§ 595-A — Regulation of mortgage brokers, mortgage bankers and exempt organizations

§ 595-a. Regulation of mortgage brokers, mortgage bankers and exempt\norganizations. 1. Establishment of grounds to impose a fine or penalty.\nIn addition to such other rules, regulations and policies as the\nsuperintendent of financial services may prescribe to effectuate the\npurposes of this article, the superintendent of financial services shall\npromulgate regulations and policies governing the establishment of\ngrounds to impose a fine or penalty with respect to the activities of a\nmortgage banker, mortgage broker or exempt organization. Such regulation\nshall encompass the following:\n (a) The misrepresentation of material facts or the making of false\npromises likely to influence, persuade, or induce an applicant for a\nmortgage loan or mortgagor to take a mortgage loan, or pursuing a course\nof misrepresentation or false promises through agents or otherwise;\n (b) The misrepresentation, or concealment of any material factors,\nterms or conditions of a transaction to which he is a party, including\nthe receipt of payment from a third party, pertinent to an applicant for\na mortgage loan or a mortgagor;\n (c) The failure to disburse funds in accordance with a written\ncommitment or agreement to make a mortgage loan;\n (d) The failure to account for or deliver to any person any personal\nproperty obtained in connection with a mortgage loan such as money,\nfund, deposit, check, draft, mortgage, or other document, or thing of\nvalue, which has come into his hands, and which is not his property, or\nwhich he is not in law or equity entitled to retain;\n (e) The improper refusal to issue a satisfaction of mortgage;\n (f) Engaging in any transaction, practice, or course of business which\noperates a fraud upon any person in connection with the purchase or sale\nof any mortgage loan;\n (g) Violation of section six-j of this chapter; and\n (h) Making a mortgage loan, or indirectly or directly providing for\nthe making of a mortgage loan, to an equity purchaser, as defined in\nsection two hundred sixty-five-a of the real property law, if the\nmortgage banker, mortgage broker or exempt organization had knowledge\nthat the equity purchaser was not complying with the provisions of\nsection two hundred sixty-five-a of the real property law with respect\nto such transaction.\n 2. Restrictions on advertising. In addition to such other rules,\nregulations and policies as the superintendent of financial services may\npromulgate to effectuate the purposes of this article, the\nsuperintendent of financial services shall prescribe regulations\ngoverning the advertising of mortgage loans, including, without\nlimitation, the following requirements:\n (a) All advertisements by a mortgage broker, mortgage banker or exempt\norganization shall contain the name and an office address of such\nentity, which in the case of licensees and registrants shall conform to\na name and address on record with the department of financial services;\n (b) No licensed mortgage broker or mortgage banker shall advertise its\nservices in any media, whether print or electronic, without the words\n"registered mortgage broker" or "licensed mortgage banker" or similar\nwords therein;\n (c) No mortgage broker, mortgage banker or exempt organization shall\nadvertise information concerning mortgage loans, including rates,\nmargins, discounts, points, fees, commissions or other material\ninformation, including material limitations on such loans, unless such\nentity is able to make such mortgage loans available to a reasonable\nnumber of qualified applicants;\n (d) All advertisements by mortgage brokers must include language\nindicating that such brokers may not make loans; and\n (e) The term "advertisement" shall not include promotional material\ncontaining fifteen words or less which does not contain references to\nspecific rates, points, discounts, fees, material loan factors, etc.,\nsuch as imprinted pencils, pens or balloons.\n 3. Required disclosures. In addition to such other rules, regulations\nand policies as the superintendent of financial services may promulgate\nto effectuate the purposes of this article, the superintendent of\nfinancial services shall promulgate regulations governing the disclosure\nrequired to be made to applicants for a mortgage loan, including,\nwithout limitation, the following requirements:\n (a) Each mortgage broker, mortgage banker and exempt organization\nshall provide to each applicant for a mortgage loan at or before the\ntime of application a disclosure of the fees payable at the time of\napplication and the conditions under which such fees may be refundable,\nand such other disclosures as shall be required by the superintendent of\nfinancial services;\n (b) Each mortgage banker and exempt organization shall make available\nto each applicant for a mortgage loan at or before the time a commitment\nto make a mortgage loan is given a written disclosure, the fees to be\npaid in connection with the commitment and the loan, or the manner in\nwhich such fees shall be determined and the conditions under which such\nfees may be refundable, and such other disclosures as may be required by\nthe superintendent of financial services; and\n (c) In each lock-in agreement it shall issue, every mortgage banker\nand exempt organization shall include a list of all documents typically\nrequired to be produced and conditions typically required to be\nsatisfied for closing of a mortgage loan based on information provided\nby the applicant. In each commitment it shall issue, every mortgage\nbanker and exempt organization shall include a list of all documents\nforeseeably required to be produced and conditions foreseeably required\nto be satisfied for closing of a mortgage loan based on information\nprovided by the applicant. In addition, no later than twelve business\ndays prior to the expiration of any lock-in period or commitment period,\na mortgage banker or exempt organization shall mail to each applicant\nfor a mortgage loan a notice indicating the date of such expiration\ntogether with a request that the applicant contact the lender\nimmediately to discuss the conditions precedent to the closing of such\nloan; and\n (d) Each mortgage broker, mortgage banker and exempt organization\nshall provide such other disclosure as the superintendent of financial\nservices shall determine by regulation are appropriate to carry out the\npurposes of this article.\n 4. Restrictions on tying. (a) No mortgage banker, mortgage broker or\nexempt organization shall, as a condition for the approval of a mortgage\nloan, require the use of a particular title insurance company, title\ninsurance agency or title insurance agent or, for any other type of\ninsurance, require the use of a particular insurer, agent or broker.\n (b) A bank, trust company, savings bank, savings and loan association\nor national bank which operates in compliance with the provisions of\nparagraph (e) of subdivision seven of section twelve-a of this chapter\nand paragraph two of subdivision (a) of section two thousand five\nhundred two of the insurance law shall be deemed to be in compliance\nwith this subdivision.\n 5. No licensee or registrant engaging in any activities constituting\nthe business of a distressed property consultant, as described in\nsection two hundred sixty-five-b of the real property law, shall charge\nfor or accept payment for real property consulting services as defined\nin such section before the full completion of such services.\n