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Banking Interpretations

NYSBL 590(1)
General Reg. Part 39
NY Personal Property Law 413

From:            Steven Barras

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Date:              07/29/2008

Subject:          Licensing requirements for the New York State

Regarding your question concerning the need for licensing to originate a home equity loan (i.e. one that is secured by a credit line mortgage) in this state, I note that such a loan is deemed to be an "exempt product" under Part 39.5(e) of the General Regulations of the Banking Board and therefore no mortgage banking license would be required for a lender to make such a loan. In any event, a duly chartered Federal or state banking organization would be exempt from licensing as a mortgage banker under Part 39.2(a) even if it offered loan products not exempt from licensing although it would subject to certain advertising, commitment and other procedures and disclosure requirements. Additionally, a lender may make up to four non-exempt mortgage loans on New York residential property in a calendar year under Article 12-D of the New York Banking Law without first obtaining a mortgage banking license.

Furthermore, you do not indicate the manner in which your mortgagors would be able to access their line of credit but I note that Section 413.12(a) of the New York Personal Property Law prohibits the issuance of credit cards that are secured by real property if they are used for purchases.  If this section of law is relevant to your question, I suggest that you consult with your bank's counsel on the applicability of this section.

As for "any other information that [you] would need in order to originate and close this loan under the laws of the State of New York as well as any licensing requirements that [you] would need to meet", I can only address matters that concern the Banking Department. I trust that this is responsive to your inquiry.

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