2019 New York Laws
BNK - Banking
Article 10 - Savings and Loan Associations
393 - Repayment of Mortgage Loans; Application of Pledged Shares.

§ 393.  Repayment of mortgage loans; application of pledged shares. 1.
For the purpose of making payment on his mortgage loan a member  may  at
any  time,  without  forfeiture  of  dividends, transfer from the amount
credited upon the shares pledged by him as security, a sum equal to  the
matured value of one or more instalment shares.
  2.  Any  mortgage  loan  made  by  a savings and loan association to a
member may be repaid in whole or in part  at  any  time,  but  the  loan
contract  may expressly provide for a period during which prepayment may
not be made without incurring prepayment penalties. When such  provision
is  contained therein, the loan contract must also expressly provide for
prepayment penalties or no prepayment penalties may  be  collected  when
the  loan  is prepaid. However, where a loan is secured by mortgage on a
one to six family residence, or is extended to finance the purchase of a
cooperative under subdivision two-a of section three hundred  eighty  of
this  chapter  which  residence or cooperative is or will be occupied in
whole or in part by the member, prepayment penalties may be imposed only
during the first twelve months from the date the mortgage or cooperative
loan was made and may not exceed:
  (a) Interest for a period of three months on the principal so prepaid;
or
  (b) Interest for the  remaining  months  of  the  first  year  on  the
principal  so  prepaid  if the prepayment is made at any time within one
year from the date the loan is made.
  The book value of instalment shares pledged as security for  any  such
loan  shall  be  deducted from the amount of the loan in determining the
amount of principal upon which such interest may be charged.
  3. Whenever any mortgage is foreclosed, the withdrawal  value  of  the
shares  transferred  and pledged to any such association as security for
the loan shall be applied toward the payment of the indebtedness of  the
member and his rights under such shares shall terminate.
  4.  In  event  of  the  voluntary  or  involuntary  liquidation of any
association, the holder of shares pledged as  security  for  a  mortgage
loan  pursuant  to  the  provisions  of subdivision one of section three
hundred eighty of this article shall be entitled to have the payments on
such shares and the  dividends  credited  or  entitled  to  be  credited
thereon applied in reduction of such mortgage loan.
  5.  No shares pledged as security for a mortgage loan may be withdrawn
while the mortgage loan against which they are pledged is outstanding.