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Banking Interpretations

NYSBL 6-h and General Regulations of the Banking Board Part 79

April 24, 2006

[ ]

Re: Home Equity Conversion Mortgages in New York

Dear [ ]:

Your letter dated December 8, 2005 to Fred Drexler, New York State Banking Department (the “Department”), has been referred to me for response. In your letter you asked whether, [ ], a wholly-owned subsidiary of [ ] Savings Bank, a Washington state-chartered savings bank, can offer Home Equity Conversion Mortgages (“HECMs”) in this state, without first receiving a license, or prior approval from the Department.

Under Section 6-h of the Banking Law, “authorized lenders,” as defined by Real Property Law Section 280, are permitted to offer HECMs in this state. Section 280.1 (d) of the Real Property Law defines an “authorized lender” as “… any entity exempted from licensing pursuant to section five hundred ninety of the banking law and approved for the making of reverse mortgage loans by the superintendent of banks.”

Section 590.1 (e) of the Banking Law defines an “exempt organization” as “… savings bank … organized under the laws of any other state … Subject to such regulations as may be promulgated by the Banking Board, ‘exempt organization’ may also include any subsidiary of such entity.”

General Regulations of the Banking Board, Part 39 appears to be the applicable regulation authorizing a subsidiary of a savings bank to be considered an “exempt organization.” Although not explicitly stated, a consolidated subsidiary of a savings bank organized under the laws of any other state should be considered as an “exempt organization.”

As an exempt organization, so qualified as result of being a consolidated subsidiary of a savings bank, there are certain conditions specified in Part 39.4 of the General Regulations of the Banking Board that must be met prior to offering reverse mortgages in this state. However, Part 79.1 (b) of the General Regulations of the Banking Board provides specific exemptions for such an entity if all it is offering is HECMs. As stated in Part 79.1 (b), “[n]either this Part nor Parts 38,39,80 and 82 shall apply to any loans which confirms to the requirements of … ‘HUD/HECM’ reverse mortgage loan program, 12 USC § 1715z-20.”

Based on the above, if [ ] is a consolidated subsidiary of [ ] Savings Bank and all it is doing is offering HECMs, then the Department has no objection to it doing so without first obtaining a license, or receiving approval from the Department.

I trust the foregoing is responsive to your inquiry.

Very truly yours,
Harry C. Goberdhan
Assistant Counsel