Regs Part 38
November 30, 2001
Mr. [ ]
Re: Fee charged in connection with a mortgage.
Dear Mr. [ ]:
Your letter regarding a fee charged by Executive Lending Services ("Executive"), a division of Baltimore American Savings Bank ("BASB"), in connection with a mortgage received by you has been referred to me for response.
According to your letter, subsequent to receiving a mortgage commitment from Executive, you decided to take a mortgage with a different bank. Upon informing Executive of your decision, BASB imposed a cancellation fee of one point of the mortgage loan. You acknowledge that when you submitted your application, you executed a written disclosure indicating your understanding that BASB would impose a fee of one point of the mortgage loan amount should you cancel subsequent to BASB issuing a commitment. After learning that this cancellation fee may be illegal, you contacted BASB's regulator, the Office of Thrift Supervision ("OTS"), and were informed by the OTS that since a specific Federal law or regulation does not exist regarding the imposition of this fee by a Federal thrift institution, the OTS would defer to applicable state law. As a result, you request that the New York State Banking Department ("Department") provide you with an opinion as to whether the imposition of such a fee is permissible under New York law.
Neither the New York Banking Law nor the regulations promulgated thereto prohibit an exempt institution from imposing a fee against an applicant upon cancellation of a mortgage application. Consequently, since BASB disclosed the terms and conditions under which said fee would be imposed, acknowledged by you, the imposition of such a fee is not prohibited in New York.
Thank you for your attention to the above.
Very truly yours,
Alvin A. Narin
 Pursuant to Section 38.1(g), Federal thrift institutions are considered exempt organizations subject to the provisions of Part 38.