New York Codes, Rules and Regulations
Title 3 - BANKING
Legal Interpretations
LI 8 Miscellaneous-Banking Board Regulations, Superintendent's Regulations, Supervisory Policies and Procedures
Section 8.1 - Interest payments by a person other than the borrower

A borrower asked whether there would be a violation of the usury laws if a lender, upon the security of a single family residence, required the seller or broker (not the borrower) to pay a certain amount, as discount or points, in addition to charging the borrower interest at a rate slightly below the maximum rate permitted by law.

The borrower's attention was called to the language of section 4.2 of Part 4 of the general regulations of the Banking Board which defines interest to include "all other amounts paid or payable, directly or indirectly, by any person, to or for the account of the lender in consideration for making the loan or forbearance." (Emphasis added) The borrower was advised that amounts paid in consideration for the making of the loan or forbearance would, thus, be included as interest regardless of whether they were paid by the borrower or by someone else. If the amount so paid brought the interest rate over the maximum rate permitted by law, then the loan would be usurious.

DATED: July 23, 1969