2010 New York Code
BNK - Banking
Article 1 - (1 - 9-U) SHORT TITLE; DEFINITIONS; MISCELLANEOUS PROVISIONS.
6-K - Real property insurance escrow accounts.

§ 6-k.  Real  property insurance escrow accounts. 1. Definitions. When
  used in this section: (a) "Mortgage  investing  institution"  means  any
  bank,  trust  company,  national  bank,  savings  bank, savings and loan
  association, federal savings bank, federal savings and loan association,
  private banker, credit union, federal credit union, investment  company,
  pension  fund,  licensed  mortgage  banker  or  any  other  entity which
  maintains a real property insurance escrow  account  for  real  property
  located in this state.
    (b)  "Mortgagor" means a person having title to and occupying a one to
  four family residence which is located in this state and is subject to a
  mortgage.
    (c) "Real property insurance" means a policy of insurance  issued,  or
  issued for delivery in this state, on a risk located or resident in this
  state  insuring the following contingency: loss or damage (including but
  not limited to loss or damage on account of fire) to real property  used
  predominantly  for  residential  purposes  and consists of not more than
  four dwelling units, other than motels or hotels.
    (d)  "Real  property  insurance  escrow  account"  means  an   account
  established by contract between a mortgagor of real property improved by
  a  one  to  four family residence and the mortgage investing institution
  having a mortgage thereon, into which the mortgage investing institution
  shall deposit money collected from the  mortgagor  for  the  purpose  of
  paying real property insurance premiums.
    (e)  "One  to four family residence" means property used primarily for
  residential purposes for one to four families, including  property  held
  in  condominium  form of ownership, and which is occupied in whole or in
  part by the owner.
    2. Duties and responsibilities  of  mortgage  investing  institutions.
  (a)  Every  mortgage  investing  institution shall make all payments for
  insurance for which they hold real property insurance escrow accounts in
  a timely manner.
    (b) Every mortgage  investing  institution  shall  pay  at  least  the
  minimum  rate of interest on each real property insurance escrow account
  as prescribed therein.
    (c) Every mortgage investing institution shall deposit  funds  from  a
  real  property  insurance  escrow  account  of  a mortgagor in a banking
  institution whose deposits are insured by a federal agency or a licensed
  branch of a foreign banking corporation whose deposits are insured by  a
  federal   agency.  Notwithstanding  the  foregoing  provisions  of  this
  subdivision, the banking board shall have the power, by  a  three-fifths
  vote  of  all  its  members,  to  exempt  from  the requirements of this
  subdivision any banking organization which does not receive deposits  or
  share accounts from the general public.
    (d)  A  mortgage  investing  institution  may debit a mortgagor's real
  property insurance escrow account for  payments  of  insurance  premiums
  only  if actual payment for such premiums is made within twenty-one days
  after such debit.
    (e) Every mortgage investing institution  shall,  at  least  annually,
  provide  to  the  mortgagor  an  analysis of the real property insurance
  escrow account of the mortgagor. Such analysis shall  contain,  for  the
  twelve  month  period  covered  by  the analysis, at least: (1) interest
  earned; (2) the amount of insurance premiums paid from the real property
  insurance escrow  account;  and  (3)  the  account  balance  as  of  the
  beginning  of  the period covered by the analysis and the ending account
  balance as of a specified date within forty-five days preceding the date
  of the analysis. In addition, the mortgage investing institution  shall,
  upon  request  by  the  mortgagor,  provide to the mortgagor the date or
  dates of the payment of  insurance  premiums  from  such  real  property

insurance escrow account. The information required by this paragraph may
  be  provided  in  notices  otherwise  required  by federal or state law,
  regulation or rule to be sent  on  at  least  an  annual  basis  to  the
  mortgagor,  including  but not limited to notices under title three-A of
  the real property tax law.
    (f)  The  mortgage  investing  institution  shall  provide  a  written
  disclosure,  in  at  least  eight point bold face type, to the mortgagor
  with respect  to  the  real  property  insurance  escrow  account.  Such
  disclosure  shall  be  provided  at the time of the establishment of the
  real property insurance escrow account. In the case of accounts  already
  in existence on the effective date of this act, such disclosure shall be
  provided  to  the  mortgagor  with  the next annual analysis required by
  paragraph  (e)  of  this  subdivision.  The  disclosure  shall   contain
  substantially the following language:
    (i)  The  mortgage  investing  institution  is  obligated  to make all
  payments for  real  property  insurance  for  which  the  real  property
  insurance  escrow  account  is  maintained. If any such payments are not
  timely, the mortgage investing institution  is  responsible  for  making
  such  payments  including any penalties and interest and shall be liable
  for all damages to the mortgagor resulting  from  its  failure  to  make
  timely payment.
    (ii)  In  the  event  that a real property insurance premium notice is
  sent directly to the mortgagor by the insurer, the mortgagor shall  have
  the  obligation to promptly transmit such premium notice to the mortgage
  investing institution, or such other institution  or  agent  as  may  be
  designated  in  writing  by  the  mortgage  investing  institution,  for
  payment. Failure to do  so  may  jeopardize  the  mortgagor's  insurance
  coverage   and  may  excuse  the  mortgage  investing  institution  from
  liability for failure  to  timely  make  such  real  property  insurance
  payments.
    (iii)  The  mortgagor  is  obligated  to  pay  one-twelfth of the real
  property  insurance  premiums  each  month  to  the  mortgage  investing
  institution for deposit into the real property insurance escrow account,
  unless  there is a deficiency or surplus in the account, in which case a
  greater or lesser amount may be required.
    (iv)  If  the  mortgage  investing  institution  is  subject  to   the
  provisions  of paragraph (c) of this subdivision, the mortgage investing
  institution must deposit the escrow payments made by the mortgagor in  a
  banking   institution   or  a  licensed  branch  of  a  foreign  banking
  corporation whose deposits are insured by a federal agency.
    (g) Every mortgage investing institution shall provide written  notice
  to  a  mortgagor  no  later than ten business days after the transfer to
  another mortgage investing institution  of  the  right  to  receive  all
  payments  from  the  mortgagor,  including  payments  made into the real
  property insurance escrow account, which notice shall include the  name,
  address  and  telephone  number of the mortgage investing institution to
  which such rights have been transferred.  Upon request by the mortgagor,
  the mortgage investing institution shall advise  the  mortgagor  of  the
  amount  of  money in such account as of the date of such transfer. Every
  mortgage investing institution shall remain fully liable to pay any real
  property insurance premiums which are due and payable prior to the  date
  of  such  transfer, and the mortgage investing institution to which such
  rights have been transferred shall be liable to pay  any  real  property
  insurance  premiums  which  are  due  and payable after the date of such
  transfer, unless otherwise agreed among the parties to the transfer.
    (h) Every mortgage investing institution shall, no later  than  thirty
  days  after  the final payment of the mortgage loan, where the mortgagor
  retains ownership of the property,  send  to  the  mortgagor  a  written

statement  that  shall  include,  but  not  be  limited to the following
  information: (i) that the real property  insurance  escrow  account  has
  been  or  will  be  terminated  (whichever is applicable); and (ii) that
  unless  the  mortgagor  establishes a new real property insurance escrow
  account with a mortgage investing institution,  the  mortgagor  will  be
  obliged  to  pay  to  the  appropriate  insurer  real property insurance
  premiums becoming due thereafter. The  written  notice  shall  also  set
  forth  the  effective date of the termination and shall provide the name
  and address of each insurer and shall advise the  mortgagor  to  contact
  such insurer for billing information.
    3.  Mailing or delivery of bills to mortgage investing institutions. A
  mortgagor who has entered into a real property insurance escrow  account
  may  designate,  in  writing,  a mortgage investing institution, and its
  successors, agents or  assigns  to  receive  premium  notices  for  real
  property insurance.  The mortgage investing institution shall advise the
  insurer  in  writing  within  fifteen days after the termination of such
  escrow account and shall inform the  insurer  that  all  future  premium
  notices  should  be sent directly to the insured. The mortgage investing
  institution shall, upon the request of the insurer, provide any document
  that clearly evidences its authorization to  receive  insurance  premium
  notices or obligation to pay real property insurance premiums.
    4.  Payments  by mortgage investing institutions. A mortgage investing
  institution may pay the real property insurance  premiums  due  on  more
  than  one  parcel  by  a  single  instrument, provided that the mortgage
  investing institution also provides to the insurer a  detailed  list  of
  the  specific  parcels  to  which  the instrument is to be applied, each
  parcel identification number  (if  any)  and  the  amount  of  the  real
  property insurance premium to be paid with respect to each parcel.
    5.  Liabilities  of  mortgage  investing  institutions. (a) A mortgage
  investing institution which receives moneys from a mortgagor for deposit
  into a real property insurance escrow account shall be  liable  to  such
  mortgagor,  upon  failure  to pay such real property insurance premiums,
  for the amount of the real property insurance  premiums  plus  penalties
  and interest imposed thereon.
    (b)  In  addition  to any other remedies permitted by law, a mortgagor
  whose real property insurance premiums are to be paid by means of a real
  property insurance escrow account pursuant to this section may bring  an
  action  against  the  mortgage  investing  institution  maintaining such
  account for the mortgagor under the provisions of  this  subdivision  if
  payments  for  real  property  insurance premiums have not been made for
  thirty days after the date such insurance premiums have become  due  and
  payable.  If  a court shall find, after considering the circumstances of
  the failure of a mortgage investing institution to pay the real property
  insurance premium of a mortgagor pursuant to an escrow  agreement,  that
  such  failure  was  due  to  the  negligence  or intentional acts of the
  mortgage investing institution, its agent, or both, the court may  award
  the  mortgagor  injunctive  relief  and  liquidated damages in an amount
  equal to three times the real property insurance premium not  paid,  but
  in no event greater than six thousand dollars.
    (c)  A mortgage investing institution shall be liable to the mortgagor
  for all damages and shall bear all responsibility for  failure  to  make
  timely payment of insurance premiums.
    (d)  The  mortgage  investing  institution shall have liability to the
  mortgagor under this subdivision only if:
    (i) the mortgage investing institution, or such other  institution  or
  agent  as  designated  in writing by the mortgage investing institution,
  has received the real property insurance premium notice; and

(ii) the mortgagor has made required payments  for  deposit  into  the
  real property insurance escrow account.
    6.  Separability.  If any provision of this section or the application
  of such provision in certain circumstances shall be  held  invalid,  the
  validity of the remainder of this section and its applicability to other
  circumstances shall not be affected.