STATE OF NEW YORK

Is a license required? Yes. State regulators at the New York State Banking Department interpret New York Code, Chapter on Banking Law, article 12E(Attached as Schedule A) require loan modification to be licensed as if they were loan originators.
State specific loan modification law? Yes. New York Code, Chapter on Real Property, 265-B(Attached as Schedule B). It
Advantages of becoming a licensed Mortgage Originator? None. Mandatory. 
Penalties for operating in the state without a license: § 4a of article 12E gives state regulators broad authority to issue fines, with no apparent limit on the amount.
Is an advanced fee permitted?   No. 265-B-2-b states that a distressed property consultant is prohibited from “charging for or accepting payment for consulting services before the full completion of such services;”
Is a written agreement required? Yes. 265-B-2-a states that a distressed property consultant is prohibited from “A distressed property consultant is prohibited fromperforming consulting services without a written, fully executed consulting contract with a homeowner;”
Other noteworthy information? None.
New York Code Ctrl + Click HereNew York Code, Banking law, Article 12E:

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New York Code, Real Property, 265-B: A direct link not possible, click on the New York Code link above and navigate to it.

License application:

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SCHEDULE A

Section:

599-a. Legislative purpose.
599-b. Definitions.
599-c. Authorization and application.
599-d. Education requirements.
599-e. Exemptions.
599-f. Required records.
599-g. Grounds for suspension or revocation of an MLO authorization.
599-h. Rules and regulations.
599-i. Construction.

§ 599-a. Legislative purpose. The legislature deems it necessary, in order to ensure the public welfare, that mortgage loan originators who originate mortgage loans on residential real property be subject to regulation by the superintendent.

§ 599-b. Definitions. As used in this article:

  1. “Mortgage loan originator” (MLO) means any person employed by or affiliated with an originating entity, who engages in mortgage loan originating irrespective of how such person is compensated by such originating entity, or any natural person who as an originating entity, or any substantial stockholder of an originating entity, engages in mortgage loan originating on residential property; provided that “affiliated with an originating entity” shall mean any person who is an independent contractor and is compensated by such originating entity in whole or in part, either directly or indirectly. An MLO shall not be deemed to mean any natural person who is an originating entity, or any substantial stockholder of an originating entity, or any officer or manager of an originating entity that supervises the activities of MLOs and does not communicate directly with the customers of the originating entity.
  2. “Mortgage loan originating” means providing services to a customer of an originating entity in accordance with paragraph (c) or (d) of subdivision one of section five hundred ninety of this chapter by soliciting, negotiating, explaining or finalizing the terms of a mortgage loan; provided, however, that the term “soliciting” shall mean the discussion of a mortgage loan product or products with a customer or potential customer but shall not be deemed to mean the taking of customer information or the referral of a customer or the customer’s information to a person who engages in mortgage loan originating; provided, further that an MLO shall not be deemed to include any person who provides clerical or secretarial services or provides legally related services that are not provided directly by an attorney relating to mortgage loan originating activities of an originating entity.
  3. “Originating entity” means a person or entity licensed or registered pursuant to article twelve-D of this chapter.
  4. “Education courses” means formal courses of learning, or instructional or training programs that relate to the current business of mortgage loan originating, including the statutory and regulatory requirements and judicial interpretations governing mortgage lending, banking and real estate transactions and practices in this state. Education courses required by this article may be offered by (a) national, New York state or other state associations that are controlled by and whose membership comprises, but is not necessarily restricted to, mortgage bankers, mortgage brokers, or banking institutions; provided, however, that any such association shall maintain supervision of such education courses satisfactory to the superintendent; (b) degree and non-degree granting institutions of post-secondary education chartered, approved or licensed by the Board of Regents; or (c) any other entities as may be approved by the superintendent. Such approval shall remain in effect so long as the education courses offered by approved entities evidence standards that are consistent with the purposes of this article, as determined by the superintendent.
  5. “Mortgage loan” and “residential real property” shall have the same meaning as such terms are defined pursuant to section five hundred ninety of this chapter.
  6. “Person” means an individual.

§ 599-c. Authorization and application.

  1. No person shall, on or after January first, two thousand eight, engage in mortgage loan originating without first being authorized by the superintendent as an MLO pursuant to this article, unless otherwise exempt pursuant to section five hundred ninety-nine-e of this article or regulations of the superintendent.
  1. Upon the filing of an application for authorization, if the superintendent shall find the general character and fitness and the education qualifications of the applicant are such as to warrant belief that the applicant will engage in mortgage loan originating honestly, fairly, and efficiently within the purpose of this article, the superintendent shall thereupon issue an authorization to the applicant as an MLO. The standards to be applied by the superintendent in finding that the character and fitness of a person warrant his or her authorization or continued authorization as an MLO shall be the same as those applied by the superintendent in finding that the character and fitness of an applicant warrant licensing or registration under sections five hundred ninety-two and five hundred ninety-two-a, respectively, of this chapter.

As part of such application and notwithstanding section eighteen-a of this chapter, the applicant shall pay a fee as determined by the superintendent as an investigation and initial authorization fee; provided, however, that the investigation portion of such fee shall be no more than the superintendent’s reasonable estimate of the actual cost or costs to the department to undertake such investigation of the applicant, and the initial authorization portion of such fee and the annual authorization fee as hereafter required pursuant to this section shall be an authorization fee amount determined by the superintendent, which shall be applicable for the first two state fiscal years beginning on or after the effective date of this article and shall be based upon the amount budgeted by the department to undertake the administration of this article. Such authorization fee shall be charged on a per person basis. Thereafter, such authorization fee shall be determined annually by the superintendent based upon the actual cost to the department of administering this article for the preceding second state fiscal year to the state fiscal year in which such fee applies. Upon authorizing the applicant as an MLO, the superintendent shall issue a certificate attesting to such authorization. The superintendent shall transmit one copy of such certificate to the applicant and file another in his or her office, and shall transmit notice of approval of such application, in such form as the superintendent deems appropriate, to the originating entity for which the applicant is providing services pursuant to subdivision six of this section at the time of making such application.

Such authorization shall be deemed to expire at the end of the annual authorization period, unless such authorized MLO pays the annual authorization fee prior to or upon the date such payment is due. In the event the authorized MLO fails to pay such fee, then the department shall notify the originating entity of the expiration of the authorization. Such authorization shall be renewed in the case of an authorized MLO failing to timely pay such fee, if such authorized MLO pays such fee within ninety days of such due date.

  1. (a) The superintendent may refuse to issue a certificate pursuant to this article if he or she shall find that the applicant (i) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if committed and prosecuted under the laws of this state, or (ii) has had an authorization revoked by the superintendent or a regulatory person or entity of another state that regulates persons engaging in mortgage loan originating, or (iii) has been a director, partner, or substantial stockholder of an originating entity which has had a registration or license revoked by the superintendent or a regulatory person or entity of another state that regulates such originating entity, or (iv) has been an employee, officer or agent of, or a consultant to, an originating entity which has had a registration or license revoked by the superintendent or a regulatory person or entity of another state that regulates such originating entity where such person shall have been found by the superintendent or by such similar regulatory person or entity of another state to bear responsibility in connection with such revocation.

(b) For the purposes of paragraph (a) of this subdivision, a person shall be deemed to have been convicted of a crime if such person shall have pled guilty to a charge thereof before a court or magistrate, or shall have been found guilty thereof by the decision or judgment of a court or magistrate or by the verdict of a jury, irrespective of the pronouncement of sentence or the suspension thereof; provided, however, such conviction of a crime shall not require the superintendent to refuse to authorize such applicant, if such plea of guilty, or such decision, judgment or verdict, shall have been set aside, reversed or otherwise abrogated by lawful judicial process or unless the person convicted of the crime shall have received a pardon therefor from the president of the United States or the governor or other pardoning authority in the jurisdiction where the conviction was had, or shall have received a certificate of good conduct granted by the board of parole pursuant to the provisions of the executive law to remove the disability under this article because of such conviction. Notwithstanding the foregoing, the superintendent shall consider the factors set forth in section seven hundred fifty-three of the correction law when making a determination to refuse to issue or renew, or to revoke or suspend an authorization.

(c) If the superintendent refuses to authorize an applicant or renew an authorization pursuant to this subdivision, the superintendent shall notify the applicant or authorized MLO of such refusal in writing; provided, however, the superintendent shall retain any fee charged for the expense of processing an initial application, notwithstanding that such application is rejected. In the event the superintendent refuses to issue or renew an authorization, then the department shall notify the originating entity of such refusal in writing.

  1. Application for an authorization required under this article shall be (i) submitted by such method and in such form as the superintendent may prescribe; (ii) under oath; and (iii) contain the following information:

(a) The exact and legal name and residence address of the applicant and the date of birth of the applicant;

(b) The current business name and address, if one, of the originating entity employing the applicant or with which the applicant has an affiliation; and

(c) Such other pertinent information as the superintendent may require.

  1. Notwithstanding article three of the state technology law or any other law to the contrary, the superintendent may require that any application for or renewal of an authorization or for any other submission or approval as may be required by this article, be made or executed by electronic means if he or she deems it necessary to ensure the efficient and effective administration of this article.
  2. Notwithstanding subdivision one of this section, a person, upon initial employment by or affiliation with an originating entity, may immediately engage in mortgage loan originating on a temporary basis until such time as such person is authorized as an MLO or notified by the superintendent that his or her application has been denied. No originating entity shall permit any such person to engage in mortgage loan originating without having proof of notice from the department that it has received an application and a copy of fingerprints for authorization of such person as an MLO.
  1. (a) Any expense of the administration of this article with respect to the authorization of MLOs that is included with an assessment of originating entities pursuant to section seventeen of this chapter shall be levied only upon such originating entities having employed or affiliated MLOs that are required to be authorized. Any revenue derived from fees established pursuant to subdivision two of this section shall be used to offset that portion of such assessment levied upon such originating entities.

(b) Any fee established pursuant to subdivision two of this section may be collected by and include a processing fee charged by an entity with which the superintendent has entered into a written contract or a memorandum of understanding to process applications and the annual authorization of MLOs pursuant to this article, and any such processing fees shall not be remitted to the superintendent and shall not be deemed revenue pursuant to this section or the state finance law.

§ 599-d. Education requirements. Each MLO shall, as a condition of initial and subsequent annual authorization, satisfactorily complete education requirements as prescribed pursuant to this section and shall submit acceptable proof of the same as the superintendent determines appropriate.

  1. Within the last five years prior to approval or within one year after approval of an application for authorization as an MLO, such person shall have completed eighteen hours of education courses.
  2. Notwithstanding subdivision one of this section or subdivision one of section five hundred ninety-nine-c of this article, any person employed by or affiliated with an originating entity prior to January first, two thousand eight, who engages in mortgage loan originating on or after such date, shall comply with the authorization and education requirements prescribed by this article on or before January first, two thousand ten.
  3. After two years following initial authorization, each MLO, as a condition of maintaining authorization as an MLO, shall complete a minimum of eighteen hours of education courses every two years during the next succeeding eight years. Thereafter, each MLO shall complete eight hours of education courses every four years. Provided, however, any MLO who is subject to subdivision two of this section and has completed eighteen hours of education courses every two years for at least six years and shall at such time have acquired ten or more years of experience engaged in mortgage loan originating shall thereafter complete eight hours of education courses every four years.
  4. Each biennial or quadrennial education requirement shall include, but not necessarily be limited to, education courses in statutory and regulatory requirements and judicial interpretations governing mortgage lending and real estate transactions and practices; provided, however, that three hours of such requirement consist of instruction in ethical conduct in the area of mortgage loan originating or lending practices.
  5. All applicable education requirements shall be completed by the expiration date of an MLO’s authorization during the year in which completion of the education requirements are due. Notwithstanding section five hundred ninety-nine-g of this article, failure to timely complete such education requirements shall cause the authorization of such MLO immediately to be suspended irrespective of whether the authorized MLO has made satisfactory payment of the annual authorization fee. Such authorization shall expire within thirty days after the date such suspension commences if the applicable education requirements are not completed by the suspended MLO within such period of time. No originating entity shall permit any MLO that is subject to any education requirement pursuant to this article to engage in mortgage loan originating until acceptable proof or record of completion has been obtained by such originating entity. Failure of any originating entity to comply with the provisions of this subdivision shall be deemed a violation of article twelve-D of this chapter.

§ 599-e. Exemptions.

  1. The provisions of this article shall not apply to an individual employed by a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union organized under the laws of this state, another state or the United States, or a subsidiary or affiliate of such a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union; provided, however, any such affiliate or subsidiary licensed or registered by the superintendent pursuant to article twelve-D of this chapter shall provide an educational program or courses for its employees who engage in mortgage loan originating as defined by this article on behalf of such subsidiary or affiliate, and provided further that such educational program or courses shall be the substantial equivalent, as determined by the superintendent, of the educational requirements applicable to mortgage loan originators as required by this article.
  2. The provisions of this article shall not apply to an individual who is under an exclusive contract with an exempt organization as defined pursuant to paragraph (e) of subdivision one of section five hundred ninety of this chapter, or an affiliate or subsidiary of an exempt organization to the extent that the individual is acting within the scope of the individual’s employment or exclusive contract and is acting within the scope of the charter, license, authority, approval or certificate of the exempt organization or an affiliate or subsidiary of the exempt organization; provided, however, any such affiliate or subsidiary of such exempt organization licensed or registered by the superintendent pursuant to article twelve-D of this chapter, shall provide an educational program or courses for individuals under exclusive contract with such affiliate or subsidiary who engage in mortgage loan originating as defined by this article on behalf of such affiliate or subsidiary, and provided further that such educational program or courses shall be the substantial equivalent, as determined by the superintendent, of the educational requirements applicable to mortgage loan originators as required by this article.
  3. The provisions of this article shall not be deemed to require an attorney at law in good standing in this state, who engages in mortgage loan originating, to meet the authorization or education requirements prescribed pursuant to this article.
  4. No employee of, or a person affiliated with, an originating entity shall be subject to the authorization or education requirements of this article due solely to such employee or person assisting in the performance of the business activities of such originating entity that are incidental to the performance of any mortgage loan originating activities performed by such originating entity.
  5. No employee of, or a person affiliated with, an exempt organization shall be subject to the authorization or education requirements of this article due to such employee or person assisting in the performance of any business activities of a mortgage broker that is controlled by, or is a subsidiary of, such exempt organization.
  6. Variances to, or extensions of, the education requirements prescribed pursuant to this article may be granted by the superintendent (a) for reasons of health certified by an appropriate health care professional; (b) for extended active duty with the armed forces of the United States; or (c) for other good cause deemed acceptable by the superintendent, in his or her sole discretion, which may prevent satisfactory or timely completion of such requirements.
  7. Such other persons as may be exempt pursuant to regulations of the superintendent.

 

§ 599-f. Required records.

  1. Each originating entity shall obtain and retain acceptable documentation of the satisfactory completion of education courses required pursuant to this article by each MLO employed by or affiliated with such originating entity and shall provide such documentation at the request of the superintendent. Such documentation shall be retained by an originating entity for six years. An originating entity shall retain a copy of any original proof or record of completion provided by an MLO. In those instances when an originating entity also retains the original proof or record of such completion of any then applicable education requirement, such originating entity shall provide the original proof or record, upon request, when an MLO terminates or has terminated his or her employment or affiliation with the originating entity.
  2. The superintendent shall maintain upon the internet web-page of the department a list of the MLOs authorized and in good standing. Such list shall indicate the name, authorization number and current originating entity, if any, employing each MLO or with whom such MLO is affiliated. Each originating entity shall on a quarterly basis in each calendar year advise the superintendent, in written or electronic form, of any MLOs employed by or affiliated with such originating entity and shall also advise in such report of any dismissal for cause of an MLO employed by or affiliated with such originating entity during such quarter, which is due or based upon an alleged violation of this chapter.

§ 599-g. Grounds for suspension or revocation of an MLO authorization.

  1. The superintendent may revoke any authorization to engage in the business of mortgage loan originating pursuant to this article if he or she finds that:

(a) Through a course of conduct, the MLO has violated any provisions of this article, or any rule or regulation promulgated by the banking board, or any rule or regulation prescribed by the superintendent under and within the authority of this article or article twelve-D of this chapter or of any other law, rule or regulation of this state or the federal government pertaining to mortgage banking, brokering or loan originating;

(b) Any fact or condition exists which, if it had existed at the time of the original application for such authorization, would have warranted the superintendent to refuse to issue such initial authorization; or

(c) The commission by an MLO of a crime against the laws of this state or any other state or of the United States involving moral turpitude or fraudulent or dishonest dealing, or the entry of a final judgment against an MLO in a civil action upon grounds of fraud, misrepresentation or deceit;

  1. The superintendent may, on good cause shown, or where there is a substantial risk of public harm, suspend any authorization of any MLO for a period not exceeding sixty days, pending investigation. “Good cause”, as used in this subdivision, shall exist only when the MLO has engaged or engages in dishonest or inequitable practices or practices which demonstrate incompetent mortgage loan originating, which practices may cause substantial harm to the persons afforded the protection of article twelve-D of this chapter.
  1. Except as provided in subdivision two of this section, no authorization shall be revoked or suspended except after notice and a hearing thereon. Any order of suspension issued after notice and a hearing may include as a condition of reinstatement that restitution be made to consumers of fees or other charges which have been improperly charged or collected as determined by the superintendent.
  2. Any MLO may surrender any authorization by delivering to the superintendent written notice that he or she thereby surrenders such authorization, but such surrender shall not affect such MLO’s civil or criminal liability for acts committed prior to such surrender.
  3. An expiration of an authorization in accordance with this article shall not affect such MLO’s civil or criminal liability for acts committed prior to such expiration. If such expiration occurs after the issuance by the superintendent of a statement of charges and notice of hearing, the superintendent may proceed against the MLO as if such expiration had not taken place.
  4. No revocation, suspension, surrender or expiration of any authorization shall impair or affect the obligation of any preexisting lawful contract between any licensee or registrant and any person.
  5. Every authorization issued pursuant to this article shall remain in force and effect until the same shall have expired in accordance with this article or shall have been surrendered, revoked or suspended in accordance with any other provisions of this article, but the superintendent shall have authority to reinstate a suspended authorization or to issue a new authorization to an MLO whose authorization shall have been revoked if no fact or condition then exists which would have warranted the superintendent to refuse to issue such initial authorization under this article.
  6. Whenever the superintendent shall revoke or suspend an authorization issued pursuant to this article, he or she shall forthwith execute multiple written orders to that effect. The superintendent shall file one copy of such order in the office of the department of banking and shall forthwith serve a copy upon the MLO and any affected originating entity. Any such order may be reviewed in the manner provided by article seventy-eight of the civil practice law and rules. Such application for review as authorized by this section must be made within thirty days from the date of such order of suspension or revocation.
  7. Whenever an authorization shall have expired in accordance with this article, the superintendent shall notify the MLO and any affected licensee or registrant that the authorization has expired and that the MLO may not 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.
  8. Any hearing held pursuant to the provisions of this section shall be subject to the provisions of the state administrative procedure act.

§ 599-h. Rules and regulations. The superintendent is hereby authorized and empowered to make such rules and regulations as may in his or her judgment be necessary or appropriate for the effective administration or enforcement of this article.

§ 599-i. Construction. Nothing contained in this article shall be deemed to impair, alter or render ineffective any provision of article twelve-D of this chapter, including but not limited to any provision thereof relating to issuing, suspending or revoking any mortgage banker license or mortgage broker registration.

§ 2. Section 22 of the banking law, as amended by chapter 744 of the laws of 2006, is amended to read as follows:

§ 22. Fingerprints.

(a) Notwithstanding any other provision of law, every applicant for a license, authorization or registration under articles nine, nine-A, eleven-B, twelve-B, twelve-C, twelve-D, twelve-E and thirteen-B of this chapter and every applicant filing an application to acquire control of any licensee or registrant, as the case may be, under such articles shall submit simultaneously with an application, his or her fingerprints in such form and in such manner as specified by the division of criminal justice services, but in any event, no less than two digit imprints. The superintendent shall submit such fingerprints to the division of criminal justice services for the purpose of conducting a criminal history search and returning a report thereon in accordance with the procedures and requirements established by the division pursuant to the provisions of article thirty-five of the executive law, which shall include the payment of the prescribed processing fees. The superintendent shall request that the division submit such fingerprints to the federal bureau of investigation, together with the processing fees prescribed by such bureau, for the purpose of conducting a criminal history search and returning a report thereon. An applicant shall not be required to submit his or her fingerprints as required by this subdivision if such applicant (i) is already subject to regulation by the department and the applicant has submitted such fingerprints to the department, such fingerprints have been submitted to the division of criminal justice services for the purpose of conducting a criminal history search, and a report of such search has been received by the department from such division; or (ii) is subject to regulation by a federal bank regulatory agency and has submitted such fingerprints to such agency which has had a criminal history search conducted of such individual and has shared such information or its determination resulting from such search with the department; or (iii) is an officer or stockholder of a corporation whose common or preferred stock is registered on a national securities exchange, as provided in an act of congress of the United States entitled the Securities Exchange Act of 1934″, approved June sixth, nineteen hundred thirty-four, as amended, or such other exchange or market system as the superintendent shall approve by regulation, and has submitted such fingerprints to such exchange or market system which has had a criminal history search conducted of such individual and has shared such information or its determination resulting from such search with the department; provided, however, that the superintendent may subsequently require such applicant to submit his or her fingerprints if the superintendent has a reasonable basis for updating the information or determination resulting from the report of the criminal history search conducted at the request of such federal banking agency, exchange or market system.

(b) The superintendent shall also, concurrent with an investigation of a licensee or registrant, or an authorized individual, pertaining to a violation of this chapter, submit such fingerprints to the division of criminal justice services for the purpose of conducting a criminal history search and returning a report thereon and through the division to the federal bureau of investigation for the purpose of a fingerprint check of such licensee [or], registrant or authorized individual.

(c) For purposes of this section, “applicant” shall include a natural person or such principal, officer, director, trustee or stockholder of any other entity as may be designated by the superintendent. Notwithstanding any other provision of this article, the superintendent shall not access criminal history data or information, unless any agency from which the superintendent receives directly criminal history data or information has entered into a use and dissemination agreement with the superintendent consistent with the provisions of this section.

§ 3. Subdivisions 1, 2 and 5 of section 39 of the banking law, subdivisions 1 and 2 as separately amended by chapters 702 and 744 of the laws of 2006, and subdivision 5 as amended by chapter 744 of the laws of 2006, are amended to read as follows:

  1. To appear and explain an apparent violation. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation licensed by the superintendent to do business or maintain a representative office in this state has violated any law or regulation, he or she may, in his or her discretion, issue an order describing such apparent violation and requiring such banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation to appear before him or her, at a time and place fixed in said order, to present an explanation of such apparent violation.
  1. To discontinue unauthorized or unsafe and unsound practices. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation licensed by the superintendent to do business in this state is conducting business in an unauthorized or unsafe and unsound manner, he or she may, in his or her discretion, issue an order directing the discontinuance of such unauthorized or unsafe and unsound practices, and fixing a time and place at which such banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation may voluntarily appear before him or her to present any explanation in defense of the practices directed in said order to be discontinued.
  1. To keep books and accounts as prescribed. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker or licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, agency or branch of a foreign banking corporation licensed by the super-intendent to do business in this state, does not keep its books and accounts in such manner as to enable him or her to readily ascertain its true condition, he or she may, in his or her discretion, issue an order requiring such banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, or foreign banking corporation, or the officers or agents thereof, or any of them, to open and keep such books or accounts as he or she may, in his or her discretion, determine and prescribe for the purpose of keeping accurate and convenient records of its transactions and accounts.

§ 4. Paragraph (a) of subdivision 1 of section 44 of the banking law, as amended by chapter 744 of the laws of 2006, is amended to read as follows:

(a) Without limiting any power granted to the superintendent under any other provision of this chapter, the superintendent may, in a proceeding after notice and a hearing, require any safe deposit company, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed mortgage banker, registered mortgage broker, authorized mortgage loan originator, or licensed budget planner to pay to the people of this state a penalty for any violation of this chapter, any regulation promulgated thereunder, any final or temporary order issued pursuant to section thirty-nine of this article, any condition imposed in writing by the superintendent or banking board in connection with the grant of any application or request, or any written agreement entered into with the superintendent.

§ 5. Subdivision 6 of section 17 of the banking law, as added by section 2 of part O of chapter 59 of the laws of 2006, is amended to read as follows:

  1. Fees as such term is used in subdivision one of this section shall mean fees charged and collected pursuant to sections eighteen and eighteen-a of this article, and article twelve-E of this chapter.

§ 6. The superintendent of banks may provide for the authorization of mortgage loan originators and charge fees for such purposes pursuant to article 12-E of the banking law and take any other measures and use any reasonable methods necessary to implement such article in order to ensure the effective and timely administration thereof, including but not limited to providing for such authorization of mortgage loan originators on or before January 1, 2008.

§ 7. This act shall take effect immediately; provided, however, that sections one through five of this act shall take effect on the same date and in the same manner as chapter 744 of the laws of 2006, takes effect.

SCHEDULE B


    § 265-b. Distressed property consulting contracts. 1. Definitions. The
  following definitions shall apply to this section:
    (a)  "Homeowner"  means  a  natural  person  who is the mortgagor with
  respect to a distressed home loan or who is in danger of losing  a  home
  for nonpayment of taxes.
    (b)  "Consulting  contract" or "contract" means an agreement between a
  homeowner  and  a  distressed  property  consultant  under   which   the
  consultant agrees to provide consulting services.
    (c)  "Consulting  services"  means  services  provided by a distressed
  property consultant to a homeowner that the consultant  represents  will
  help to achieve any of the following:
    (i)  stop,  enjoin,  delay, void, set aside, annul, stay or postpone a
  foreclosure filing, a foreclosure  sale  or  the  loss  of  a  home  for
  nonpayment of taxes;
    (ii) obtain forbearance from any servicer, beneficiary or mortgagee or
  relief  with respect to the potential loss of the home for nonpayment of
  taxes;
    (iii) assist the homeowner to exercise a  right  of  reinstatement  or
  similar  right  provided  in  the  mortgage  documents  or any law or to
  refinance a distressed home loan;
    (iv) obtain any extension of the period within which the homeowner may
  reinstate or otherwise restore his or her rights  with  respect  to  the
  property;
    (v)  obtain  a  waiver  of  an  acceleration  clause  contained in any
  promissory note or contract secured by  a  mortgage  on  a  property  in
  foreclosure;
    (vi) assist the homeowner to obtain a loan or advance of funds;
    (vii) assist the homeowner in answering or responding to a summons and
  complaint,  or otherwise providing information regarding the foreclosure
  complaint and process;
    (viii) avoid or ameliorate the impairment of  the  homeowner's  credit
  resulting from the commencement of a foreclosure proceeding or tax sale;
  or
    (ix)  save  the  homeowner's  property  from  foreclosure  or loss for
  non-payment of taxes.
    (d) "Distressed home loan" means a home loan  that  is  in  danger  of
  being  foreclosed  because  the homeowner has one or more defaults under
  the mortgage that entitle the lender to accelerate full payment  of  the
  mortgage and repossess the property, or a home loan where the lender has
  commenced  a foreclosure action. For purposes of this paragraph, a "home
  loan" is a loan in which the debt is incurred by the homeowner primarily
  for personal, family or household purposes, and the loan is secured by a
  mortgage or deed of trust on property upon which  there  is  located  or
  there  is  to  be located a structure or structures intended principally
  for occupancy of from one to four families which is or will be  occupied
  by the homeowner as the homeowner's principal dwelling.
    (e)   "Distressed   property  consultant"  or  "consultant"  means  an
  individual or a corporation, partnership, limited liability  company  or
  other   business  entity  that,  directly  or  indirectly,  solicits  or
  undertakes employment to provide consulting services to a homeowner  for
  compensation  or  promise  of  compensation with respect to a distressed
  home loan or a potential loss of the home for  nonpayment  of  taxes.  A
  consultant does not include the following:
    (i) an attorney admitted to practice in the state of New York;
    (ii)  a person or entity who holds or is owed an obligation secured by
  a lien on any  property  in  foreclosure  while  the  person  or  entity
  performs services in connection with the obligation or lien;
    (iii)  a  bank,  trust  company, private banker, bank holding company,
  savings bank, savings and  loan  association,  thrift  holding  company,
  credit  union  or  insurance  company  organized  under the laws of this
  state, another state or the United States, or a subsidiary or  affiliate
  of  such  entity  or  a  foreign  banking  corporation  licensed  by the
  superintendent of banks or the comptroller of the currency;
    (iv) a federal Department of Housing and  Urban  Development  approved
  mortgagee  and  any  subsidiary  or affiliate of such mortgagee, and any
  agent or employee of these persons while engaged in the business of such
  mortgagee;
    (v) a judgment creditor of the homeowner, if the  judgment  creditor's
  claim accrued before the written notice of foreclosure sale is sent;
    (vi)  a  title  insurer authorized to do business in this state, while
  performing title insurance and settlement services;
    (vii) a person licensed as  a  mortgage  banker  or  registered  as  a
  mortgage  broker or registered as a mortgage loan servicer as defined in
  article twelve-D of the banking law;
    (viii) a bona fide not-for-profit organization that offers  counseling
  or advice to homeowners in foreclosure or loan default; or
    (ix)  a  person  licensed  or registered in the state to engage in the
  practice of other professions  that  the  superintendent  of  banks  has
  determined should not be subject to this section.
    (f) "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.
    (g)  "Business  day"  shall mean any calendar day except Sunday or the
  public holidays as set forth  in  section  twenty-four  of  the  general
  construction law.
    2.  Prohibitions.  A distressed property consultant is prohibited from
  doing the following:
    (a) performing consulting services without a written,  fully  executed
  consulting contract with a homeowner;
    (b)  charging  for or accepting payment for consulting services before
  the full completion of such services;
    (c) taking a power of attorney from a homeowner;
    (d) retaining any original loan document or  other  original  document
  related  to the distressed home loan, the property or the potential loss
  of the home for nonpayment of taxes; or
    (e) inducing or attempting to induce a homeowner to enter a consulting
  contract that does not fully comply with the provisions of this article.
    3. Distressed property consulting contracts. (a) A distressed property
  consulting contract shall:
    (i) contain the entire agreement of the parties;
    (ii) be provided  in  writing  to  the  homeowner  for  review  before
  signing;
    (iii) be printed in at least twelve point type and written in the same
  language  that  is  used  by  the  homeowner and was used in discussions
  between the consultant and the homeowner to  describe  the  consultant's
  services or to negotiate the contract;
    (iv)  fully  disclose  the  exact  nature  of  the distressed property
  consulting services to be provided by the distressed property consultant
  or  anyone  working  in  association  with   the   distressed   property
  consultant;
    (v) fully disclose the total amount and terms of compensation for such
  consulting services;
    (vi)  contain  the  name, business address and telephone number of the
  consultant and the street address (if different) and facsimile number or
  email address of the distressed property consultant where communications
  from the homeowner may be delivered;
    (vii)  be  dated  and  personally  signed  by  the  homeowner  and the
  distressed property consultant and be witnessed and  acknowledged  by  a
  New York notary public; and
    (viii)  contain  the  following  notice,  which shall be printed in at
  least fourteen point boldface type,  completed  with  the  name  of  the
  distressed  property  consultant,  and located in immediate proximity to
  the space reserved for the homeowner's signature:
  "NOTICE REQUIRED BY NEW YORK LAW
    You may cancel this contract, without any penalty  or  obligation,  at
  any   time   before   midnight  of          (fifth  business  day  after
  execution).
            (Name of Distressed Property Consultant) (the "Consultant") or
  anyone working for the Consultant may not take any money from you or ask
  you for  money  until  the  Consultant  has  completely  finished  doing
  everything this Contract says the Consultant will do.
  You  should  consider  consulting  an  attorney or a government-approved
  housing counselor before signing  any  legal  document  concerning  your
  home.  It  is advisable that you find your own attorney, and not consult
  with an attorney recommended or provided to you  by  the  Consultant.  A
  list  of  housing counselors may be found on the website of the New York
  State Banking Department,  www.banking.state.ny.us  or  by  calling  the
  Banking Department toll-free at 1-877-BANK-NYS (1-877-226-5697). The law
  requires that this contract contain the entire agreement between you and
  the  Consultant.  You  should  not  rely  upon any other written or oral
  agreement or promise."
  The distressed property consultant shall accurately enter  the  date  on
  which the right to cancel ends.
    (b)(i)  The  homeowner has the right to cancel, without any penalty or
  obligation, any contract with a  distressed  property  consultant  until
  midnight  of  the  fifth  business  day  following  the day on which the
  distressed property consultant  and  the  homeowner  sign  a  consulting
  contract. Cancellation occurs when the homeowner, or a representative of
  the  homeowner, either delivers written notice of cancellation in person
  to the address specified in the consulting contract or sends  a  written
  communication  by  facsimile, by United States mail or by an established
  commercial letter delivery service. A dated proof of facsimile  delivery
  or   proof   of  mailing  creates  a  presumption  that  the  notice  of
  cancellation has been delivered on the date the facsimile is sent or the
  notice  is  deposited  in  the  mail  or  with  the  delivery   service.
  Cancellation  of  the  contract  shall  release  the  homeowner  of  all
  obligations to pay fees or any  other  compensation  to  the  distressed
  property consultant.
    (ii)  The  consulting contract shall be accompanied by two copies of a
  form, captioned "notice of cancellation" in at least  twelve-point  bold
  type.  This  form  shall  be  attached  to the contract, shall be easily
  detachable, and shall contain the following  statement  written  in  the
  same  language  as used in the contract, and the contractor shall insert
  accurate information as to the date on which the right  to  cancel  ends
  and the contractor's contact information:
  "NOTICE OF CANCELLATION
  Note:  You  may cancel this contract, without any penalty or obligation,
  at any time before midnight of ______. (Enter date)
  To cancel this contract, sign and date both copies of this  cancellation
  notice  and  personally deliver one copy or send it by facsimile, United
  States mail, or  an  established  commercial  letter  delivery  service,
  indicating  cancellation to the Distressed Property Consultant at one of
  the following:

  Name of Contractor_________________________
  Street Address_____________________________
  City, State, Zip___________________________
  Facsimile:_________________________________

  I hereby cancel this transaction.

  Name of Homeowner:_________________________

  Signature of Homeowner:____________________

  Date:______________________________________"
    (iii)  Within  ten  days following receipt of a notice of cancellation
  given in accordance  with  this  subdivision,  the  distressed  property
  consultant  shall  return  any original contract and any other documents
  signed by or provided by the homeowner. Cancellation shall  release  the
  homeowner  of  all  obligations  to  pay any fees or compensation to the
  distressed property consultant.
    4. Penalties and other  provisions.  (a)  If  a  court  finds  that  a
  distressed  property  consultant  has  violated  any  provision  of this
  section, the court may make null and  void  any  agreement  between  the
  distressed homeowner and the distressed property consultant.
    (b)  If  the  distressed property consultant violates any provision of
  this section and the homeowner suffers damage because of the  violation,
  the  homeowner  may  recover  actual and consequential damages and costs
  from the distressed property consultant  in  an  action  based  on  this
  section.    If  the  distressed  property  consultant  intentionally  or
  recklessly violates any provision of this section, the court  may  award
  the homeowner treble damages, attorneys' fees and costs.
    (c)  Any  provision of a consulting contract that attempts or purports
  to limit the liability of the distressed property consultant under  this
  section shall be null and void. Inclusion of such provision shall at the
  option  of  the  homeowner  render  the  consulting  contract  void. Any
  provision  in  a  contract  which  attempts  or  purports   to   require
  arbitration  of  any dispute arising under this section shall be void at
  the option of the homeowner.  Any  waiver  of  the  provisions  of  this
  section shall be void and unenforceable as contrary to public policy.
    (d)  In  addition to the other remedies provided, whenever there shall
  be a violation of this section, application may be made by the  attorney
  general in the name of the people of the state of New York to a court or
  justice  having  jurisdiction  by  a  special  proceeding  to  issue  an
  injunction, and upon notice to the defendant of not less than five days,
  to enjoin and restrain the continuance of such  violations;  and  if  it
  shall  appear  to  the  satisfaction  of  the  court or justice that the
  defendant has, in fact, violated this  section,  an  injunction  may  be
  issued  by  such court or justice, enjoining and restraining any further
  violation, without requiring proof that any person has,  in  fact,  been
  injured  or  damaged thereby. In any such proceeding, the court may make
  allowances to the attorney general  as  provided  in  paragraph  six  of
  subdivision  (a)  of  section  eighty-three  hundred  three of the civil
  practice law and rules, and direct restitution. Whenever the court shall
  determine that a violation of this section has occurred, the  court  may
  impose  a  civil  penalty of not more than ten thousand dollars for each
  violation.  In  connection  with  any  such  proposed  application,  the
  attorney general is authorized to take proof and make a determination of
  the  relevant  facts and to issue subpoenas in accordance with the civil
  practice law and rules.
    (e) The provisions of this  section  are  not  exclusive  and  are  in
  addition  to  any  other  requirements,  rights, remedies, and penalties
  provided by law.

 


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