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Banking Interpretations

NYSBL 6-L and General Regulations of the Banking Board Part 41

Alan Weinberg, Legal
10/25/06

Subject 
Re:   NY Points and Fees calculation with regard to Lender/Seller/Third Party paid fees

This is in reply to your e-mail below and follows up on our conversation of 10/16/06.

The amendment to Part 41, which deleted the phrase "by the borrower at or before loan closing" from the text of Section 41.1 (e)(6)(iii) in order to make the section consistent to Section 6-1 of the Banking Law, makes it clear that the payor is not relevant to the question of whether the payment falls within the definition of "points and fees." As we discussed, however, there are other conditions that are relevant to the question of whether the payment falls within the definition of "points and fees" and those conditions may be found in the definition of "points and fees" and the other text of Section 41.1(h). As discussed, please refer to the version of Part 41 and the accompanying explanatory material that was posted to our web site on 9/27/06.

(My e-mail of 3/29/06 did focus on broker compensation because of the differences between the New York and federal rules on this point and the apparent confusion among the public on this matter. The inclusion of the 9/3/04 letter was meant to illustrate how the differences came into being when, at an earlier time, the New York and federal rules did not differ on this point.)

Alan M. Weinberg
Assistant Counsel

_______________________________

To: <Alan.Weinberg@banking.state.ny.us>

Subject: NY Points and Fees calculation with regard to Lender/Seller/Third Party paid fees

Mr. Weinberg,

This email is in follow up to a voicemail left for today from [---].

We received the email below from you in March of this year. Although you are confirming our interpretation that all lender, seller and third party fees are included in the points and fees calculation, the latter part of your email references a Department Interpretive letter dated September 3, 2004. The department letter appears to only reference yield spread premiums paid by the lender, seller or third party. The initial question was in reference to borrower fees paid being paid by lender, seller or third party. Could you please clarify?