New York Codes, Rules and Regulations
Title 3 - BANKING
Chapter III - SUPERINTENDENT'S REGULATIONS
Subchapter B - NON-BANKING ORGANIZATIONS
Part 413 - Procedures And Requirements For Mortgage Brokers To Act As Fha Mortgage Loan Correspondents
Section 413.3 - Minimum standards required for approval
Current through Register Vol. 46, No. 12, March 20, 2024
(a) For purposes of this Part, in addition to any other requirements of New York or Federal law, an applicant must satisfy the following requirements before obtaining approval from the superintendent to make FHA insured mortgage loans:
(b) The form of the surety bond shall be obtained from the Mortgage Banking Division of the Banking Department or such other form as is satisfactory to the superintendent. Such bond shall be in favor of the superintendent for the protection of the superintendent and residential mortgage consumers located in New York State and shall contain substantially the following language:
"The proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees determined by the Superintendent to be improperly charged or collected and to pay banking department examination costs and assessments, solely in the event of the insolvency, liquidation or bankruptcy of such mortgage broker or the surrender, expiration or revocation of such mortgage broker's registration or approval to make loans as an FHA Mortgage Loan Correspondent. In the event of the insolvency or bankruptcy of the mortgage broker, the proceeds of the bond shall be paid to the Superintendent forthwith for disposition in accordance with the applicable provisions of the Banking Law."
(c) The form of the deposit agreement shall be obtained from the Mortgage Banking Division of the Banking Department or such other form as is satisfactory to the superintendent. The deposit agreement shall be for the protection of the superintendent and residential mortgage consumers located in New York State. An executed copy of such deposit agreement shall be filed with the superintendent. The assets which comprise the deposit shall be valued at the lower of principal amount or market value and must be deposited in a New York State chartered commercial bank, trust company, savings bank, savings and loan association, private banker or national bank, Federal savings bank or Federal savings and loan association located in New York State. As part of the deposit agreement, the applicant shall agree that prior to the release or substitution of any assets subject to the deposit agreement, the applicant shall file a certificate with the depository which shall specify the following:
In addition, as part of the deposit agreement, the applicant shall agree that the superintendent may revoke the authority of the depository to pay dividends or interest on the securities, funds or other assets deposited pursuant to this deposit agreement.
(d) The superintendent, in his or her sole discretion, may withdraw approval as to one or more sponsors at any time should the superintendent determine that the sponsor's funding capability, financial standing, character and fitness, and/or supervisory or consumer complaint record is such as to give the superintendent reasonable cause to doubt the ability of such sponsor to meet its obligations to the loan correspondent. Notification of any such disapproval will be sent in writing to the loan correspondent. Within five business days from receipt of such notification, the loan correspondent shall cease doing business with the sponsor.
(e) Paragraph (a)(5) and subdivisions (b) and (c) of this section shall remain in full force and effect until 24 months from the effective date of this Part provided that the Superintendent of Banks shall monitor the effects of the operation of such paragraph and subdivisions and shall submit to the Governor's Office of Regulatory Reform a report after this Part shall have been in effect for 22 months. This report shall include findings on the effects of this operation of such paragraph and subdivisions and, in addition, shall contain recommendations regarding the extension or re-adoption of such paragraph and subdivisions. Specifically, such report shall include the following information: