§ 14-B — Power of the superintendent of financial services to prescribe minimum rate of interest on mortgage escrow accounts

New York § 14-B

• Jurisdiction: New York
• Law BNK: Banking
• Art. 2: Department of Financial Services; Superintendent of Financial Services; Supervisory and Regulatory Powers

Text

§ 14-b. Power of the superintendent of financial services to prescribe\nminimum rate of interest on mortgage escrow accounts. 1. The\nsuperintendent shall have the power to prescribe, from time to time but\nnot more often than once in every three month period, by regulation a\nminimum rate of, and method or basis of computing, interest that a\nmortgage investing institution shall be required to pay on each escrow\naccount maintained with respect to a mortgage on a one to six family\nresidence occupied by the owner or on any property owned by a\ncooperative apartment corporation, as defined in subdivision twelve of\nsection three hundred sixty of the tax law, (as such subdivision was in\neffect on December thirtieth, nineteen hundred sixty), and located in\nthis state, which rate shall be greater than the rate of interest\nrequired to be paid under section 5-601 or 5-602 of the general\nobligations law.\n 2. In making such determination the superintendent shall consider\npertinent economic and cost factors including, but not limited to: (i)\ncurrent yields on short term investments, (ii) current dividend rates\npaid on regular savings accounts throughout this state, (iii) currently\nprevailing interest rates on conventional and insured or guaranteed\nmortgage loans in this state, (iv) cost factors in maintaining escrow\naccounts and (v) such other pertinent economic or cost factors that the\nsuperintendent shall deem to be appropriate. Prior to the\nsuperintendent's prescription of any such minimum rate of interest, the\nsuperintendent shall issue a statement in writing setting forth the\neconomic and cost data and criteria upon which such determination is\nbased. Prior to making such determination, the superintendent may invite\npresentation, by interested persons, of information and data relating to\neconomic and cost factors relevant to such minimum rate of interest.\n 3. The superintendent may promulgate such regulations as the\nsuperintendent deems necessary and proper to implement and define the\nprovisions of this section. The superintendent may prescribe the minimum\nrate of interest from time to time, but not more often than once in any\nthree-month period, and shall provide reasonable notice to the public of\nany change in the rate of interest, of the effective date of such\nchange, which shall be not less than seven days following the adoption\nof such change by the superintendent, and of any rule or regulation\nadopted pursuant to this subdivision.\n 4. In no event shall interest be required to be paid on escrow\naccounts where (i) there is a contract between the mortgagor and the\nmortgage investing institution, entered into before the date this\nsubdivision shall have become a law which contains an express disclaimer\nof an obligation on the part of the mortgage investing institution to\npay interest on such accounts, or (ii) the payment of such interest\nwould violate any federal law or regulation, or (iii) such accounts are\nmaintained with a mortgage servicing company, neither affiliated with\nnor owned in whole or in part by the mortgage investing institution,\nunder a written contract, entered into before the date this subdivision\nshall have become a law, which contract does not permit the mortgage\ninvesting institution to earn or receive a return from the investment of\nsuch accounts.\n 5. "Mortgage investing institution" as used in this section and in\nsection 5-601 or 5-602 of the general obligations law shall mean and\ninclude any bank, trust company, national bank, savings bank, savings\nand loan association, federal savings and loan association, private\nbanker, credit union, investment company, insurance company, pension\nfund, mortgage company or other entity which makes, extends or holds a\nmortgage on any one to six family residence occupied by the owner or any\nproperty owned by a cooperative apartment corporation, as defined in\nsubdivision twelve of section three hundred sixty of the tax law, (as\nsuch subdivision was in effect on December thirtieth, nineteen hundred\nsixty), and located in this state.\n 6. "Escrow account" as used in this section and in section 5-601 or\n5-602 of the general obligations law shall mean any account established\npursuant to an agreement between a mortgagor and a mortgage investing\ninstitution whereby the mortgagor pays to the mortgage investing\ninstitution or his designee amounts to be used for the payment of\ninsurance premiums, water rents or any similar charges, and shall also\ninclude real property tax escrow accounts as defined in title three-A of\narticle nine of the real property tax law.\n 7. "One to six family residence" as used in this section and in\nsection 5-601 or 5-602 of the general obligations law shall mean\nproperty used primarily for residential purposes for one to six\nfamilies, including property held in condominium form, and which is\noccupied in whole or in part by the owner.\n 8. If any provision of this section, or the application of such\nprovision to any individual, company, corporation or circumstance, shall\nbe held invalid, the remainder of this section, and the application of\nsuch section to individuals, companies, corporations, or circumstances\nother than those to which it is held invalid, shall not be affected\nthereby.\n