners or directors of any licensee or registrant, the licensee or registrant shall submit to the superintendent the name, address, and occupation of each new officer, partner or director, and provide such other information as the superintendent may require. S 594-a. Annual fees. 1. License fee. The license fee for each calendar year or part thereof shall be one thousand dollars payable on or before the fifteenth day of December for the next succeeding year, except that if the license is issued after June thirtieth in any year, the fee shall be five hundred dollars payable for that year. 2. Registration fee. The registration fee for each calendar year or part thereof shall be five hundred dollars payable on or before the fifteenth day of December for the next succeeding year, except that if the mortgage broker is issued a certificate after June thirtieth in any year, the fee shall be two hundred fifty dollars for that year. If the registrant fails to pay the required registration fee pursuant to this subdivision or pursuant to subdivision three of this section by December fifteenth, then the registrant shall be required to pay a late fee in the amount of one hundred dollars. 3. The superintendent shall prescribe an annual fee to maintain a branch office of a licensee or registrant not to exceed one thousand dollars per annum for each branch office of a licensee, or five hundred dollars per annum for each registrant. S 594-b. Changes in control. 1. It shall be unlawful except with the prior approval of the superintendent for any action to be taken which results in a change of control of the business of a licensee or registrant. Prior to any change of control, the person desirous of acquiring control of the business of a licensee or registrant shall make written application to the superintendent and pay an investigation fee of one thousand dollars to the superintendent. The application shall contain such information as the superintendent, by rule or regulation, may prescribe as necessary or appropriate for the purpose of making the determination required by subdivision two of this section. This information shall include but not be limited to the information and other material required for a licensee by subdivision one of section five hundred ninety-one of this article or required for a registrant by subdivision one of section five hundred ninety-one-a of this article. 2. The superintendent shall approve or disapprove the proposed change of control of a licensee or registrant in accordance with the provisions of section five hundred ninety-two of this article relating to licensees or section five hundred ninety-two-a of this article relating to registrants. The superintendent shall approve or disapprove the application in writing within ninety days after the date the application is filed with the superintendent. 3. For a period of six months from the date of qualification thereof and for such additional period of time as the superintendent may prescribe, in writing, the provisions of subdivisions one and two of this section shall not apply to a transfer of control by operation of law to the legal representative, as hereinafter defined, of one who has control of a licensee or registrant. Thereafter, such legal representative shall comply with the provisions of subdivisions one and two of this section. The provisions of subdivisions one and two of this section shall be applicable to an application made under such section by a legal representative. The term "legal representative", for the purposes of this section, shall mean one duly appointed by a court of competent jurisdiction to act as executor, administrator, trustee, committee, conservator or receiver, including one who succeeds a legal representative and one acting in an ancillary capacity thereto in accordance with the provisions of such court appointment. 4. As used in this section: (a) the term "person" includes an individual, partnership, corporation, association or any other organization, and (b) the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a licensee or registrant, whether through the ownership of voting stock of such licensee or registrant, the ownership of voting stock of any person which possesses such power or otherwise. Control shall be presumed to exist if any person, directly or indirectly, owns, controls or holds with power to vote ten per centum or more of the voting stock of any licensee or registrant or of any person which owns, controls or holds with power to vote ten per centum or more of the voting stock of any licensee or registrant, but no person shall be deemed to control a licensee or registrant solely by reason of being an officer or director of such licensee or registrant or person. The superintendent may in his discretion, upon the application of a licensee or registrant or any person who, directly or indirectly, owns, controls or holds with power to vote or seeks to own, control or hold with power to vote any voting stock of such licensee or registrant, determine whether or not the ownership, control or holding of such voting stock constitutes or would constitute control of such licensee or registrant for purposes of this section. S 595. Grounds for suspension or revocation of license, or suspension or deletion of name from mortgage broker roll. 1. The superintendent may revoke any license to engage in the business of a mortgage banker issued pursuant to this article or delete the name of a mortgage broker from the roll of mortgage brokers registered pursuant to this article if he shall find that: (a) Through a course of conduct, the licensee or registrant has violated any provisions of this article, or any rule or regulation promulgated by the banking board, or any rule or regulation prescribed by the superintendent under and within the authority of this article or of any other law, rule or regulation of this state or the federal government; (b) Any fact or condition exists which, if it had existed at the time of the original application for such license or registration, would have warranted the superintendent in refusing originally to issue such license; (c) The commission by a licensee or registrant of a crime against the laws of this state or any other state or of the United States involving moral turpitude or fraudulent or dishonest dealing, or the entry of a final judgment against a licensee or registrant in a civil action upon grounds of fraud, misrepresentation or deceit; (d) As a part of such determination regarding suspension or revocation, the superintendent is authorized to require the fingerprinting of any licensee or registrant. Such fingerprints shall be submitted to the division of criminal justice services for a state criminal history record check, as defined in subdivision one of section three thousand thirty-five of the education law, and may be submitted to the federal bureau of investigation for a national criminal history record check. 2. The superintendent may, on good cause shown, or where there is a substantial risk of public harm, suspend any license or delete the name of any registrant for a period not exceeding thirty days, pending investigation. "Good cause", as used in this subdivision, shall exist only when the licensee or registrant has defaulted or is likely to default in performing its financial engagements or engages in dishonest or inequitable practices which may cause substantial harm to the persons afforded the protection of this article. 3. Except as provided in subdivision two of this section, no license or registration shall be revoked or suspended except after notice and a hearing thereon. Any order of suspension issued after notice and a hearing may include as a condition of reinstatement that the licensee or registrant make restitution to consumers of fees or other charges which have been improperly charged or collected as determined by the superintendent. 4. Any licensee or registrant may surrender any license or certificate by delivering to the superintendent written notice that it thereby surrenders such license or certificate, but such surrender shall not affect such licensee`s or registrant`s civil or criminal liability for acts committed prior to such surrender. If such surrender is made after the issuance by the superintendent of a statement of charges and notice of hearing, the superintendent may proceed against the licensee or registrant as if such surrender had not taken place. 4-a. An expiration of registration in accordance with section five hundred ninety-two-a of this article shall not affect such registrant`s civil or criminal liability for acts committed prior to such expirations. If such expiration occurs after the issuance by the superintendent of a statement of charges and notice of hearing, the superintendent may proceed against the registrant as if such expiration had not taken place. 5. No revocation, suspension, surrender or expiration of any license or certificate shall impair or affect the obligation of any preexisting lawful contract between the licensee or registrant and any person. 6. Every license or registration issued pursuant to this article shall remain in force and effect until the same shall have expired in accordance with section five hundred ninety-two-a of this article or shall have been surrendered, revoked or suspended in accordance with any other provisions of this article, but the superintendent shall have authority to reinstate a suspended license or certificate or to issue a new license or certificate to a licensee or registrant whose license or registration shall have been revoked if no fact or condition then exists which would have warranted the superintendent in refusing originally to issue such license or registration under this article. 7. Whenever the superintendent shall revoke or suspend a license or registration issued pursuant to this article, he shall forthwith execute in duplicate a written order to that effect. The superintendent shall file one copy of such order in the office of the department of banking and shall forthwith serve the other copy upon the licensee or registrant. Any such order may be reviewed in the manner provided by article seventy-eight of the civil practice law and rules. Such application for review as authorized by this section must be made within thirty days from the date of such order of suspension or revocation. 7-a. Whenever a registration shall have expired in accordance with section five hundred ninety-two-a of this article, the superintendent shall notify the registrant that the registration has expired and that the registrant may not engage in the business of soliciting, processing, placing or negotiating a mortgage loan or offering to solicit, process, place or negotiate a mortgage loan in this state. 8. Any hearing held pursuant to the provisions of this section shall be noticed, conducted and administered in compliance with the state administrative procedure act. S 595-a. Regulation of mortgage brokers, mortgage bankers and exempt organizations. 1. Establishment of grounds to impose a fine or penalty. In addition to such other rules, regulations and policies as the banking board may prescribe to effectuate the purposes of this article, the banking board shall promulgate regulations and policies governing the establishment of grounds to impose a fine or penalty with respect to the activities of a mortgage banker, mortgage broker or exempt organization. Such regulation shall encompass the following: (a) The misrepresentation of material facts or the making of false promises likely to influence, persuade, or induce an applicant for a mortgage loan or mortgagor to take a mortgage loan, or pursuing a course of misrepresentation or false promises through agents or otherwise; (b) The misrepresentation, or concealment of any material factors, terms or conditions of a transaction to which he is a party, including the receipt of payment from a third party, pertinent to an applicant for a mortgage loan or a mortgagor; (c) The failure to disburse funds in accordance with a written commitment or agreement to make a mortgage loan; (d) The failure to account for or deliver to any person any personal property obtained in connection with a mortgage loan such as money, fund, deposit, check, draft, mortgage, or other document, or thing of value, which has come into his hands, and which is not his property, or which he is not in law or equity entitled to retain; (e) The improper refusal to issue a satisfaction of mortgage; and (f) Engaging in any transaction, practice, or course of business which operates a fraud upon any person in connection with the purchase or sale of any mortgage loan. (g) Violation of section six-j of this chapter. 2. Restrictions on advertising. In addition to such other rules, regulations and policies as the banking board may promulgate to effectuate the purposes of this article, the banking board shall prescribe regulations governing the advertising of mortgage loans, including, without limitation, the following requirements: (a) All advertisements by a mortgage broker, mortgage banker or exempt organization shall contain the name and an office address of such entity, which in the case of licensees and registrants shall conform to a name and address on record with the banking department; (b) No licensed mortgage broker or mortgage banker shall advertise its services in any media, whether print or electronic, without the words "registered mortgage broker" or "licensed mortgage banker" or similar words therein; (c) No mortgage broker, mortgage banker or exempt organization shall advertise information concerning mortgage loans, including rates, margins, discounts, points, fees, commissions or other material information, including material limitations on such loans, unless such entity is able to make such mortgage loans available to a reasonable number of qualified applicants; (d) All advertisements by mortgage brokers must include language indicating that such brokers may not make loans; and (e) The term "advertisement" shall not include promotional material containing fifteen words or less which does not contain references to specific rates, points, discounts, fees, material loan factors, etc., such as imprinted pencils, pens or balloons. 3. Required disclosures. In addition to such other rules, regulations and policies as the banking board may promulgate to effectuate the purposes of this article, the banking board shall promulgate regulations governing the disclosure required to be made to applicants for a mortgage loan, including, without limitation, the following requirements: (a) Each mortgage broker, mortgage banker and exempt organization shall provide to each applicant for a mortgage loan at or before the time of application a disclosure of the fees payable at the time of application and the conditions under which such fees may be refundable, and such other disclosures as shall be required by the banking board; (b) Each mortgage banker and exempt organization shall make available to each applicant for a mortgage loan at or before the time a commitment to make a mortgage loan is given a written disclosure, the fees to be paid in connection with the commitment and the loan, or the manner in which such fees shall be determined and the conditions under which such fees may be refundable, and such other disclosures as may be required by the banking board; and (c) In each lock-in agreement it shall issue, every mortgage banker and exempt organization shall include a list of all documents typically required to be produced and conditions typically required to be satisfied for closing of a mortgage loan based on information provided by the applicant. In each commitment it shall issue, every mortgage banker and exempt organization shall include a list of all documents foreseeably required to be produced and conditions foreseeably required to be satisfied for closing of a mortgage loan based on information provided by the applicant. In addition, no later than twelve business days prior to the expiration of any lock-in period or commitment period, a mortgage banker or exempt organization shall mail to each applicant for a mortgage loan a notice indicating the date of such expiration together with a request that the applicant contact the lender immediately to discuss the conditions precedent to the closing of such loan; and (d) Each mortgage broker, mortgage banker and exempt organization shall provide such other disclosure as the banking board shall determine by regulation are appropriate to carry out the purposes of this article. 4. Restrictions on tying. (a) No mortgage banker, mortgage broker or exempt organization shall, as a condition for the approval of a mortgage loan, require the use of a particular title insurance company, title insurance agency or title insurance agent or, for any other type of insurance, require the use of a particular insurer, agent or broker. (b) A bank, trust company, savings bank, savings and loan association or national bank which operates in compliance with the provisions of subdivision eight of section fourteen-g of this chapter and paragraph two of subdivision (a) of section two thousand five hundred two of the insurance law shall be deemed to be in compliance with this subdivision. S 596. Superintendent authorized to examine; expenses. For the purpose of discovering violations of this article or securing information lawfully required by him hereunder, the superintendent may at any time, and as often as he may determine, either personally or by a person duly designated by him, investigate the business and examine the books, accounts, records, and files used therein of every licensee and registrant. For that purpose the superintendent and his duly designated representative shall have free access to the offices and places of business, books, accounts, papers, records, files, safes and vaults of all such licensees and registrants. The superintendent and any person duly designated by him shall have authority to require the attendance of and to examine under oath all persons whose testimony he may require relative to such business. The expenses incurred in making any examination pursuant to this section shall be assessed against and paid by the licensee or registrant so examined, except that traveling and subsistence expenses so incurred shall be charged against and paid by licensees or registrants in such proportions as the superintendent shall deem just and reasonable, and such proportionate charges shall be added to the assessment of the other expenses incurred upon each examination. Upon written notice by the superintendent of the total amount of such assessment, the licensee or registrant shall become liable for and shall pay such assessment to the superintendent. In any hearing in which the bank examiner acting under authority of this chapter is available for cross-examination, any official written report, worksheet, other related papers, or duly certified copy thereof, compiled, prepared, drafted, or otherwise made by said bank examiner, after being duly authenticated by said examiner, may be admitted as competent evidence upon the oath of said examiner that said worksheet, investigative report, or other related documents were prepared as a result of an examination of the books and records of a licensee or registrant or other person, conducted pursuant to the authority of this chapter. S 597. Books and records; reports. Each licensee, registrant and exempt organization shall keep and use in its business such books, accounts and records as will enable the superintendent to determine whether such licensee, registrant or exempt organization is complying with the provisions of this article and with the rules and regulations lawfully made by the superintendent and the banking board. Every licensee, registrant and exempt organization shall preserve such books, accounts, and records, for at least three years; provided, however, that preservation by photographic reproduction thereof or records in photographic form, including an optical disk storage system and the use of electronic data processing equipment that provides comparable records to those otherwise required and which are available for examination upon request shall constitute compliance with the requirements of this section. Each licensee and registrant shall annually, on or before a date to be determined by the superintendent, file a report with the superintendent giving such information as the superintendent may require concerning the business and operations during the preceding calendar year of such licensee or registrant under authority of this article. Such report shall be subscribed and affirmed as true by the licensee or registrant under the penalties of perjury and shall be in the form prescribed by the superintendent. In addition to annual reports, the superintendent may require such additional regular or special reports as he may deem necessary to the proper supervision of licensees and registrant under this article. Such additional reports shall be in the form prescribed by the superintendent and shall be subscribed and affirmed as true under the penalties of perjury. S 598. Additional penalties for violation of this article; civil, criminal; liquidated damages. 1. In addition to such penalties as may otherwise be applicable by law, the superintendent may, after notice and hearing as provided elsewhere in this article, require any entity, licensee, registrant or exempt organization found violating the provisions of this article or the rules or regulations promulgated hereunder to pay to the people of this state an additional penalty for each violation of the article or any regulation or policy promulgated hereunder a sum not to exceed five thousand dollars for each such violation, provided however, that the aggregate penalty assessed in any one proceeding shall not exceed one hundred thousand dollars. 2. Whoever violates any provision of the licensing requirements of subparagraphs (a) and (b) of subdivision two of section five hundred ninety of this article by making a mortgage loan without being licensed or specifically exempted from licensing, or soliciting, processing, placing or negotiating a mortgage loan without being registered or specifically exempted from registration, shall be guilty of a class A misdemeanor, punishable as provided in articles seventy and eighty of the penal law. 3. Liquidated damages. In addition to any other remedy which an applicant for a mortgage loan or mortgagor may have against a licensee, registrant or exempt organization for breach of contract or agreement to make a mortgage loan, the court after considering the circumstances may award the plaintiff, upon granting a judgment in his favor in an individual action on such claim, liquidated damages an amount equal to twice the amount of any fees or other charges paid by the applicant or mortgagor in connection with such contract or agreement exclusive of any amounts paid or payable after the mortgage or other security instrument is executed. 4. Statutory or common-law remedies. Nothing in this article shall limit any statutory or common-law right of any person to bring any action in any court for any act, or the right of the state to punish any person for any violation of any law. 5. Civil penalties assessable against unlicensed or unregistered persons or entities. If any non-exempt unlicensed or unregistered person or entity engages in activities encompassed by this article, he shall be liable to any person or entity affected by such activities for a sum of money of not less than the amount of money paid to an affected person or entity in connection with such activities, nor more than four times such sum. Such sum may be sued for and recovered by any person or entity for his use and benefit in any court of competent jurisdiction. S 599. Separability of provisions. If any provision of this article, or the application of such provision to any person, co-partnership, association, corporation or circumstance, shall be held invalid, the remainder of the article, and the application of such provision to persons, co-partnerships, associations, corporations or circumstances other than those as to which it is held invalid, shall not be affected thereby.

New York Banking Law

Article 12-D, Licensed Mortgage Bankers