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Banking Interpretations

NYSBL 590(2)

February 13, 2006

[ ]

Re: Licensing Obligations for Secondary Market Activities

Dear [ ]:

Your November 28, 2006 letter to the Robert Mengani, Assistant Deputy, Mortgage Banking Division, regarding licensing obligations for a corporation involved in secondary market activities in New York State has been forwarded to me for reply.

You explain that your client, [ ] a nonprofit public benefit corporation, is contemplating purchasing and selling mortgage-backed securities and New York residential (1-4 family) mortgage loans on the secondary market. You state that the Company will not engage in any servicing related activity, enforce its rights under the notes it purchases, or have any contact with borrowers. The Company also will not be engaged in loan origination activities, such as taking applications, processing applications, making underwriting decisions, issuing commitments or funding loans at closing.

Section 590.2(a) of Article 12-D of the New York Banking Law provides that unless exempt, no person, partnership, association, corporation or other entity may engage in the business of making mortgage loans without a license. Section 590.1(c) provides that “making a mortgage loan” shall mean for compensation or gain, either directly or indirectly, advancing funds, offering to advance funds, or making a commitment to advance funds to an applicant for a mortgage loan or a mortgagor as a mortgage loan. Given the above-described activities, we concur with your conclusion that [ ] does not need to be licensed under Article 12-D of the New York State Banking Law. I trust this has been responsive to your inquiry.

Sincerely,

Christine M. Tomczak
Assistant Counsel