2010 New York Code
BNK - Banking
Article 12-D - (589 - 599) LICENSED MORTGAGE BANKERS
590 - Licensing.

§ 590.  Licensing.  1.  Definitions.  (a) "Mortgage loan" shall mean a
  loan to  a  natural  person  made  primarily  for  personal,  family  or
  household  use,  secured  by  either  a  mortgage  or  deed  of trust on
  residential real property, any certificate of stock or other evidence of
  ownership in, and proprietary lease from, a corporation  or  partnership
  formed  for  the  purpose  of  cooperative ownership of residential real
  property or, if determined by the banking  board  by  regulation,  shall
  include  such  a  loan  secured by a security interest on a manufactured
  home;
    (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;
    (h) "Mortgage loan servicer" or "servicer"  shall  mean  a  person  or
  entity  registered pursuant to subdivision two of this section to engage
  in the business of servicing mortgage loans for property located in this
  state;
    (i) "Servicing mortgage loans"  shall  mean  receiving  any  scheduled
  periodic  payments from a borrower pursuant to the terms of any mortgage
  loan, including amounts for escrow accounts under section six-k of  this
  chapter,  title  three-A of article nine of the real property tax law or
  section ten of 12 U.S.C. 2609, and making the payments to the  owner  of
  the loan or other third parties of principal and interest and such other
  payments  with  respect to the amounts received from the borrower as may
  be required pursuant to the terms of the mortgage service loan documents
  or servicing contract. In the case of a home equity conversion  mortgage

or  reverse  mortgage  as  referenced  in section six-h of this chapter,
  sections two hundred  eighty  and  two  hundred  eighty-a  of  the  real
  property law or 24 CFR 3500.2, servicing includes making payments to the
  borrower.
    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, mortgage banker or mortgage loan
  servicer. 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.
    (b-1) No person, partnership, association, corporation or other entity
  shall engage in the business of servicing mortgage loans with respect to
  any  property  located in this state without first being registered with
  the superintendent as a mortgage loan servicer in  accordance  with  the
  registration procedure provided by such regulations as may be prescribed
  by  the  superintendent.  The  superintendent  may  refuse to register a
  mortgage loan servicer on the same grounds that he or she may refuse  to
  issue  a  registration  certificate  to  a  mortgage  broker pursuant to
  subdivision two of section five hundred ninety-two-a  of  this  article.
  The  registration  provisions of this subdivision shall not apply to any
  exempt organization, mortgage banker, or mortgage broker or  any  person
  or  entity  which  shall  be  exempted  in  accordance  with regulations
  prescribed by the superintendent hereunder; provided  that  such  exempt
  organization,  mortgage  banker,  mortgage  broker,  or  exempted person
  notifies the superintendent  that  it  is  acting  as  a  mortgage  loan
  servicer  in  this  state and complies with any regulation applicable to
  mortgage loan servicers, promulgated by the banking board or  prescribed
  by  the  superintendent  with  respect  to  mortgage loan servicers. The
  superintendent may require all registrations  and  notifications  to  be
  made  through  the Nationwide Mortgage Licensing System and Registry. An
  application to  become  a  registered  mortgage  loan  servicer  or  any
  application   with   respect  to  a  mortgage  loan  servicer  shall  be
  accompanied by a fee as prescribed pursuant  to  section  eighteen-a  of
  this  chapter.  Any  fee established pursuant to this subdivision may be

collected by and include a processing  fee  charged  by  the  Nationwide
  Mortgage  Licensing  System and Registry. Any such processing fees shall
  not be remitted to the superintendent and shall not  be  deemed  revenue
  pursuant to this chapter or the state finance law.
    (c)  A  licensee  registrant  or  mortgage loan servicer 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.  Rules and regulations. In addition to such powers as may otherwise
  be prescribed by this chapter, the banking board  is  hereby  authorized
  and  empowered  to  promulgate  such rules and regulations as may in the
  judgement of the banking board be consistent with the purposes  of  this
  article,  or  appropriate  for  the  effective  administration  of  this
  article, including, but not limited to:
    (a) Such rules and regulations in connection with  the  activities  of
  mortgage  brokers,  mortgage bankers, mortgage loan servicers 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,  mortgage  loan
  servicers and exempt organizations in making mortgage loans;
    (c) Such rules  and  regulations  under  this  article  regarding  the
  origination,  sale  or  servicing  of  manufactured home loans as may be
  necessary and appropriate for the protection of consumers;
    (d) 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
    (e) 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, or a
  mortgage loan servicer to assist in  the  performance  of  the  business
  activities  described  in  this  article  for  the  exempt organization,
  licensee or registrant, or a mortgage loan servicer  or  is  engaged  in
  regulated  activities  as  an  associate or affiliate of a registrant, a
  licensee, a mortgage loan servicer  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,  mortgage  loan
  servicers  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 in conformity with the provisions of this  chapter,  such
  rules  and  regulations  as  may  be promulgated by the banking board or
  prescribed by the superintendent thereunder and all  applicable  federal
  laws and the rules and regulations promulgated thereunder;
    (c)  Mortgage  bankers  and  exempt  organizations shall make mortgage
  loans in conformity with the provisions of this chapter, such rules  and
  regulations  as may be promulgated by the banking board or prescribed by
  the superintendent thereunder and all applicable federal  laws  and  the
  rules and regulations promulgated thereunder;
    (d)  Mortgage loan servicers shall engage in the business of servicing
  mortgage loans in conformity with the provisions of this  chapter,  such
  rules  and  regulations  as  may  be promulgated by the banking board or
  prescribed by the superintendent thereunder and all  applicable  federal
  laws and the rules and regulations promulgated thereunder.
    (e)  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.