Skip to Content

NY.gov Portal State Agency Listing

Translate | Disclaimer

Department of Financial Services logo

Banking Interpretations

NYSBL 6-l

 

December 27, 2006

This is in reply to your 10/1/06 e-mail below to Sara Kelsey, Deputy Superintendent and Counsel, and follows up on our conversation of 11/7/06 where we discussed and clarified what you are questioning in the 4/7/05 letter by Ms. Cherry.

Ms. Cherry's letter dealt specifically with New York Banking Law, Section 6-l(1)(f)(ii), which provides that

"points and fees" means: All charges for items listed under Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase "points and fees."

(12 CFR Section 226.4(c)(7) lists the real estate related fees that the Federal Reserve excludes from the finance charge, if the fees are bona fide and reasonable in amount.)

Ms. Cherry concludes that

Section 6-6-1(1)(f)(ii) [sic] clearly indicates that charges for items listed under Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations are only "points and fees" if the lender or an affiliate receives compensation in connection with such a charge. If only a third party unrelated to the lender receives compensation in such case, the item will not be deemed to be "points or fees" under Section 6-1 regardless of what the Federal Reserve's Commentary on the item states. (Emphasis added.)

The underscored language above is the source of your question. Section 6-l has a four-prong test of what are "points and fees." Ms. Cherry's letter dealt with only the second prong, which is fairly clear from the totality of the letter. The underscored language above should be read in that context and the intention of the letter is that under Section 6-l(1)(f)(ii) charges for items listed under Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations are only "points and fees" if the lender or an affiliate receives compensation in connection with such a charge. If only a third party unrelated to the lender receives compensation in such case, the item will not be deemed to be "points or fees" under Section 6-l(1)(f)(ii) regardless of what the Federal Reserve's Commentary on the item states, although the item may be deemed to be "points or fees" if it meets the criteria under any of the other three prongs of the test in Section 6-l, namely Section 6-l(1)(f)(i), (iii) or (iv) .

I trust this is responsive to your inquiry.

Alan M. Weinberg
Assistant Counsel