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Banking Interpretations

NYSBL 6-l and 590

March 2, 2006

[ ]

Re: Predatory Lending Law – Banking Law Section 6-l

Dear [ ]:

In your November 30, 2005 letter to Mr. Kenneth Bielemeier of the New York State Banking Department, you state that in reviewing the predatory lending law, it is your impression that under New York State Banking Law, Section 6-l subdivision (2) thereof, whenever the word “lender” is used in the law it “means a mortgage banker as defined in paragraph (f) of subdivision one (1) of section five hundred ninety of this chapter…” You further assert that private parties who make mortgage loans not exceeding five or more in number during the year are not subject to the requirements of section 6-l.

The applicability of Section 6-l is limited to those parties who are New York State licensed mortgage bankers, as well as exempt organizations as defined in paragraph (e) of subdivision one of section five hundred ninety of New York State Banking Law. Banking Law Section 590.2(a), Necessity for License, states that “no person, partnership, association, corporation or other entity shall engage in the business of making five or more mortgage loans in any one calendar year without first obtaining a license from the superintendent in accordance with the licensing procedure provided in this article and such regulations as may be promulgated by the banking board or prescribed by the superintendent” as defined in Section 590.1(a). Thus, a mortgage banking license is not required for private parties who make under five mortgage loans during the year, but would be required for those parties making five or more mortgage loans during the year.

Compliance with usury laws is not related to the question of whether a license under Article 12-D of the Banking Law is required, nor to the applicability of Section 6-I.

I trust that this is responsive to your inquiry. If you have any questions, I can be reached at (212) 709-1642.

Sincerely,

Christine M. Tomczak
Assistant Counsel

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