§ 380 — Power to make loans

§ 380. Power to make loans. 1. A savings and loan association may make\na loan upon the security of a mortgage of the type authorized to be made\nby a savings bank by subdivisions five-a and six of section two hundred\nthirty-five of this chapter, subject to such regulations as the\nsuperintendent of financial services may prescribe.\n 1-b. A savings and loan association may also lend its funds to\nborrowers therefrom upon their promissory notes payable to the\nassociation which are:\n (a) secured by one or more mortgages in which a savings and loan\nassociation may invest; provided however, that the amount loaned is not\nin excess of ninety per centum of the principal sum secured by such\nmortgage or mortgages. The assignment of every mortgage taken as\nsecurity for any such note shall be recorded or registered in the office\nof the proper recording officer of the county in which the real property\ndescribed in such mortgage is located, unless such mortgage or mortgages\nhave been so assigned by a savings and loan association;\n (b) secured by any of the stocks and bonds in which a savings and loan\nassociation may invest, except stocks eligible for investment pursuant\nto the provisions of subdivision twenty-six of section two hundred\nthirty-five of this chapter; provided however, that the amount of the\nloan is not in excess of ninety per centum of the market value of such\nstocks and bonds;\n (c) made by a savings bank which has been incorporated three years or\nmore.\n (d) secured by any of the stocks eligible for investment by a savings\nand loan association pursuant to the provisions of subdivision\ntwenty-six of section two hundred thirty-five of this chapter; provided\nhowever, that (1) the amount of the loan is not in excess of the lesser\nof (i) eighty-five per centum of the market value of such stocks, or\n(ii) the maximum loan value of such stocks determined in accordance with\nFederal Reserve Regulation U and the supplement thereto of the board of\ngovernors of the federal reserve system and as if the savings and loan\nassociation were a member bank of such system extending credit secured\nby such stocks for their purchase as margin stock, and (2) the amount of\nsuch loan, together with the aggregate amount outstanding of all loans\nmade pursuant to this paragraph and the aggregate amount of investments\nin stock eligible for investment by a savings and loan association\npursuant to the provisions of subdivision twenty-six of section two\nhundred thirty-five of this chapter, shall not exceed the aggregate\nlimitations set forth in subdivision twenty-six of section two hundred\nthirty-five of this chapter;\n 2. A savings and loan association may lend its funds to its members\nupon their notes as follows: (a) secured by the transfer and pledge to\nthe association of shares of any savings and loan association or by the\nassignment to the association of a time deposit in any savings and loan\nassociation, the withdrawal value of which, in either case, shall not be\nless than the amount of any such loan.\n (b) Representing loans and advances of credit for the purpose of\nfinancing alterations, repairs and improvements upon or in connection\nwith, or as the superintendent may authorize the equipping of existing\nstructures, and the building of new structures, upon urban, suburban, or\nrural real property (including the restoration, rehabilitation,\nrebuilding, and replacement of such improvements which have been damaged\nor destroyed by earthquake, conflagration, tornado, hurricane, cyclone,\nflood, or other catastrophe), by the owners thereof or by lessees of\nsuch real property under a lease expiring not less than six months after\nthe maturity of the loan or advance of credit or by lessees under\nproprietary leases from a corporation or partnership formed for the\npurpose of the cooperative ownership of real estate, provided: (1) the\namount of such loan, advance of credit, or purchase made for the purpose\nof financing the alteration, repair, equipping or improvement of\nexisting structure or the building of new structure does not exceed\ntwenty thousand dollars; (2) the maturity thereof does not exceed one\nhundred twenty-one months; (3) the rate which may be paid by the\nborrower for interest, discount, and fees of all kinds in connection\nwith the transaction shall be the rate or rates agreed to by the savings\nand loan association and the borrower; and (4) the loan shall be paid in\nequal or substantially equal monthly installments calculated from the\ndate of the note; provided, however, that in addition thereto, the\nsavings and loan association may contract to charge the borrower: (i)\nthe fees payable to the appropriate public officer to perfect any lien\nor other security interest taken to secure the loan or the premium, not\nin excess of such filing fee, payable for any insurance in lieu of such\nfiling; (ii) in case of default, and in accordance with the provisions\nof the instrument evidencing the obligation, either a fine in an amount\nnot to exceed five cents per dollar on any installment which has become\ndue and remained unpaid for a period in excess of ten days, but no such\nfine shall exceed five dollars and only one fine shall be collected on\nany such installment regardless of the period during which it remains in\ndefault, and provided further that should the aggregate of such fines\ncollected in connection with any loan exceed two per centum of such\nloan, or in any event twenty-five dollars, the savings and loan\nassociation shall refund such excess to the borrower within sixty days\nafter the loan is paid in full, or, subject to an allowance of unearned\ninterest attributable to the amount in default, interest on each amount\npast due at a rate not in excess of the rate provided for in the\ninstrument evidencing the obligation; (iii) the actual expenditures,\nincluding reasonable attorney's fees, for necessary court process; and\n(iv) in case the savings and loan association insures a borrower under a\ncredit unemployment insurance policy, group life insurance policy, group\nhealth insurance policy, group accident insurance policy, or group\nhealth and accident insurance policy, or requires insurance on personal\nproperty securing any such loan, an amount not in excess of the premiums\nchargeable in accordance with rate schedules then in effect and on file\nwith the superintendent of financial services for such insurance by the\ninsurer. No savings and loan association shall require a borrower to\npurchase shares in the association, or to purchase shares in lieu of\nregular periodic installment payments, or to do or refrain from any\nother act which would entail additional expense or sacrifice, as a\ncondition precedent to granting a loan or advance of credit under the\nauthority of this paragraph. Notwithstanding the provisions of this\nparagraph no refund of excess fines shall be required if it amounts to\nless than one dollar.\n (c) Representing loans and advances of credit for the purpose of\ndefraying the cost of attendance of one or more students the income of\nwhose family is fifteen thousand dollars or more per year at the time\nthe loan or loan commitment is made at a university or college or for\nthe purpose of defraying the cost of attendance of one or more students\nat an elementary or secondary school providing education required for\nminors; provided, however, that no such loan shall bring the total\nunpaid principal balances of any one or more loans made by such savings\nand loan association to the borrower pursuant to this paragraph to an\namount in excess of thirty thousand dollars; and further provided that\nthe maturity of any such loan does not exceed eighty-five months; and\nfurther provided that the rate which may be paid by the borrower for\ninterest, discount, and fees of all kinds in connection with the\ntransaction shall be the rate or rates agreed to by the savings and loan\nassociation and the borrower, reckoned on each loan or advance from the\ndate thereof, calculated on any of the following bases: (i) on the\nunpaid principal amount of such loans and advances from time to time\noutstanding, or (ii) for each month on an average balance outstanding\ndetermined by dividing by two the sum of the balances of unpaid\nprincipal of such loans and advances outstanding on two dates during\nsuch month, as specified in such agreement; the first of which dates\nbeing not later than the fifteenth day of such month and the second\nbeing not earlier than the sixteenth day of such month and not less than\nten nor more than twenty days after the first day, or (iii) for each\nmonth on a fixed amount selected from a schedule, which fixed amount may\nexceed the average daily balance under (i) above, or the average balance\nif determined under (ii) above, by a differential of not more than five\ndollars, provided the same fixed amount is also used for computing\ninterest for any month for which such balance exceeds said fixed amount\nby any amount up to at least the same differential; and further provided\nthat the loan shall be paid in equal or substantially equal monthly\ninstallments calculated from the date of the note. No fee, commission,\nexpense, or other charge whatsoever shall be taken, received, reserved\nor contracted for in addition to the rate of interest authorized by this\nparagraph except (i) the fees payable to the appropriate public officer\nto perfect any lien or other security interest taken to secure the loan\nor the premium, not in excess of such filing fee, payable for any\ninsurance in lieu of such filing; (ii) in case of default, and in\naccordance with the provisions of the instrument evidencing the\nobligation, either a fine in an amount not to exceed five cents per\ndollar on any installment which has become due and remained unpaid for a\nperiod in excess of ten days, but no such fine shall exceed five dollars\nand only one fine shall be collected on any such installment regardless\nof the period during which it remains in default, and provided further\nthat should the aggregate of such fines collected in connection with any\nloan exceed two per centum of such loan, or in any event twenty-five\ndollars, the savings and loan association shall refund such excess to\nthe borrower within sixty days after the loan is paid in full, or,\nsubject to an allowance of unearned interest attributable to the amount\nin default, interest on each amount past due at a rate not in excess of\nthe rate provided for in the instrument evidencing the obligation; (iii)\nthe actual expenditures, including reasonable attorney's fees, for\nnecessary court process; and (iv) in case the savings and loan\nassociation insures a borrower under a credit unemployment insurance\npolicy, group life insurance policy, group health insurance policy,\ngroup accident insurance policy, or group health and accident insurance\npolicy, or requires insurance on personal property securing any such\nloan, an amount not in excess of the premiums chargeable in accordance\nwith rate schedules then in effect and on file with the superintendent\nof financial services for such insurance by the insurer. No savings and\nloan association shall require a borrower to place any sum on deposit,\nor to make deposits in lieu of regular periodic installment payments, or\nto do or refrain from doing any other act which would entail additional\nexpense or sacrifice, as a condition precedent to granting a loan or\nadvance of credit under the authority of this paragraph, except under\nsuch terms and conditions as the superintendent may from time to time\napprove. Notwithstanding the provisions of this paragraph no refund of\nexcess fines shall be required if it amounts to less than one dollar.\n (d) Representing loans secured by mobile home chattel paper evidencing\na monetary obligation incurred to finance the purchase of a mobile home\nlocated at the time of such purchase, or to be located within ninety\ndays, at a semipermanent site within the state or in a contiguous state\nand to be maintained as a residence of the borrower, the borrower's\nspouse, child, grandchild, parent or grandparent.\n (1) For this paragraph:\n (i) "mobile home chattel paper" means written evidence of both a\nmonetary obligation and a security interest of first priority in a\nmobile home and any equipment installed, or to be installed therein, and\n (ii) "mobile home" or "manufactured home" means a structure,\ntransportable in one or more sections, which in the traveling mode, is\neight body feet or more in width or forty body feet or more in length,\nor when erected on site, is three hundred twenty or more square feet,\nand which is built on a permanent chassis and designed to be used as a\ndwelling with or without a permanent foundation when connected to\nrequired utilities, and includes the plumbing, heating, air-conditioning\nand electrical systems contained therein.\n (2) If the loan is for the purpose of financing the purchase of a new\nmobile home,\n (i) it shall mature not later than two hundred forty months after the\ndate thereof, and\n (ii) the amount advanced to the borrower shall not exceed one hundred\nper cent of the sum of (a) the purchase price of such mobile home\n(including any installed equipment) plus (b) the price of any new\nequipment installed or to be installed by the dealer.\n (3) If the loan is for the purpose of financing the purchase of a used\nmobile home,\n (i) it shall mature not later than two hundred forty months after the\ndate thereof, and\n (ii) the amount advanced to the borrower shall not exceed one hundred\nper cent of the purchase price of the mobile home actually paid\n(including any installed equipment).\n (4) The loan shall be payable in equal or substantially equal monthly\ninstallments calculated from the date of the loan. Interest, which may\nbe taken in advance, may be charged thereon, computed from the date of\nthe loan to the date of the last installment payable thereunder, if the\nloan has a maturity, (i) not exceeding thirty-seven months, at a rate\nnot to exceed six dollars per annum discount per one hundred dollars of\nthe face amount or ten dollars if the interest so computed is less than\nthat amount, or (ii) exceeding thirty-seven months, at a rate not to\nexceed five dollars per annum discount per one hundred dollars of the\nface amount provided that the interest charged, if the amount thereof\nexceeds ten dollars, shall not exceed one per cent per month on the\nunpaid principal balance.\n (5) The authorized interest shall be inclusive of all charges incident\nto investigating and making any loan. No fee, commission, expense, or\nother charge shall be permitted except that the savings and loan\nassociation may contract to charge the borrower (i) the fees payable to\na public officer to perfect any lien or other security interest taken to\nsecure the loan, or the premium, not in excess of such filing fee,\npayable for any insurance in lieu of such filing; (ii) in case of\ndefault, and in accordance with the instrument evidencing the\nobligation, either a fine in an amount not to exceed five per cent on\nany installment which has become due and remained unpaid for a period in\nexcess of ten days, but no such fine shall exceed five dollars and only\none fine shall be collected on any such installment regardless of the\nduration of the default, and provided further that should the aggregate\nof such fines collected in connection with any loan exceed two per cent\nof such loan or twenty-five dollars, the savings and loan association\nshall refund such excess within sixty days after the loan is paid in\nfull, or, subject to an allowance of unearned interest attributable to\nthe amount in default, interest on each amount past due at a rate not in\nexcess of one per cent per month during the delinquency; (iii) the\nactual expenditures, including reasonable attorney's fees for necessary\ncourt process, and (iv) in case the savings and loan association insures\na borrower under a credit unemployment insurance policy, group life\ninsurance, health insurance, accident insurance, or health and accident\ninsurance policy, or requires insurance on the property securing such\nloan, an amount not in excess of the premiums lawfully chargeable. No\nsavings and loan association shall require a borrower to purchase shares\nin the association, or to purchase shares in lieu of regular periodic\ninstallment payments, or to do or refrain from doing any other act which\nwould entail additional expense or sacrifice, as a condition to granting\na loan under this paragraph except as the superintendent may from time\nto time approve. No refund of excess fines need be made if it amounts to\nless than one dollar.\n (6) As a condition of any loan made pursuant to this paragraph, the\nborrower shall certify that the mobile home, against which the loan is\nmade, is intended to be maintained in the state or in a contiguous state\nas a residence of the borrower, the borrower's spouse, child,\ngrandchild, parent or grandparent. If the mobile home shall not be so\nmaintained on the ninetieth day next succeeding the date of the loan or\nif it is relocated so as to no longer be located in the state or a\ncontiguous state at any time before the first anniversary of the loan,\nthe loan and all authorized charges shall become immediately due and\npayable subject only to the refund provisions of paragraph (d) and the\nborrower may, if the contract so provides, be required to pay, as an\nadditional authorized charge, a penalty in an amount not to exceed two\nper cent of the face amount of the loan.\n (7) No loan shall be made by a savings and loan association pursuant\nhereto if the total amount loaned by it pursuant to this paragraph\nexceeds, or by the making of such loan will exceed, an amount equal to\nfive per cent of the assets of the savings and loan association.\n (8) Subject to such limitations and conditions as the superintendent\nof financial services may prescribe by general regulation, a savings and\nloan association may make a loan pursuant to this paragraph which the\nfederal housing administrator has insured or has made a commitment to\ninsure and may receive and hold such debentures as are issued by the\nfederal housing administrator in payment of such insurance, or which is\nguaranteed pursuant to the provisions of the act of congress entitled\nthe "Servicemen's Readjustment Act of l944." No law of this state\nprescribing or limiting the interest rate upon loans or advances of\ncredit or prescribing a penalty for violation thereof or prescribing the\nnature, amount or form of security or requiring security upon which\nloans or advances of credit may be made or prescribing or limiting the\nperiod for which loans or advances of credit may be made or limiting the\namount of any class of loans, advances of credit or purchases which may\nbe made shall be deemed to apply to loans, advances of credit or\npurchases made or to loans acquired by purchase pursuant to this\nsubparagraph.\n (e) A borrower may prepay any loan made pursuant to paragraph (b), (c)\nor (d) in full or, with the consent of the savings and loan association,\nmay refinance the loan. In the event of such prepayment or refinancing,\nthe savings and loan association shall refund: (1) the unearned portion\nof the interest to the borrower the amount of which portion shall be\ndetermined according to a generally accepted actuarial method; provided,\nhowever, that if the amount of interest previously deducted (i) was less\nthan ten dollars, no refund shall be required; or (ii) exceeded the sum\nof ten dollars and the earned interest is less than that amount, the\nsavings and loan association may retain such an additional amount as\nwill bring the earned interest to the sum of ten dollars and refund the\nremainder, and provided further, that unless the loan is refinanced, no\nrefund shall be required if it amounts to less than one dollar; and (2)\nif a charge was made to the borrower for premiums for insuring the\nborrower under a credit unemployment insurance policy, group life\ninsurance policy, or under a group health, group accident or group\nhealth and accident insurance policy, the excess of the charge to the\nborrower therefor over the premiums paid or payable by the savings and\nloan association, if such premiums were paid or payable by the savings\nand loan association periodically, or the refund for such insurance\npremium received or receivable by the savings and loan association, if\nsuch premium was paid or payable in a lump sum by the savings and loan\nassociation, provided that no such refund shall be required if it\namounts to less than one dollar. In the event (i) the maturity of the\nloan is accelerated due to the default of the borrower or otherwise and\njudgment is obtained, or (ii) repayment is made pursuant to any such\ninsurance policy, the borrower or his legal representative, as the case\nmay be, shall be entitled to the same refund as if the loan had been\nprepaid in full on the date of acceleration or repayment.\n 2-a. A savings and loan association may lend its funds to borrowers\ntherefrom upon their promissory notes representing loans for the purpose\nof financing the purchase of or refinancing an existing ownership\ninterest in certificates of stock or other evidence of an ownership\ninterest in, and a proprietary lease from, a corporation or partnership\nformed for the purpose of the cooperative ownership of real estate as\nprovided in this subdivision.\n A savings and loan association may, subject to such regulations as the\nsuperintendent of financial services finds necessary and proper, invest\nto an amount not exceeding the maximum per cent of the loans permitted\nto be made on real estate improved by a single family residence occupied\nby the owner, provided that for purposes of this section the amount of\nthe purchase price shall be deemed to equal the appraised value of such\ncertificate of stock or other evidence of an ownership interest, or, in\nthe case of a refinancing, the appraised value of certificates of stock\nor other evidence of the ownership of an interest in, and a proprietary\nlease from, a corporation or partnership formed for the purpose of the\ncooperative ownership of real estate, for the purpose of financing a\npurchase of or refinancing an existing ownership interest in such a\ncorporation or partnership; provided (a) such investment is secured\nwithin ninety days from the making of the loan by an assignment or\ntransfer of the stock or other evidence of an ownership interest of the\nborrower and a proprietary lease; and (b) repayments of principal and\ninterest shall be effected within the same number of years as a\nconventional mortgage loan previously described in this subdivision. The\nmaximum rate of interest which may be charged, taken or received upon\nany loan or forbearance made pursuant to this subdivision may exceed the\nrate of interest prescribed by the superintendent of financial services\nin accordance with section fourteen-a of this chapter by no more than\none and one-half per cent per annum.\n 3. A savings and loan association may also lend its funds, if at any\ntime such association has funds in excess of the amount needed for loans\nto its members, as follows:\n (a) To other savings and loan associations.\n (b) Upon bonds and mortgages and notes and mortgages upon real estate\nto the same extent authorized in subdivision one of this section,\nsubject to the limitations therein.\n 3-a. A savings and loan association may also lend its funds to its\nmembers or their children who are attending or planning to attend\ncolleges in this state or elsewhere, to assist them in meeting their\nexpenses of higher education, where such loans are made by the\nassociation and (1) guaranteed by the New York higher education\nassistance corporation in accordance with the provisions of article\nfourteen of the education law, or (2) insured or covered by a commitment\nto insure or are guaranteed or covered by a commitment to guarantee\nissued by the federal education commissioner in accordance with the\nprovisions of the act of congress entitled the "Higher Education Act of\n1965". In such cases no further security for the repayment of such loans\nshall be required of the borrowers by the association. A savings and\nloan association may also lend its funds to nonmembers, for the same\npurposes and upon the same terms and conditions if, at any time, such\nassociation has funds in excess of the amount needed for loans to its\nmembers.\n 4. No loan shall be made under the provisions of this section upon the\nsecurity of a mortgage:\n (a) Which is not a first lien upon the property described therein,\nunless all prior mortgages, liens or encumbrances thereon are owned by\nsuch association; and no such prior mortgage, lien or encumbrance shall\nbe sold, transferred or assigned by such association until every\nsubsequent mortgage, lien or encumbrance owned by it shall have been\nfully paid and satisfied; and further provided that whenever loans are\nmade under both subdivisions one and three of this section upon the same\nreal estate the limitations of amount applicable to the loan under each\nsubdivision shall be determined by first segregating that portion of the\nappraised value of the premises necessary to sustain the prior mortgage,\nlien or encumbrance, and the limitation of amount applicable to the\nadditional mortgage, lien or encumbrance shall then be determined with\nreference only to the remaining portion of the appraised value; provided\nfurther that the loan under subdivision three shall provide for equal or\nsubstantially equal periodic payments of interest and principal at least\nannually in amount sufficient to pay all interest and effect full\nrepayment of principal within thirty years;\n (b) Except upon the written and signed certificate of an appraiser\nappointed pursuant to policies established by the board of directors,\ncertifying to the value of the premises according to such appraiser's\njudgment. Such certificate shall be filed and preserved among the\nrecords of the association and any member shall have access thereto;\n 4-a. A savings and loan association may, in addition to the authority\ngranted under any other subdivision of this section or subdivision six\nof section three hundred seventy-nine of this article, make a loan to a\nnatural person upon the security of a mortgage which is not a first lien\nat the rate or rates agreed to by the savings and loan association and\nthe borrower, subject to such regulations as the superintendent of\nfinancial services may prescribe. Such regulations by the superintendent\nof financial services may include such restrictions as the\nsuperintendent of financial services finds necessary or proper,\nincluding without limitation, a restriction as to the percentage of\ntotal assets which may be invested in such loans or a restriction on the\nloan to appraisal value of property securing such loan.\n For purposes of this subdivision, the term mortgage shall include a\nlien on an existing ownership interest in certificates of stock or other\nevidence of an ownership interest in, and a proprietary lease from, a\ncorporation or partnership formed for the purpose of the cooperative\nownership of real estate.\n 5. Every mortgage and every assignment of a mortgage taken by any\nsavings and loan association shall be immediately recorded or registered\nin the office of the proper recording officer of the county in which the\nreal estate described in such mortgage is located. This subdivision\nshall not apply to a participating interest in any mortgage which shall\nhave been acquired by a savings and loan association under the\nprovisions of section three hundred eighty-c of the banking law if the\noriginating mortgagee shall have recorded such mortgage or an assignment\nthereof in the office of the proper recording officer of the county in\nwhich the real estate described in such mortgage is located.\n 6. Any savings and loan association may require either single premium\nreducing term, monthly premium reducing term, or fully paid-up life\ninsurance or accident, health or disability insurance to be assigned to\nit by any borrower. When directed by the written order of a borrower,\nthe cost of such insurance may be advanced and paid by the association.\nAll such payments may be added to the unpaid balance of the loan.\n 7. A savings and loan association shall have the power to waive its\nright to enforce payment of a bond or note secured by a mortgage on real\nproperty and may waive its right to obtain a deficiency judgment against\nthe borrower in the event of foreclosure of such mortgage.\n