US Laws, Codes, Statutes & Cases

 
    * Section  6-128.  a.  Definitions. For purposes of this section only,
  the following terms shall have the following meanings:
    (1) "Affiliate" means any person that controls, is controlled  by,  or
  is under common control with another person, including any successors in
  interest.  Control  shall  mean  ownership of ten percent or more of any
  class of outstanding stock of a company or the power to direct or  cause
  the direction of the management and policies of a person.
    (2)  "Annual  Percentage  Rate" means the annual percentage rate for a
  home loan calculated according to the provisions of the federal truth in
  lending act, as amended by the home ownership and equity protection  act
  of  1994  (15 U.S.C. § 1601, et seq.), and its implementing regulations,
  as said statute or regulations may be amended from time to time.
    (3) "Bona Fide Loan Discount Points" means discount  points  knowingly
  paid  by  the  borrower,  funded  through any source, for the purpose of
  reducing, and which in fact result in a  bona  fide  reduction  of,  the
  interest  rate  or  time-price  differential  applicable  to  the  loan,
  provided that the amount of the interest rate reduction purchased by the
  discount points is reasonably consistent with established industry norms
  and practices.
    (4) "City Agency" means a city,  county,  borough,  or  other  office,
  department,  division,  bureau,  board  or commission, or a corporation,
  institution or agency of government, the expenses of which are  paid  in
  whole or in part from the city treasury.
    (5)  "Compliance  Worksheet"  means  a form or forms contained in each
  file of a high-cost home loan as defined by  this  section  provided  by
  each  lender  certifying  as  to the presence or absence of each fact or
  circumstance that could give rise to the classification of the loan as a
  high-cost home loan,  or  a  predatory  home  loan,  including,  without
  limitation,  underwriter  judgments  as  to the credit worthiness of the
  borrower for the loan and the tangible benefits  to  the  borrower,  the
  compensation  paid directly or indirectly to the mortgage broker for the
  loan, if any, whether the  high-cost  home  loan  refinances  a  special
  mortgage   and  whether  the  high-cost  home  loan  refinances  another
  high-cost home loan made by the same  lender  or  an  affiliate  of  the
  lender.
    (6)   "Financial   Institution"   means   a  bank,  savings  and  loan
  association, thrift, credit union, investment company, mortgage  banker,
  mortgage   broker,  trust  company,  savings  bank,  securities  broker,
  municipal securities broker,  securities  dealer,  municipal  securities
  dealer,   securities   underwriter,  municipal  securities  underwriter,
  investment trust, bank holding company,  finance  company  or  financial
  services holding company.
    (7)  "First-Lien  Home Loan" means a home loan secured by a first lien
  on residential real property, a condominium unit or cooperative shares.
    (8) "High-Cost Home Loan" means a home loan that meets or exceeds  the
  threshold set forth in either subparagraph a or b of this definition:
    (a)  the  total points and fees on the loan exceed four percent of the
  total loan amount if the total loan amount is fifty thousand dollars  or
  more;  or  the greater of five percent of the total loan or one thousand
  five hundred dollars, if the  total  loan  amount  is  less  than  fifty
  thousand  dollars; provided that up to and including four bona fide loan
  discount points payable by the borrower  in  connection  with  the  loan
  transaction  shall  be excluded from the calculation of the total points
  and fees payable by the borrower, but only if  the  interest  rate  from
  which  the  loan's  interest  rate will be discounted does not exceed by
  more than two percentage points the required net yield for a  ninety-day
  standard  mandatory delivery commitment for a reasonably comparable loan

  from either the federal national mortgage  association  or  the  federal
  home loan mortgage corporation, whichever is greater; or
    (b) for a first-lien home loan, the annual percentage rate of the home
  loan at consummation of the transaction equals or exceeds six percentage
  points  over  the  yield  on  United  States  treasury securities having
  comparable periods of maturity to the loan maturity, measured as of  the
  fifteenth  day of the month immediately preceding the month in which the
  application for the extension of credit is received by  the  lender;  or
  for a junior-lien home loan, the annual percentage rate of the home loan
  at  consummation  of  the transaction equals or exceeds eight percentage
  points over the  yield  on  United  States  treasury  securities  having
  comparable  periods of maturity to the loan maturity, measured as of the
  fifteenth day of the month immediately preceding the month in which  the
  application  for  the extension of credit is received by the lender. For
  purposes of subparagraph b of this definition, if the terms of the  home
  loan offer any initial or introductory period, and the annual percentage
  rate is less than that which will apply after the end of such initial or
  introductory period, then the annual percentage rate that shall be taken
  into  account  for  purposes  of  this section shall be the rate that is
  calculated and disclosed on the initial  disclosure  statement  required
  under  section  226.6 of title 12 of the code of federal regulations for
  the period after the initial or introductory period.
    (9) "Home Loan" means a residential mortgage,  other  than  a  reverse
  mortgage  transaction,  but  including  an  open-end  line of credit, in
  which:
    (a) the borrower is a natural person;
    (b) the loan is secured by a mortgage on real estate upon which  there
  is  located or there is to be located a structure or structures intended
  principally for occupancy  by  from  one  to  four  families,  or  by  a
  residential  condominium  or  by a cooperative unit, or shares issued in
  respect thereof, which is or will be occupied by  the  borrower  as  the
  borrower's principal residence;
    (c) the property is located in the city of New York;
    (d) the principal amount of the loan does not exceed the greater of:
    (i)  the  conforming  loan  size  limit  for  a comparable dwelling as
  established  from  time  to  time  by  the  federal  national   mortgage
  association; or
    (ii) three hundred thousand dollars;
    (e)  the loan is primarily for personal, family or household purposes;
  and
    (f) the loan is entered into on or after the date this  section  takes
  effect.
    (10)  "Junior-Lien  Home  Loan" means a home loan secured by a lien on
  residential real property, condominium unit or cooperative  shares  that
  is  junior  in  priority  to a first-lien home loan with respect to such
  property.
    (11) "Lender" means any person that extends, purchases or invests  in,
  directly  or  indirectly,  including  through  collective  investment or
  securitization entities, one or more home  loans,  or  any  person  that
  arranges,   directly   or   indirectly,   including  through  collective
  investment  or  securitization,  for  the  extension,  purchase  of   or
  investment in one or more home loans, including, but not limited to, the
  securities  trust  trustee and underwriter, and any mortgage broker with
  respect to home loans. However,  for  purposes  of  this  definition,  a
  lender shall not be deemed to be:
    (a)  collective  investment  entities,  including, without limitation,
  investment companies as defined under  the  Investment  Company  Act  of
  1940,  hedge  funds,  bank  collective  trust  funds, offshore funds and

  similar entities that are not created to and do  not  acquire  pools  of
  mortgage  loans,  or  issue  securities  based on and backed by pools of
  mortgage loans, and  any  passive  investor  in  the  interests  created
  therein that exercises no discretion regarding such interests other than
  to buy, hold or sell them;
    (b)  purchasers of mortgage loans or mortgage related securities where
  the seller is obligated by written agreement and, in  fact,  intends  to
  repurchase all the loans or securities within 180 days of such sale;
    (c)  lenders  whose  interest  in high-cost home loans is limited to a
  security interest or who acquire title as a result of the foreclosure of
  such security interest, except that such lenders shall not extend credit
  to a person found to be a predatory lender as defined by this section;
    (d) securities broker dealers that trade  in  but  otherwise  are  not
  involved in any material respect in the securitization of the underlying
  mortgages; or
    (e)  any  passive  investor  in  securities or interests in securities
  based on or backed by a pool of high-cost home loans that  exercises  no
  discretion  regarding  the  securities  other  than to buy, hold or sell
  them.
    (12) "Mortgage Broker" means any person engaged  in  the  business  of
  soliciting, processing, placing, or negotiating home loans who functions
  as  an  intermediary  for  compensation,  paid  directly  or indirectly,
  between the borrower and the lender in the making of a home loan.
    (13) "Person" means any natural person, domestic corporation,  foreign
  corporation,  association,  syndicate, joint stock company, partnership,
  joint venture or unincorporated association, or other like organization,
  engaged in a business or commercial enterprise.
    (14) "Points and Fees" means:
    (a) all items listed in 15 U.S.C.  sections  1605(a)(1)  through  (4),
  except interest or the time-price differential;
    (b) all charges for items listed under section 226.4(c)(7) of title 12
  of  the  code  of federal regulations, as amended from time to time, but
  only  if  the  lender  receives  direct  or  indirect  compensation   in
  connection  with the charge or the charge is paid to an affiliate of the
  lender;
    (c) all compensation not otherwise specified in this  definition  paid
  directly  or  indirectly  to  a mortgage broker, including a broker that
  originates a home loan in its own name through an advance of  funds  and
  subsequently assigns the home loan to the person advancing the funds;
    (d)  the premium of any single-premium credit life, credit disability,
  credit property, credit unemployment or other life or health  insurance,
  including  any payments for debt cancellation or suspension, except that
  insurance premiums calculated and paid on a monthly basis shall  not  be
  included; and
    (e)  all prepayment fees or penalties that are charged to the borrower
  if the loan refinances a prior loan  made  by  the  same  lender  or  an
  affiliate of the lender.
    (15) "Predatory Lender" means:
    (a)  a  lender  that,  in  the  aggregate  for  such  lender  and  its
  affiliates, extends, purchases or  invests  in,  during  a  twelve-month
  period, the lesser of:
      (i) ten individual predatory loans, or
      (ii)  any number of predatory loans constituting five percent of the
  total number of home loans made, purchased or invested  in  during  such
  twelve-month period by such lender and its affiliates.
    (b)  Notwithstanding  subparagraph  a  of  this definition, any lender
  shall not be a predatory lender if:

      (i) the lender obtains the approval of the comptroller of  the  city
  of New York for a plan to discontinue the practice of making, purchasing
  or  otherwise  investing  in  predatory  loans  by  the  lender  and its
  affiliates, and the lender and  its  affiliates  then  completely  cease
  making,  purchasing  or otherwise investing in predatory loans within 60
  days after the plan is approved by the comptroller; and
      (ii) the lender and its affiliates remain in  compliance  with  such
  plan;  provided  that  no  more  than  one  plan may be submitted to the
  comptroller on behalf of any lender, except a  subsequent  plan  may  be
  submitted to the comptroller:
    (A) if ten or more years have passed since the same lender submitted a
  prior plan pursuant to this section; or
    (B)  by  a  person  solely  in  connection  with  the acquisition of a
  predatory lender after the date of submission of a prior  plan  if  such
  plan  will  discontinue  the practice of making, purchasing or otherwise
  investing in predatory loans by the acquired predatory lender within  90
  days of such acquisition; or
      (iii)  when  directly  or  indirectly  purchasing  or  investing  in
  high-cost home loans, or arranging for the  purchase  or  investment  in
  high-cost  home  loans  by  collective investment or securitization, the
  lender reasonably believes, after reasonable investigation, conducted by
  or on behalf of such lender, based upon reasonable procedures consistent
  with  industry  practice  for  the  review  of  the  terms   and   other
  characteristics  of  home  loans  in  connection  with  the  purchase or
  securitization of, or investment in,  high-cost  home  loans  generally,
  that the home loans purchased or invested in do not constitute predatory
  loans  as  defined  by  this  section.  For purposes of this clause iii,
  "procedures consistent with industry practice" shall include, but not be
  limited to, a random statistical sample of not less than ten percent  of
  the  home  loans  for  real  property  located  in  the city of New York
  included in the home loan pool to be securitized  or  purchased,  except
  that  if  the  lender  has an established business relationship with the
  originator  or  wholesaler  of  the  home  loans  being   purchased   or
  securitized,  as  demonstrated  by  the lender having completed not less
  than four transactions with said entity during the preceding two  years,
  the lender may conduct a random statistical sample of not less than five
  percent  of the home loans described above. Furthermore, for purposes of
  this clause, the lender may rely on a complete Compliance Worksheet,  as
  defined  in  this  section,  to  establish  a  reasonable  belief that a
  high-cost home loan is not a predatory loan as defined in  subparagraphs
  a,  b,  d  (only  with  respect to the lender or an affiliate not having
  advised or recommended that the borrower obtain a waiver  of  home  loan
  counseling), o, p and q of paragraph 16 of this subdivision; or
      (iv)  the  lender  is an exempt organization qualified under section
  501(c)(3) of the  internal  revenue  code,  and  operates  to  remediate
  predatory  loans  with  the approval of, or in association with, a city,
  state or federal agency.
    (16) "Predatory Loan" means any high-cost home loan with one  or  more
  of the following characteristics:
    (a) Proceeds of the high-cost home loan are used to pay all or part of
  an existing home loan and the borrower does not receive a reasonable and
  tangible   benefit   from   the   new  home  loan  considering  all  the
  circumstances, including the terms of both the  new  and  existing  home
  loan  and  any  other debt being refinanced by the new loan, the cost of
  the new home loan, and the borrower's  circumstances.  For  purposes  of
  this  subparagraph,  there  shall be a presumption that the borrower has
  received a reasonable and tangible benefit if, at the time the refinance
  loan is made, any of the following is true:

      (i) as a result of the refinance there is a  net  reduction  in  the
  borrower's total monthly payments on all debts consolidated into the new
  home  loan,  and  this  reduction  will continue for at least thirty-six
  months after the refinance;
      (ii)  as  a  result  of  the  refinance  there is a reduction in the
  borrower's blended interest rate on all debts consolidated into the  new
  home loan, and it will not take more than five years for the borrower to
  recoup the points and fees charged for the refinance; or
      (iii)  the  refinance  loan is necessary to prevent default under an
  existing home loan or other secured debt of the borrower, provided  that
  the lender for the refinanced loan is not the same as or an affiliate of
  the lender for the existing home loan or other secured debt.
    (b)  The  lender  does not reasonably believe at the time it makes the
  high-cost home loan that the borrower will be able to make the scheduled
  payments, based upon a  consideration  of  the  borrower's  current  and
  expected  income,  current  obligations,  employment  status,  and other
  financial resources (other than equity  in  the  home  being  financed).
  There  shall  be  a  presumption  that  the borrower is able to make the
  scheduled payments if, at the time the loan is made:
      (i) the scheduled monthly payments (after giving effect to any index
  adjustments with respect to the loan) on the loan (including  principal,
  interest,  taxes,  insurance, assessments, condominium fees, cooperative
  maintenance expenses) combined with the scheduled payments for all other
  debt, do not exceed fifty  percent  of  the  borrower's  documented  and
  verified monthly gross income; and
      (ii)  the  borrower has sufficient residual income as defined in the
  guidelines established in section 36.4337(e) of title 38 of the code  of
  federal   regulations   and   United   States   department   of  veteran
  administration form 26-6393 to  pay  essential  monthly  expenses  after
  paying the scheduled monthly payments and any additional debt; or
      (iii)  if clauses (i) or (ii) of this subparagraph do not apply, the
  home loan shall be a predatory loan unless  the  lender  determines  and
  documents  prior  to the closing of the loan that the making of the loan
  is justified based upon  specific  compensating  factors,  such  as  the
  borrower's long-term credit history, the borrower's demonstrated ability
  to  make payments under comparable or greater debt obligations to income
  ratios,  the  conservative  use  of  credit  standards,  the  borrower's
  significant liquid assets or other reasonable factors.
    (c) The lender finances points and fees, as defined in paragraph 14 of
  subdivision a of this section, in an amount that exceeds four percent of
  the  total  loan  amount  for  a  closed-end high-cost home loan or four
  percent of the maximum line of credit amount for  an  open-end  line  of
  credit.
    (d)  Prior  to  making  the  high-cost  home loan, the lender does not
  receive a written certification from an independent  housing  or  credit
  counselor, approved by the United States department of housing and urban
  development,  that  the borrower received counseling on the advisability
  of the loan transaction and the appropriateness  of  the  loan  for  the
  borrower,  or  waived  the loan counseling. Provided that a borrower may
  waive the loan counseling required pursuant to this subparagraph only by
  contacting such an independent housing or credit counselor  by  personal
  meeting  or live telephone conversation at least three days prior to the
  closing of the home loan and certifying in a notarized written statement
  to the  counselor  that  he  or  she  has  elected  to  waive  the  loan
  counseling,  and  no  such waiver shall be valid if the lender or any of
  its affiliates has recommended or advised  the  borrower  to  make  such
  waiver.

    (e)  More than two periodic payments required under the high-cost home
  loan are consolidated  and  paid  in  advance  from  the  loan  proceeds
  provided to the borrower other than a loan issued by or guaranteed by an
  instrumentality of the United States or of any state or any city agency,
  such  as  loan  products  offered  by  the  United  States department of
  veterans administration, fair housing administration  or  state  of  New
  York mortgage agency.
    (f)  Default  by the borrower triggers an interest rate increase. This
  provision does not apply to periodic interest rate changes in a variable
  rate  loan  otherwise  consistent  with  the  provisions  of  the   loan
  agreement, provided the change in the interest rate is not occasioned by
  the event of a default or the acceleration of the indebtedness.
    (g)   The   lender,   at  its  sole  discretion,  may  accelerate  the
  indebtedness and demand repayment of the entire outstanding balance of a
  high-cost home loan. This prohibition does not apply when  repayment  of
  the  loan  has  been  accelerated  by  bona  fide default, pursuant to a
  due-on-sale provision, or pursuant to some other provision of  the  loan
  agreement  unrelated  to  the  payment  schedule,  such as bankruptcy or
  receivership.
    (h) The payment schedule for the high-cost home loan requires  regular
  periodic  payments  that cause the principal balance to increase, except
  as a result of a temporary forbearance sought by the borrower.
    (i) There is a required scheduled payment that is twice  as  large  as
  the average of the earlier scheduled payments, unless such increases are
  justified  by  a  reamortization  as  a result of a new withdrawal in an
  open-ended line of credit. This provision does not apply:
      (i) when the  payment  schedule  is  adjusted  to  the  seasonal  or
  irregular income of the borrower; or
      (ii)  if  the  purpose  of  the  loan  is a construction bridge loan
  connected with the construction of a dwelling  intended  to  become  the
  borrower's principal residence.
    (j)  The  loan  agreement  imposes a penalty or fee on the borrower in
  violation of section 5-501(3)(b)  of  the  general  obligations  law  or
  section 393(2) of the banking law for paying the balance of the loan, in
  whole or in part.
    (k) The loan agreement contains a mandatory arbitration clause that is
  oppressive,  unfair,  unconscionable,  or substantially in derogation of
  the rights of the borrower.
    (l) Any of the proceeds of the high-cost home loan are paid to  either
  a  home improvement contractor that is an affiliate of the lender or any
  home improvement contractor other than:
      (i) by an instrument payable solely to the borrower; or
      (ii) at the election of the borrower, through a  third-party  escrow
  agent in accordance with terms established in a written agreement signed
  by   the   borrower,   the  lender  and  the  contractor  prior  to  the
  disbursement.
    (m)  The  high-cost  home  loan  finances  any  credit  life,   credit
  disability,   credit  property,  credit  unemployment,  health  or  life
  insurance, or proceeds of the loan are used to make payments pursuant to
  debt  cancellation  or   suspension   agreements.   Insurance   premiums
  calculated  and paid on a monthly basis shall not be considered financed
  by the home loan.
    (n) The borrower is charged any  fees  or  other  charges  to  modify,
  renew, extend or amend a high-cost home loan or to defer any payment due
  under  the  terms  of  the  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

  subparagraph, fees shall not include interest that is otherwise  payable
  and   consistent  with  the  provisions  of  the  loan  documents.  This
  subparagraph shall not apply to a home loan where the lender is charging
  points  and  fees in connection with any additional proceeds received by
  the borrower in connection with the modification, renewal, extension  or
  amendment  (over and above the current principal balance of the existing
  high-cost home loan) provided that the points and fees  charged  on  the
  additional sum must reflect the lender's typical point and fee structure
  for high-cost home loans.
    (o) The high-cost home loan refinances an existing home loan that is a
  special  mortgage  originated,  subsidized or guaranteed by or through a
  state, tribal or local government, or  non  profit  organization,  which
  bears either a below-market interest rate at the time of origination, or
  has  nonstandard  payment  terms  beneficial  to  the  borrower, such as
  payments that vary with income, are limited to a percentage  of  income,
  or where no payments are required under specified conditions, and where,
  as  a  result of the refinancing, the borrower would lose one or more of
  the benefits of the special mortgage,  unless  the  lender  is  provided
  prior  to  the  loan  closing documentation by an independent housing or
  credit counselor, approved by the United States  department  of  housing
  and  urban  development,  or  the lender who originally made the special
  mortgage, that a borrower has  received  home  loan  counseling  on  the
  advantages  and  disadvantages  of  the  refinancing.  There shall be no
  waiver of the home loan counseling requirement of this subparagraph.
    (p) The lender charges points and fees on a high-cost home  loan  that
  refinances a prior high-cost home loan extended by the same lender or an
  affiliate  of the lender and the refinancing occurs within five years of
  the extension of the prior home loan.
    (q) The home loan is secured as a result of  fraudulent  or  deceptive
  marketing or sales efforts.
    (r)  The  home  loan  violates any applicable provision of the federal
  truth in lending act, as  amended  by  the  home  ownership  and  equity
  protection  act  of  1994  (15  U.S.C.  1601, et seq.), the federal real
  estate settlement procedures act of 1974 (12 U.S.C. § 2601, et seq.), or
  any regulations implementing these statutes,  or  the  restrictions  and
  limitations  on  high-cost  home loans in the general regulations of the
  New York state banking board (3 NYCRR Part 41), as  these  statutes  and
  these regulations may be amended from time to time.
    b. City Financial Assistance. (1) No city agency shall approve, grant,
  award,  pay,  distribute  or  issue  any  city financial assistance to a
  financial institution where the financial institution or an affiliate of
  the financial institution is a  predatory  lender  as  defined  by  this
  section.
    (2)  As a condition to receiving any form of financial assistance from
  a city agency, a financial institution shall provide a statement to  the
  city agency certifying that neither the financial institution nor any of
  its affiliates is or will become a predatory lender. The statement shall
  be  certified  by  the chief executive or chief financial officer of the
  institution, or the designee of any such person, and  shall  be  made  a
  part  of  the  award,  grant or assistance agreement. A violation of any
  provision  of  the  certified  statement  shall  constitute  a  material
  violation of the conditions of the award, grant or assistance agreement.
    (3)  After  the  approval or issuance of an award, grant, or any other
  financial assistance,  the  comptroller  may  conduct  an  investigation
  pursuant  to  subdivision  f  of  this  section  to  determine whether a
  financial institution or any of its affiliates is a predatory lender  as
  defined by this section. Upon determining that the financial institution
  or its affiliate is a predatory lender, and where no cure is effected or

  corrective  plan  filed pursuant to subparagraph b of paragraph three of
  subdivision f of this section  and  approved  by  the  comptroller,  the
  comptroller  shall  provide evidence to the city agency that approved or
  issued  the  financial  assistance that the financial institution or its
  affiliate is a predatory lender and request in  writing  that  the  city
  agency  take  the  appropriate  actions to rescind or otherwise void the
  award, grant or assistance. Upon receipt of the  comptroller's  request,
  the  city  agency shall then make a finding whether or not the financial
  institution or its affiliate is a predatory lender in violation of  this
  section.  Upon making a finding of violation, the city agency shall take
  such action as may be appropriate and  provided  for  by  law,  rule  or
  contract,  including,  but  not  limited  to:  declaring  the  financial
  institution in default of  the  award,  grant  or  financial  assistance
  agreement;   imposing  sanctions;  recovering  the  funds  advanced;  or
  requiring repayment of any taxes or interest abated or deferred.  Within
  sixty  days  of  receiving  notification  from the comptroller, the city
  agency shall place a written explanation in the financial  institution's
  file  regarding  any  action  the city agency has taken pursuant to this
  section, or the reasons no action  was  taken.  Copies  of  the  written
  explanation shall be immediately forwarded to the comptroller and to the
  city council. Nothing in this paragraph shall preclude a city agency, in
  the  absence  of  a request from the comptroller, from investigating and
  making a determination whether or not a  financial  institution  or  its
  affiliate is a predatory lender in violation of this section.
    (4)  For the purposes of this section, city financial assistance shall
  include, but not be limited  to,  tax  abatements  (including,  but  not
  limited  to, abatements of property, sales or mortgage recording taxes),
  cash payments or grants.
    (5) Nothing in this section shall operate to impair  any  contract  or
  agreement  regarding  financial  assistance  in  effect on the date this
  section takes effect, except that renewal, amendment or modification  of
  such  contract  or agreement occurring on or after the enactment of this
  section shall be subject to all conditions specified in this section.
    (6) Notwithstanding  any  city  laws,  rules  or  regulations  to  the
  contrary, any financial institution or its affiliate that has been found
  by  a  city  agency  to  be  a predatory lender shall be prohibited from
  applying for or receiving any city financial assistance  from  any  city
  agency  for  a  period  of  three  years  from  the  date  of  the  last
  disbursement  or  approval  of  an  award,  grant  or  other   financial
  assistance, or from the date of the finding, whichever is later.
    c.  City Contracts. (1) No city agency shall enter into a contract for
  goods or services with a financial institution  or  an  affiliate  of  a
  financial  institution  where  either  the  financial institution or its
  affiliate is a predatory lender as defined by this section.
    (2) As a condition of contracting with a city  agency,  the  financial
  institution  or  its  affiliate  shall  provide  a statement to the city
  agency certifying that neither the financial institution nor any of  its
  affiliates  is or will become a predatory lender. The statement shall be
  certified by the chief executive  or  chief  financial  officer  of  the
  institution  or affiliate, or the designee of any such person, and shall
  be made a part  of  the  contract  or  agreement.  A  violation  of  any
  provision  of the certified statement shall constitute a material breach
  of the contract.
    (3) During the period of a city contract, the comptroller may  conduct
  an  investigation pursuant to subdivision f of this section to determine
  whether a financial institution or one of its affiliates is a  predatory
  lender  as  defined by this section. Upon determining that the financial
  institution or its affiliate is a predatory lender, and where no cure is

  effected  or  corrective  plan  filed  pursuant  to  subparagraph  b  of
  paragraph  three  of  subdivision  f of this section and approved by the
  comptroller, the comptroller shall provide evidence to the  city  agency
  that issued the contract that the financial institution or its affiliate
  is  a  predatory lender and request in writing that the city agency take
  the appropriate actions to rescind or otherwise void the contract.  Upon
  receipt  of  the  comptroller's request, the city agency that issued the
  contract shall  then  make  a  finding  whether  or  not  the  financial
  institution  or its affiliate is a predatory lender in violation of this
  section. Upon making a finding of violation, the city agency shall  take
  such  action  as  may  be  appropriate  and provided for by law, rule or
  contract,  including,  but  not  limited  to:  declaring  the  financial
  institution  or  the  affiliate  in default; arranging for the alternate
  procurement of the goods or services to which such contract  relates  in
  such  manner  as  to  prevent any loss to the city agency that otherwise
  might result from the immediate  cessation  of  the  contract;  imposing
  sanctions;  or  recovering  damages.  Within  sixty  days  of  receiving
  notification from the comptroller, the city agency shall place a written
  explanation in the financial institution's or affiliate's contract  file
  regarding any action the city agency has taken pursuant to this section,
  or  the  reasons  no action was taken. Copies of the written explanation
  shall be immediately forwarded  to  the  comptroller  and  to  the  city
  council.  Nothing in this paragraph shall preclude a city agency, in the
  absence of a request from the comptroller, from investigating and making
  a determination whether or not a financial institution or its  affiliate
  is a predatory lender in violation of this section.
    (4)  This  subdivision  shall  not apply to any contract evidencing or
  establishing the terms of any debt obligations issued by or on behalf of
  the city agency, but shall apply to contracts with  respect  to  agency,
  underwriting and other services provided in connection with any issuance
  thereof.
    (5)  Nothing  in  this section shall operate to impair any contract in
  effect on the date this  section  takes  effect,  except  that  renewal,
  amendment  or  modification  of  such contract occurring on or after the
  enactment of this section shall be subject to all  conditions  specified
  in this section.
    (6)  Nothing in this section shall be construed to limit the authority
  to cancel or terminate a contract, deny or withdraw approval to  perform
  a  subcontract  or provide supplies, issue a non-responsibility finding,
  issue  a  non-responsiveness  finding,   deny   a   person   or   entity
  pre-qualification, or otherwise deny a person or entity city business.
    (7)  Notwithstanding  any  city  laws,  rules  or  regulations  to the
  contrary, any financial institution or affiliate that has been found  by
  a  city  agency  to  be  a  predatory  lender  shall  be prohibited from
  contracting with any city agency for a period of three  years  from  the
  termination  date  of the contract or the date of the finding, whichever
  is later.
    d. Deposits. (1) A financial institution that is a predatory lender as
  defined by this section, or  that  has  affiliates  that  are  predatory
  lenders, shall not be a depository for the funds of any city agency.
    (2)  As  a  condition for being a depository of city agency funds, the
  financial institution shall provide a  statement  to  the  city  banking
  commission  certifying that neither the financial institution nor any of
  its affiliates is or will become a predatory lender. The statement shall
  be certified by the chief executive or chief financial  officer  of  the
  institution,  or the designee of any such person, and shall constitute a
  material provision of the deposit contract or agreement.

    (3)  The  comptroller  shall  have  the  authority  to  investigate  a
  financial  institution  that  is  a  depository  for  city  funds or its
  affiliates pursuant to  subdivision  f  of  this  section  to  determine
  whether  the  financial  institution  or  any  of  its  affiliates  is a
  predatory  lender  as defined by this section. Upon determining that the
  financial institution or its affiliate is a predatory lender, and  where
  no  cure is effected or corrective plan filed pursuant to subparagraph b
  of paragraph three of subdivision f of this section and approved by  the
  comptroller,  the  comptroller  shall  provide  evidence  to the banking
  commission  that  the  financial  institution  or  its  affiliate  is  a
  predatory  lender  and  request  that  the banking commission revoke the
  designation of the financial institution as  a  depository  pursuant  to
  section 1524 of the city charter. The banking commission shall then make
  a  finding  whether  the  financial  institution  or  its affiliate is a
  predatory lender pursuant to this section and is  in  violation  of  its
  certification  pursuant  to  section  1524(2)(a)(4) of the city charter.
  Upon making a finding of violation, the banking  commission  shall  take
  appropriate  action to revoke the financial institution's or affiliate's
  designation as a depository of the funds of any city agency.
    e. Investments. (1) The comptroller may, in  his  or  her  discretion,
  recommend  that  city  moneys  or  funds not be invested or permitted to
  remain invested in the stocks, securities or other  obligations  of  any
  financial institution that is a predatory lender or of an affiliate of a
  predatory lender.
    (2)  The  comptroller,  when  investing  city  funds  in  a  financial
  institution or an affiliate of the financial institution,  may  consider
  the  institution or affiliate's compliance with federal, state and local
  laws or regulations governing predatory lending. The comptroller, in his
  or her discretion and in accordance with his  or  her  sound  investment
  judgment,  may  remove  investments with financial institutions or their
  affiliates that fail to comply with such federal, state or local laws or
  regulation. Provided that in cases where the comptroller decides, in the
  exercise of his or her discretion and sound investment judgment, not  to
  remove investments in a financial institution or its affiliate that is a
  predatory  lender  as  defined  by  this  section, the comptroller shall
  immediately place a written explanation in the financial institution  or
  affiliate's  file  regarding  the reasons for his or her decision not to
  remove the investments, and forward a copy of the written explanation to
  the city council.
    f. Enforcement. (1)  The  comptroller  shall  have  the  authority  to
  investigate  whether  financial  institutions  or  their  affiliates are
  predatory lenders as defined in this section.
    (2) Whenever the comptroller has reason to believe  that  a  financial
  institution  or  its  affiliate  has  violated  any  provisions  of this
  section, or upon  a  verified  complaint  in  writing  by  an  aggrieved
  borrower,  the  comptroller  may  conduct  an investigation to determine
  whether a violation has occurred. The verified  complaint  shall,  at  a
  minimum,  describe  the  violation  and  contain a release signed by the
  borrower authorizing the comptroller to obtain or otherwise gain  access
  to  all  loan  documents  pertaining  to  the complaint and to any other
  records, files or information deemed necessary  by  the  comptroller  to
  conduct  the  investigation.  An  investigation  by  the comptroller may
  include, but is not limited to, reviewing information from regulatory or
  oversight agencies regarding lending or other activities of a  financial
  institution  as  it  relates  to high-cost home loans, and investigating
  verified complaints from borrowers  that  a  financial  institution  has
  engaged in predatory lending practices.

    (3)  (a)  Upon  the  commencement of an investigation, the comptroller
  shall notify the financial institution  or  affiliate  in  writing,  and
  allow  the financial institution or affiliate an opportunity to respond.
  If the financial institution or  affiliate  denies  the  allegations  or
  fails  to  respond  within thirty days of the receipt of written notice,
  the comptroller shall determine whether the  financial  institution  has
  violated the provisions of this section.
    (b)  If  the financial institution or affiliate has been found to have
  violated the provisions of this section, the  financial  institution  or
  affiliate  shall  have thirty days to cure the violation or to submit to
  the comptroller for his or her approval a corrective plan to discontinue
  the predatory lending  practices  according  to  clauses  i  and  ii  of
  subparagraph  b  of  paragraph fifteen of subdivision a of this section.
  Upon good cause shown, the comptroller may extend the initial thirty-day
  period up to an additional thirty days.
    (c) If the financial  institution  or  affiliate  fails  to  cure  the
  violation   within   the  thirty  days  or  to  submit  and  obtain  the
  comptroller's approval for a corrective plan pursuant to  this  section,
  the  comptroller shall inform the appropriate city agency or the banking
  commission, as applicable, and request that it take action  pursuant  to
  either  paragraph  3  of subdivision b, paragraph 3 of subdivision c, or
  paragraph 3 of subdivision d of  this  section.  Until  the  comptroller
  gives  notice  to  the  applicable  city  agency  or  banking commission
  pursuant to this subparagraph, the comptroller shall  hold  confidential
  any information he receives, gathers, produces, collects or generates as
  a result of any investigation pursuant to this section. However, nothing
  herein  shall  restrict the comptroller from exchanging information with
  government agencies in the furtherance of an investigation  pursuant  to
  this section.
    (4) Any person found to have made a false statement in a certification
  required  under  this  section  shall  be liable to the city for a civil
  penalty of not less than $25,000 in addition to the other remedies  that
  the city agency may have under this local law.
    * NB Enacted without section heading.
    * The  validity  of  local  law  36  of 2002 is currently a subject of
  disagreement between the Mayor and the City Council. This  certification
  is  not  intended as a legal opinion as to the validity of the local law
  other than certifying the truth of the facts presented herein.