General Industry Letters
Mortgage Banking Letters
and Part 38.3 of the General Regulations of the Banking Board
June 16, 2011
To the Individual or Institution Addressed:
Re: Part 38.3 of the General Regulations of the Banking Board – Addition of statement in application alerting borrowers to the gravity of falsifying any information that they put on their application.
On December 23, 2009, an amendment to Part 38.3 of the General Regulations of the Banking Board was adopted. This amendment requires the addition of the following statement to the introductory paragraph of a written application: “It is a crime to intentionally falsify information on this application.”
During the proposal stage of rulemaking, the Department received comments which pointed out that this additional language would largely duplicate the language set forth in the Federal National Mortgage Association’s (“Fannie Mae”) 1003 Uniform Mortgage Application Form and the Federal Home Loan Mortgage Corporation’s (“Freddie Mac”) application Form 65. After considering the comments, the Department responded that it would provide certain clarifications in an interpretive industry letter.
The Department considers the specific language contained in the Fannie Mae and Freddie Mac Forms to be in compliance with Part 38.3. However, this conclusion relates solely to the use of the Fannie Mae 1003 or Freddie Mac 65 Forms, which contains the following language in Section 1 of the Acknowledgement and Agreement statement:
- The information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may have suffered any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Section 1001, et seq.
or the following falsification statement appearing above the signature line on the Fannie Mae 1003 or Freddie Mac 65 loan application Continuation Sheet.
I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.
However, if a mortgage lender, mortgage broker or exempt organization alters the language in Section 1 of the Acknowledgement and Agreement statement or the falsification statement appearing above the signature line on the Fannie Mae 1003 or Freddie Mac 65 forms and Continuation Sheet the revised language must conform with the disclosure language in Part 38.3.
Mortgage bankers, mortgage brokers and exempt organizations must ensure that all mortgage application forms, including electronic forms, used to facilitate mortgage loan origination on 1-4 family residential property located in New York comply with the requirements of Part 38.3.
Prior to October 1, 2011, any mortgage banker, mortgage broker or exempt organization that still has preprinted application forms without the required disclosure, may attach a separate disclosure sheet using the required language. The statement on the separate sheet must use a font size not smaller than 12 point type and there must be an endorsement by the applicant indicating the date such disclosure was received.
If you have any questions related to this Industry Letter, please contact me (212) 709-5540 or at rholda.ricketts @banking.state.ny.us.
Very truly yours,
Deputy Superintendent of Banks
Mortgage Banking Division