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Banking Interpretations

NYSBL Sec. 641

Memorandum


To: Senior Examiner Matthew

From: Christine R. Cardi

Date: May 24, 2005

Subject: [ ]


[ ]

Recommendation : A license to operate a money transmission business in New York State is not required for the business activity described below.

Background
[ ] is incorporated and headquartered in Ohio. It does not maintain any offices in New York State. It offers a biweekly mortgage payment program to new homeowners, including New York State residents. Customer monthly mortgage payments are divided in half and the half payment amounts are withdrawn from the customer checking accounts every two weeks. [ ] makes 13 yearly payments to the customer mortgage holders ("Lenders"), instead of the 12 yearly payments typically made. According to [ ] their customers average a 7 year savings on a 30 year mortgage by making 13 payments each year, enabling them to pay off a 30 year mortgage in 23 years with a 25% savings in interest charges. Withdrawals from customer checking accounts are made by way of ACH debit authorizations given by the customers to allow[ ]]bank, Florida Bank located in Plantation Florida, to withdraw the customer funds on a biweekly basis. The customer funds are withdrawn and then held in [ ] FDIC insured account at Florida Bank until Florida Bank sends the funds to the Lenders on the monthly due date plus the additional 13th payment for the year.

Reasoning  
Based on [ ] description of its biweekly mortgage payment business, it appears that it is not conducting the business of money transmission in New York State as that business is contemplated in article 13-B of New York's Banking Law since [ ] does not have a physical presence in New York State, either with respect to its offices or its bank account used in conducting its biweekly mortgage payment business.

Noted and Agreed: S.A.K._____