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Mortgage Banking Regulations and Statutes
Chapter III.B. Superintendent's Regulations [Subchapter B] - Non-Banking Organizations
Part 420 Mortgage Loan Originators: Authorization; Education Requirements

April 16, 2008


Part 420. MORTGAGE LOAN ORIGINATORS: AUTHORIZATION; EDUCATION REQUIREMENTS

(Statutory authority: Banking Law, Article 12-E)

§ 420.1 Mortgage loan originator authorization and revocation.

(a) Section 599-c of the Banking Law provides that the Superintendent may authorize individuals to carry out the activities of a Mortgage Loan Originator (MLO)(many capitalized terms used herein without definition are defined in Section 420.3 below)  if the Superintendent shall find that the general character and fitness and the education qualifications of the individual are such as to warrant the belief that the individual will engage in Mortgage Loan Originating honestly, fairly, and efficiently. The standards to be applied by the Superintendent in finding that the character and fitness of an individual warrant his or her authorization or continued authorization as an MLO are the same as those applied by the Superintendent in finding that the character and fitness of an individual warrant licensing or registration under Sections 592 and 592-a, respectively, of the Banking Law.

(b) Section 599-g of the Banking Law provides that the Superintendent may revoke any authorization to engage in the business of Mortgage Loan Originating if the Superintendent finds that the MLO has violated any provisions of Article 12-E of the Banking Law, or any rule or regulation promulgated thereunder or under Article 12-D of the Banking Law or any other law, rule or regulation of this state or the federal government pertaining to mortgage banking, brokering or loan originating.

§ 420.2 Exemptions.

As provided in Section 599-e of the Banking Law:

(a)  Individuals employed by certain banking organizations and their affiliates.

  1. Except as provided in subparagraph (ii) of this paragraph, the provisions contained in Article 12-E of the Banking Law and this Part shall not apply to an individual employed by a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union organized under the laws of this state, another state or the United States, or a subsidiary or affiliate of such a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union.

  2. If any such affiliate or subsidiary is licensed or registered by the Superintendent pursuant to Article 12-D of the Banking Law, it shall provide for its employees who engage in Mortgage Loan Originating on behalf of such subsidiary or affiliate an educational program or Education Courses that the Superintendent determines to be the substantial equivalent of the educational requirements applicable to non-exempt MLOs under Article 12-E of the Banking Law.

(b) Individuals working under exclusive contract with certain banking organizations and their affiliates.

  1. Except as provided in subparagraph (ii) of this paragraph, the provisions contained in Article 12-E of the Banking Law and this Part shall not apply to an individual who is under an exclusive contract with an Exempt Article 12-D Organization, or an affiliate or subsidiary of such an organization, to the extent that the individual is acting within the scope of the individual's employment or exclusive contract and is acting within the scope of the charter, license, authority, approval or certificate of the exempt organization or an affiliate or subsidiary of the exempt organization.

  2.  If any such affiliate or subsidiary of an Exempt Article 12-D Organization is licensed or registered by the Superintendent pursuant to Article 12-D of the Banking Law, it shall provide for individuals under exclusive contract with such affiliate or subsidiary who engage in Mortgage Loan Originating on behalf of such affiliate or subsidiary an educational program or Education Courses that the Superintendent determines to be the substantial equivalent  of the educational requirements applicable to non-exempt MLOs under Article 12-E of the Banking Law.

(c) Attorneys.  An attorney at law in good standing in this state, who engages in Mortgage Loan Originating, shall not be required to meet the authorization or education requirements prescribed pursuant to this Part.

(d) Assisting in incidental activities.  No employee of, or a person affiliated with, an Originating Entity shall be subject to the authorization or education requirements of this Part due solely to such employee or person assisting in the performance of the business activities of such Originating Entity that are incidental to the performance of any Mortgage Loan Originating activities performed by such Originating Entity.

(e) Exempt Organizations.  No employee of, or a person affiliated with, an exempt organization shall be subject to the authorization or education requirements of this Part due to such employee or person assisting in the performance of any business activities of a mortgage broker that is controlled by, or is a subsidiary of, such exempt organization.

(f) Exemptions approved by the Superintendent.  The provisions contained in this Part shall not apply to such other persons as may be exempt with the prior written approval of the Superintendent for good cause.

§ 420.3 Definitions.

For purposes of this Part:

(a)  “Annual Expiration Date” with respect to any MLO means December 31 of each year.

(b) "Education Course" means a formal course of learning or instructional or training program provided by an entity described in Part 420.12(a) that relates to the current business of Mortgage Loan Originating, including the statutory and regulatory requirements and judicial interpretations governing mortgage lending, banking and real estate transactions and practices in this state.

(c)  “Exempt Article 12-D Organization” means an insurance company, banking organization, foreign banking corporation licensed by the Superintendent or the Comptroller of the Currency to transact business in the State of New York, national bank, federal savings bank, federal savings and loan association, federal credit union, or any bank, trust company, savings bank, savings and loan association or credit union organized under the laws of any other state or any instrumentality created by the United States or any state with the power to make mortgage loans, and, subject to regulations of the Banking Board, a subsidiary or affiliate of one of the foregoing.

(d) “Hour” means fifty minutes of education time, exclusive of breaks, meals and introductions.

(e) "Mortgage loan" means a loan to a natural person made primarily for personal, family or household use, primarily secured by either a mortgage on residential real property or certificates of stock or other evidence of ownership interests in, and proprietary leases from, corporations or partnerships formed for the purpose of cooperative ownership of residential real property.

(f) "Mortgage Loan Originator" (MLO) means:

  1. any person employed by or affiliated with an Originating Entity, who engages in Mortgage Loan Originating irrespective of how such person is compensated by such Originating Entity, or

  2. any natural person  who as an Originating Entity, or any Substantial Stockholder of an Originating Entity, engages in Mortgage Loan Originating.

For purposes of clause (i) of this definition, a person is "affiliated with an Originating Entity" if such person is an independent contractor and is compensated by such Originating Entity in whole or in part, either directly or indirectly.  For purposes of clause (ii) of this definition, a natural person who is an Originating Entity, or any substantial stockholder of an Originating Entity, or any officer or manager of an Originating Entity that supervises the activities of MLOs and does not communicate directly with the customers of the Originating Entity shall not be deemed to be an MLO.  For purposes of clause (ii) of this definition, “Substantial Stockholder” means any stockholder that owns, controls or holds with power to vote 10 percent or more of the voting stock of the Originating Entity.

(g) "Mortgage Loan Originating" means providing services to a customer of an Originating Entity in accordance with Section 590(1)(c) or 590(1)(d) of the Banking Law by soliciting, negotiating, explaining or finalizing the terms of a mortgage loan.  For purposes of this definition, the term "soliciting" shall mean discussing a mortgage loan product or products with a customer or potential customer, but a person shall not be deemed to solicit a mortgage loan solely by virtue of taking customer information or referring a customer or the customer's information to a person who engages in Mortgage Loan Originating; and provided, further, that a person shall not be deemed to be an MLO solely because the person provides clerical or secretarial services or provides legally related services that are not provided directly by an attorney relating to Mortgage Loan Originating activities of an Originating Entity.

(h) "Originating Entity" means a person or entity licensed or registered pursuant to Article 12-D of the Banking Law, and, with respect to a Mortgage Loan Originator, means the registered entity by which the Mortgage Loan Originator is then employed or affiliated.

(i)  “Person” means an individual.

(j) "Residential real property" means real property located in this state improved by a one-to-four family owner-occupied dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed.

§ 420.4 Application procedure for initial authorization as an MLO.

(a) Authorization requirement. Effective April 1, 2008, no person shall engage in Mortgage Loan Originating without first being authorized by the Superintendent as an MLO pursuant to Article 12-E of the Banking Law, unless excluded from the definition of Mortgage Loan Originating in Section 420.3(g) above or exempt pursuant to Section 599-e of the Banking Law; provided, however, that:

  1. a person who was employed by or affiliated with an Originating Entity as an MLO prior to January 1, 2008 may continue to engage in Mortgage Loan Originating until the earlier of January 1, 2010 or the date such person receives notice from the Superintendent that his or her application has been denied; and

  2. a person who is initially employed by or affiliated with any Originating Entity as an MLO on or after January 1, 2008, and who has submitted an application, fingerprints and required fees in accordance with this Part and  Supervisory Procedure MB 107 may engage in Mortgage Loan Originating from the time he or she receives notice from the Superintendent that his or her application has been accepted for processing until such time as such person is notified by the Superintendent that his or her application has been denied.

(b) Submission of application. Each applicant to become an authorized Mortgage Loan Originator shall file an application in such form as shall then be required by the Superintendent.  A person who is initially employed by or affiliated with an Originating Entity as an MLO on or after January 1, 2008 shall file such an application as soon as practicable after employment.  A  person who was employed by or affiliated with an Originating Entity as an MLO prior to January 1, 2008  shall file such an application not later than July 1, 2008, or such later date as the Superintendent may agree with such MLO’s Originating Entity. The application for initial authorization as an MLO shall be affirmed by the applicant and submitted electronically in such form and in such manner as may be prescribed by the Superintendent. Instructions for submission of applications shall be available on the Banking Department’s website (www.banking.state.ny.us).

(c) Fees. A completed application shall be accompanied by payment of the following fees:  (i) an investigation and initial authorization fee, (ii) such fees as may be required for processing fingerprints, and (iii) a processing fee, all as described in Section 420.13 of this Part.  No such fee will be refunded if the application is withdrawn or not approved.  The schedule of fees shall be posted on the Banking Department’s website (www.banking.state.ny.us). 

(d) Fingerprints and fingerprint certification. The applicant shall provide two sets of fingerprints in such form as shall be acceptable to the New York State Division of Criminal Justice Services, together with a fingerprint certification in the form prescribed by the Superintendent.

(e) Information and documents required. The application shall include the information and documents required by Supervisory Procedure MB 107 as well as such additional information and documents as the Superintendent deems necessary to determine whether the applicant satisfies the standard set forth in Section 599-c of the Banking Law. Nothing contained herein shall limit the Superintendent’s authority to consider all relevant factors set forth in Section 420.1(a) and 420.6(d) in determining whether to approve the application.

(f) In-person conferences.   In the absence of a showing of undue hardship, the Superintendent may also require that the applicant and any officers, directors and/or representatives of the Originating Entity with which the applicant is employed or affiliated appear at the Banking Department to present information about the qualifications of the applicant.

§ 420.5 Originating on a temporary basis.

(a)  Notwithstanding Section 420.4(a) of this Part, with respect to a person who was employed by or affiliated with an Originating Entity as an MLO prior to January 1, 2008, an Originating Entity may permit such person to engage in Mortgage Loan Originating until the earlier of (i) January 1, 2010 and (ii) the date the Originating Entity receives notice that such person’s application for authorization has been denied by the Superintendent or has been withdrawn.

(b) Notwithstanding Section 420.4(a), with respect to a person who was not employed by or affiliated with an Originating Entity as an MLO prior to January 1, 2008,  if the Originating Entity has received notice from the Banking Department that the Banking Department has accepted for processing an application for authorization of such person as an MLO, then the Originating Entity may permit such person to engage in Mortgage Loan Originating until the date it receives notice that such person’s application for authorization has been denied by the Superintendent or has been withdrawn.

§ 420.6 Notice of approval or denial of application; certificate of authorization; and internet listing.

(a) Upon authorizing any applicant as an MLO, the Superintendent shall:

  1. transmit notice of approval of the application, in such form as the Superintendent deems appropriate, to the Originating Entity that currently employs the MLO, or with which the MLO is affiliated, at the time of making such application;

  2. issue a certificate attesting to such authorization;

  3. transmit one copy of such certificate to the applicant; and

  4. file another copy of such certificate in his or her office.

(b) The Superintendent shall maintain upon the Banking Department’s website (www.banking.state.ny.us) a list of authorized MLOs. The list shall indicate the following:

  1. name of the MLO;

  2. authorization number of the MLO; and

  3. the Originating Entity that currently employs the MLO, or with which the MLO is affiliated.

(c) An authorization issued pursuant to Article 12-E of the Banking Law is not transferable.

(d) The Superintendent may deny an application where he or she finds that the applicant does not possess the general character and fitness or the education qualifications so as to warrant belief that the applicant will engage in Mortgage Loan Originating honestly, fairly and efficiently or that there is good cause to believe that the public interest would not be served by approving such application. In making such determination the Superintendent may consider all relevant factors, including but not limited to, employment history; educational background; financial responsibility; history of complaints or consumer abuse relating to real estate transactions; regulatory fines and enforcement actions; revocation, suspension or denial of licenses, certifications, authorizations or registrations in this state or any other state; and history of criminal convictions. 

(e) Upon denying an application for authorization as an MLO, the Superintendent shall notify, in writing, the applicant and the Originating Entity with which the applicant is employed or affiliated that the application was denied and that the applicant may not engage in the business of Mortgage Loan Originating in this state.

§ 420.7 Inactive Status 

The authorization of an MLO is not effective during any period during which the MLO is not employed by or affiliated with a mortgage broker or mortgage banker licensed pursuant to Article 12-D of the Banking Law.  When an MLO ceases to be employed by or affiliated with an Originating Entity, the Originating Entity shall promptly notify the Superintendent of the termination date of such employment or affiliation.  The authorization of such MLO shall be placed in inactive status until the Superintendent receives written or electronic notice of the MLO’s new employment or affiliation.  An MLO shall continue to pay the annual authorization fee and to take required Education Courses while in inactive status.

§ 420.8 Suspension and Expiration of Authorization. 

(a) Failure to pay annual authorization fee.

  1. Authorization as an MLO shall expire on the Annual Expiration Date unless the annual authorization fee is paid prior to or upon the date the payment is due.

  2. In the event such fee is not paid by the due date, the Banking Department shall notify the Originating Entity of the expiration of the authorization.

  3. If such authorization expires because the annual fee has not been paid by the due date, the authorization shall be reinstated if such fee is paid within ninety days after such due date.

(b) Failure to timely complete education requirements. Each authorized MLO shall complete all applicable education requirements by the Annual Expiration Date of such MLO's authorization during the year in which completion of the education requirements is due.  Notwithstanding Section 599-g of the Banking Law, failure to timely complete the education requirements shall cause the MLO’s authorization to be suspended immediately, irrespective of whether the MLO has made satisfactory payment of the annual authorization fee.  The MLO’s authorization shall expire within thirty days after the date such suspension commences unless the applicable education requirements are completed within such period of time.

(c) Notification of expiration. Whenever an authorization shall have been suspended or expired in accordance with Article 12-E of the Banking Law or this Part, the Superintendent shall notify the MLO and the affected Originating Entity that the authorization has been suspended or expired and that the MLO may not engage in the business of Mortgage Loan Originating in this state.

(d) Civil and criminal liability. The suspension or expiration of an authorization shall not affect an MLO’s civil or criminal liability for acts committed prior to such time. If such suspension or expiration occurs after the issuance by the Superintendent of a statement of charges and notice of hearing, the Superintendent may proceed against the MLO as if such suspension or expiration had not taken place.

(e) Effect of suspension or expiration. No suspension or expiration of an authorization shall impair or affect the obligations under any preexisting lawful contract between any licensee or registrant and any person.

§ 420.9 Renewal of Authorization.

(a) Annual expiration of authorization.  Each MLO authorization issued by the Superintendent under the provisions of Article 12-E of the Banking Law shall expire annually on the Annual Expiration Date. The authorization shall become invalid after that date unless renewed.  The Banking Department shall notify all authorized MLOs of the date such renewal period begins.

(b) Submission of annual request for renewal. An annual request for renewal of authorization as an MLO shall be affirmed by the MLO and submitted electronically in such form and in such manner as may be prescribed by the Superintendent. Instructions for annual renewal of authorization shall be available on the Banking Department’s website (www.banking.state.ny.us).

(c) Annual authorization fee. A completed annual request for renewal shall be accompanied by an annual authorization fee, established pursuant to the requirements of Article 12-E of the Banking Law, of $50.00.

(d) Information and documents required. The annual request for renewal shall include the information and documents referred to in Supervisory Procedure MB 107 as well as such additional information and documents as the Superintendent deems necessary to determine whether the MLO continues to satisfy the standard set forth in Section 599-c of the Banking Law.

§ 420.10 Surrender of authorization.

(a) Who may surrender.   MLO authorization may be surrendered only by the authorized individual named on the certificate of authorization. An Originating Entity that employs an MLO or with which an MLO is affiliated may not surrender the authorization of such MLO.

(b) Form of surrender. Surrender of MLO authorization shall be by written notice in such form as may be prescribed by the Superintendent. The instructions for surrender shall be posted on the Banking Department’s website (www.banking.state.ny.us).

(c) Civil and criminal liability. Surrender of an MLO authorization shall not affect the MLO’s civil or criminal liability for acts committed prior to such surrender.  If such surrender occurs after the issuance by the Superintendent of a statement of charges and notice of hearing, the Superintendent may proceed against the MLO as if such surrender had not taken place.

(d) Effect of surrender. No surrender of an MLO’s authorization shall impair or affect the obligation of any preexisting lawful contract between any licensee or registrant and any person.

§ 420.11 Education requirement.

(a)  Condition to authorizations.  Each MLO shall, as a condition of initial and subsequent annual authorization:

  1. satisfactorily complete education requirements as prescribed pursuant to Section 599-d of the Banking Law and specified in this Part; and

  2. submit to the Originating Entity proof of completion of the required number of Hours of Education Courses by providing certificates of course completion in the form required by the Superintendent.

(b)  Proof that MLO has completed education requirements.  No Originating Entity shall permit any MLO who is required to have completed education requirements pursuant to Article 12-E of the Banking Law to engage in Mortgage Loan Originating until it has received acceptable proof of completion of such requirements.

(c) Credit for Education Courses.  An MLO shall receive credit for satisfactorily completing an Education Course if such course is presented by a course provider described in Section 420.12(a) of this Part, is approved by the Superintendent if required by Section 420.12(d) of this Part, and meets any other requirements established by the Superintendent as authorized by Section 599-h of the Banking Law.

(d) MLOs employed before January 1, 2008.  Any person employed by or affiliated with an Originating Entity prior to January 1, 2008, who engages in Mortgage Loan Originating on or after such date shall comply with the following:

  1. Complete the initial eighteen Hours of Education Courses prescribed by Article 12-E of the Banking Law no later than January 1, 2010.

  2. Complete a minimum of eighteen hours of Education Courses every two years during the next succeeding six years).

  3. If by the end of such six-year period, such MLO has acquired ten or more years of experience actively engaged in Mortgage Loan Originating, the MLO shall thereafter complete eight Hours of Education Courses every four years.

  4. If by the end of such six-year period, such MLO has not acquired ten or more years of experience actively engaged in Mortgage Loan Originating, the MLO shall complete eighteen Hours of Education Courses during the next succeeding two years and eight Hours of Education Courses every four years thereafter.

(e) MLOs first employed after January 1, 2008.  Any person who was not employed by or affiliated with an Originating Entity prior to January 1, 2008, who engages in Mortgage Loan Originating on or after such date, shall comply with the following:

  1. Within the last five years prior to approval or by the Annual Expiration Date in the year in which the first anniversary of the MLO’s authorization occurs, such person shall have completed eighteen Hours of Education Courses.

  2. Beginning on the second anniversary of initial authorization, such MLO shall complete a minimum of eighteen Hours of Education Courses every two years during the next succeeding eight years, provided that such requirements must be completed by the Annual Expiration Date of the MLO’s authorization during the year in which completion of such requirement is due.

  3. Upon acquiring ten or more years of experience actively engaged in Mortgage Loan Originating, such MLO shall complete eight Hours of Education Courses every four years, provided that such requirements must be completed by the Annual Expiration Date of the MLO’s authorization during the year in which completion of such requirement is due.

(f) Course content.  During each biennial and quadrennial education period under clause (d) or (e) of this Section, the MLO shall take a mix of Education Courses that relate to the then current business of Mortgage Loan Originating, including the subjects listed in paragraph (g) of this Section. Three Hours of such instruction shall consist of instruction in ethical conduct in the area of Mortgage Loan Originating or lending practices. The content of Education Courses, and the depth in which it is covered may vary depending on the prior Mortgage Loan Originating experience of the MLO and other factors as determined by the Superintendent pursuant to Article 12-E of the Banking Law. 

(g)    Course requirements for inexperienced MLOsEducation courses offered to Mortgage Loan Originators with less than 4 years experience as MLOs shall emphasize the fundamental tasks performed by Mortgage Loan Originators and must provide students with basic knowledge and competency in areas of Mortgage Loan Origination and lending including but not limited to:

  1. Loan procedures and processes;

  2. Real property sales transactions;

  3. Relevant New York State laws and legal developments governing mortgages, lending,  credit, real property and proceedings, consumer protection, fraudulent and deceptive business practices, advertising of mortgage products, predatory lending, fair lending and privacy;

  4. Relevant federal laws and legal developments governing mortgages, lending, credit, real property, consumer protection, fraudulent and deceptive business practices, advertising, predatory lending, fair lending and privacy, including the Equal Credit Opportunity Act (ECOA); Fair and Accurate Transaction Act (FACTA), Fair Credit Reporting Act (FCRA), Home Mortgage Disclosure Act (HMDA), Home Ownership and Equity Protection Act (HOEPA), Gramm-Leach Bliley Act (with respect to privacy of customer information), Federal Trade Commission Safeguard Rules, Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act,  and Federal Trade Commission Act relating to deceptive practices and false advertising;

  5. Ethical Business Practices in the Mortgage Industry;

  6. Detection and Elimination of Fraud in the Mortgage Industry; and

  7. Such other areas and subjects as the Superintendent may prescribe or approve.

(h)  Course requirements for experienced MLOs.  Education Courses offered to Mortgage Loan Originators with more than four years of experience shall reflect the activities performed by experienced Mortgage Loan Originators and provide the MLO with advanced knowledge of the laws and business practices applicable to the mortgage industry. Subjects may include, but are not limited to, those set forth in Section 420.11(g) but the level of instruction should be geared to those who have already mastered the basics of the subject.

(i) Failure to timely complete education requirements. Notwithstanding Section 599-g of the Banking Law, an MLO’s failure to timely complete any education requirement shall cause the uthorization of the MLO to be suspended immediately irrespective of whether the MLO has made satisfactory payment of the annual authorization fee.

(j) Variances and extensions. Variances to, or extensions of, the education requirements prescribed pursuant to Article 12-E of the Banking Law may be granted by the Superintendent

  1. for reasons of health certified by an appropriate health care professional;

  2. for extended active duty with the armed forces of the United States; or

  3. for other good cause deemed acceptable by the Superintendent, in his or her sole discretion, which may prevent satisfactory or timely completion of such requirements.

(k)  Education programs for Exempt MLOs employed by or affiliated with certain affiliates of banking institutions.  For purposes of Section 599-e and Sections 420.2(a)(ii) and (b)(ii) of this Part, an educational program is substantially equivalent to the requirements for non-exempt MLOs if:

  1. The program requires each MLO to complete the number of Hours of Education Courses required under Sections 599-d(1), (2) and (3) of the Banking Law;

  2. The Education Courses required by the Program cover the subjects required under Section 420.11(f), (g) and (h) of this Part; and

  3. The educational background of instructors and quality of course materials evidence standards that are consistent with the purposes of Article 12-E, as determined by the Superintendent.

The educational program may be provided by the entity registered under Article 12-D or by its affiliated financial institution, or may give credit for courses provided by an Authorized Provider or Approved Provider as described in Section 420.12 of this Part.

§ 420.12 Approved education providers and courses.

(a) Providers. The Education Courses required by Article 12-E of the Banking Law may be offered by

  1. national, New York state or other state associations that are controlled by and whose membership comprises, but is not necessarily restricted to, mortgage bankers, mortgage brokers, or banking institutions (hereinafter, “trade associations”); provided, however, that any such trade association shall maintain supervision of such education courses satisfactory to the Superintendent;  

  2. degree and non-degree granting institutions of post-secondary education chartered, approved or licensed by the New York Board of Regents (hereinafter, “education institutions” and, collectively with trade associations, “Authorized Providers”); or

  3. any other persons or entities as may be approved by the Superintendent (hereinafter, “Approved Providers”). Such approval shall remain in effect so long as the Education Courses offered by the Approved Provider evidence standards that are consistent with the purposes of Article 12-E of the Banking Law, as determined by the Superintendent.

(b) Application for Approved Provider status. Application by persons or entities seeking to become Approved Providers pursuant to Section 420.12(a)(3) of this Part shall be made in the form prescribed by the Superintendent, a copy of which form shall be posted on the Banking Department’s website (www.banking.state.ny.us).  In determining whether to approve such application the Superintendent may consider factors as he or she shall deem relevant, including but not limited to, educational background, financial responsibility, and employment, regulatory and criminal history, attendance verification procedures, method of course delivery, and instructors’ educational background and relevant teaching experience. 

(c)  Notification of acting as an Authorized Provider.  Each trade association that meets the requirements of Section 420.12(a)(1) and each education institution that meets the requirements of Section 420.12(a)(2) and that proposes to offer Education Courses to Mortgage Loan Originators authorized by the Superintendent shall notify the Superintendent of its intention to offer such courses and shall provide the Superintendent with information about such Education Courses, including, without limitation, the course name, subject matter, offering dates and credit Hours to be awarded.

(d) Application for course approval. (i) Prior approval of the Superintendent is not required for any Education Course offered by an Authorized Provider identified in Section 420.12(a)(1) or (2), provided that the Authorized Provider has determined that such Education Course is consistent with the purpose of Article 12-E of the Banking Law, and, provided further, that, at the discretion of an Authorized Provider, the Authorized Provider may apply for prior approval of any Education Course.  Application for course approval shall be made in the form prescribed by the Superintendent, a copy of which form shall be posted on the Banking Department’s website (www.banking.state.ny.us).  (ii)  An Approved Provider shall not give any Education Course unless the Superintendent has first approved such course.  Application for course approval shall be made in the form prescribed by the Superintendent, a copy of which shall be posted on the Banking Department’s website (www.banking.state.ny.us).   

(e) Advertisement of Education Courses.  No person or entity shall advertise or publish any material indicating that an Education Courses offered by such entity has been approved by the Superintendent unless such person or entity has received the prior approval of the Superintendent pursuant to the provisions of Article 12-E and Section 420.12(a)(3) or 420.12(c) of this Part.  A trade association or education association that has complied with paragraph (c) of this Part may include a statement in its advertising for any Education Course to the effect that “This course meets the requirements of the New York State Banking Department with respect to education courses for MLOs.”

(f) Listing of Approved and Authorized Providers and Education Courses. The Banking Department will post on its website (www.banking.state.ny.us) a listing of (i) Approved Providers, (ii) approved Education Courses, (iii) each trade association and education institution that has notified the Superintendent under paragraph (c) above that it intends to offer Education Courses to MLOs authorized in New York, and (iv) additional information regarding approval requirements.

(g) Reciprocity.  The Superintendent may approve Education Courses taken by an MLO pursuant to the education requirements of another jurisdiction if the Superintendent is satisfied that the continuing education requirements of such jurisdiction meet the standards of Article 12-E.  A list of such approved jurisdictions shall be posted on the Banking Department’s website (www.banking.state.ny.us).

(h)  Reports by Authorized and Approved Providers.  Each year beginning in 2009, no later than February 28 of the year, each Authorized Provider and each Approved Provider shall provide a report to the Superintendent with respect to the Education Courses given by it for which it has granted a certificate of satisfactory completion to any MLO authorized in New York.  Such report shall include such information as may be required by the Superintendent.

(i)  Suspension or revocation of authority.  The Superintendent may from time to time examine providers of Education Courses to determine the effectiveness of their Education Courses in meeting the purposes of Article 12-E, including reviewing course programs, materials, instructors and evaluation forms.  If the Superintendent determines that one or more Education Courses provided by an Approved Provider do not meet the purposes of Article 12-E, or that a trade association’s supervision of its Education Courses is not satisfactory to achieve the purposes of Article 12-E, the Superintendent shall notify the provider of the deficiencies.  If the provider does not rectify such deficiencies, the Superintendent may revoke the authorization of such provider.

§ 420.13 Calculation and collection of fees.

(a) Under Section 599-c of the Banking Law, each applicant to be an MLO must pay the following fees determined by the Superintendent:

  1. an investigation fee determined in the reasonable estimate of the Superintendent to be the actual cost to the Banking Department to investigate the applicant,

  2. an initial authorization fee,

  3. the fingerprint processing fee charged by the State Division of Criminal Justice Services and established pursuant to Article 35 of the Executive Law,

  4. an annual authorization fee determined by the Superintendent, which shall be fixed for the state fiscal years ending March 31, 2009 and March 31, 2010, and may thereafter vary based on the actual cost to the Banking Department of administering Article 12-E of the Banking Law for the state fiscal year prior to the year in which such fee applies, and

  5. a processing fee that may be charged and collected by an entity with which the Superintendent has entered into a written contract or a memorandum of understanding to process applications or the annual authorization of MLOs.

All fees may be collected by an entity with which the Superintendent has contracted to process MLO applications or renewals.  With respect to initial applications, the fees in clauses (i), (ii), (iii) and (v) must be filed with the application.

(b) The Superintendent has determined the following initial fees:

  1. an investigation fee of $125;

  2. an initial authorization fee of $50;

  3. an annual authorization fee of $50;

  4. the fingerprint processing fee charged by the State Division of Criminal Justice Services and established pursuant to Section Article 35 of the Executive Law, and

  5. any processing fee that may be charged and collected by the entity that processes the application.    

(c) The schedule of fees in effect from time to time in accordance with Article 12-E shall be posted on the Banking Department’s website (www.banking.state.ny.us). 

 § 420.14 Duties of an Originating Entity.

(a) Each Originating Entity shall:

  1. no later than January 15, 2008, submit to the Superintendent in writing or electronically  a report in such form as may be prescribed by the Superintendent containing the name and residence address of each MLO employed by or affiliated with such Originating Entity as of December 31, 2007;

  2. by the end of each quarter in each calendar year submit to the Superintendent in written or electronic form a report containing the following:

    1. each MLO newly employed by or affiliated with such Originating Entity during such quarter and the effective date of such employment; and

    2. each dismissal for cause of an MLO employed by or affiliated with such Originating Entity during such quarter, which is due to or based upon an alleged violation of the Banking Law or any other violation of any applicable federal or state law, rule or regulation and the effective date of such dismissal;

  3. determine that each person who becomes employed by or affiliated with such Originating Entity as an MLO, as well as each person who is employed by or affiliated with such Originating Entity as an MLO on the effective date of this Part, has the character, fitness and education qualifications to warrant the belief that he or she will engage in Mortgage Loan Originating honestly, fairly and efficiently, and obtain and maintain in its files such information about each such employee or affiliate copies of the information upon which such determination was based;

  4. except as permitted by Section 420.5 of this Part, ensure that any MLO employed by the Originating Entity has been duly authorized by the Superintendent to engage in Mortgage Loan Originating activities and that such authorization is not expired, or been suspended or revoked;

  5. assign MLOs to locations licensed or registered by the Superintendent, display the authorization certificate for each MLO working at the licensed or registered location;

  6. ensure that the authorization number of each MLO performing Mortgage Loan Origination services with respect to a mortgage application is recorded on such application;

  7. obtain documentation of the satisfactory completion of Education Courses, pursuant to Article 12-E of the Banking Law, for each MLO employed by or affiliated with such Originating Entity, which  documentation shall be:

    1. in a form acceptable to the Superintendent;

    2. retained by the Originating Entity for six years from the date of receipt of such documentation; and

    3. provided to the Banking Department by the Originating Entity at the request of the Superintendent; and

  8. if the Originating Entity retains the original proof or record of completion of Education Courses by an MLO, provide the original to the MLO, upon request; and

  9. not pay compensation for Mortgage Loan Originating activities to an individual who is then required to be authorized as an MLO but has not received such authorization, or, except as required by law or court order, pay the compensation of a MLO to a person other than the person named on the MLO authorization.

(b) An Originating Entity or exempt organization shall  not permit any MLO who is subject to any education requirement pursuant to Article 12-E of the Banking Law that is then required to have been completed to engage in Mortgage Loan Originating until acceptable proof or record of completion has been obtained by such Originating Entity.

§ 420.15 Duties of a Mortgage Loan Originator

(a)  Each MLO shall:

  1. engage in Mortgage Loan Originating activities in a manner that commands the confidence of the community and warrants belief that his or her activities are conducted honestly, fairly and free from deceptive practices.

  2. promptly notify the Banking Department of the following:

    1. change of primary residence address;

    2. any felony conviction or pending felony charges; any charge of or conviction with respect to a misdemeanor involving financial services or a financial services related business; or any charge or conviction involving fraud, false statements or omissions, theft or wrongful taking of property, bribery, perjury; forgery or extortion subsequent to initial authorization;

    3. termination of and/or resignation from employment with Originating Entity;

    4. the initiation, settlement or resolution of any complaint, action or proceeding brought against him or her by a state or federal governmental unit or self-regulatory organization in connection with a financial services-related activity or business or involving fraud, misrepresentation, consumer deception, larceny or perjury; and

    5. the initiation, settlement or resolution of any other civil action or proceeding against him or her involving fraud, misrepresentation, larceny or perjury.

  3. Each MLO shall obtain course completion certificates evidencing satisfactory completion of the credit Hour requirements for each biennial or quadrennial education period and provide a copy thereof to his or her Originating Entity.

  4. not be simultaneously employed or affiliated with more than one Originating Entity licensed, registered or exempt from licensing pursuant to the provisions of Article 12-D of the Banking Law; 

  5. not engage in conduct prohibited under Part 38.7 of the General Regulations of the Banking Board, as applicable;

  6. not continue to engage in Mortgage Loan Originating after receiving notice of the denial of his or her application for authorized MLO status or notice of the revocation, suspension or expiration of his or her authorization;

  7. not misrepresent his or her authorization status, or persuade or induce a borrower to apply for a mortgage loan under the belief that such MLO is duly licensed as a mortgage banker or registered as a mortgage broker pursuant to Article 12-D of the Banking Law or an entity exempt from the licensing provisions of Article 12-D;

  8. not publish, advertise or display his or her MLO authorization in any manner which implies that the MLO is licensed or registered with the State of New York Banking Department to engage in Mortgage Loan Originating activities as a mortgage banker or mortgage broker pursuant to Article 12-D of the Banking Law;

  9. not conduct business with any entity or individual which he or she knows or should know is an unlicensed mortgage banker, unregistered mortgage broker or unauthorized MLO not otherwise exempt from the licensing, registration, and authorization requirements of Articles 12-D and 12-E of the Banking Law;

  10. not download or remove borrowers’ or mortgage loan applicants’ loan files or other information from the premises or automated systems of Originating Entities licensed, registered or exempt pursuant to Article 12-D of the Banking Law, without written permission of the Originating Entity;

  11. not publish or advertise his or her MLO authorization certificate or authorization number in any manner which implies that such authorization certificate or authorization number can be shared or used by multiple individuals to engage in Mortgage Loan Originating activities in this state; and

  12. not allow any person or entity, regardless of whether such person or entity is registered, licensed or authorized pursuant to Article 12-D or 12-E of the Banking Law, to utilize the MLO’s authorization certificate or authorization number to engage in Mortgage Loan Originating activities.

§ 420.16 Administrative Action and Penalties

(a) Revocation of authorization.  Pursuant to Section 599-g of the Banking Law, the Superintendent may revoke any authorization as a Mortgage Loan Originator if he or she finds that:

  1. The MLO has violated any provision of Article 12-E, any rule or regulation promulgated by the Banking Board, or any rule or regulation prescribed by the Superintendent under Article 12-D or 12-E of the Banking Law or any other law, rule or regulation of New York State or the federal government pertaining to mortgage banking, mortgage brokering or loan originating;

  2. Any fact or condition exists which, if it had existed at the time of the original application for authorization, would have warranted the Superintendent to refuse to issue such initial authorization; or

  3. The MLO has committed a crime under the laws of New York or any other state or of the United States involving moral turpitude or fraudulent or dishonest dealing, or the entry of a final judgment against the MLO in a civil action on grounds of fraud, misrepresentation or deceit.

(b) Suspension of authorization.  In addition to the suspensions of authorization provided for in Section 420.8 of this Part, pursuant to Section 599-g of the Banking Law, the Superintendent may, upon good cause shown, or where there is a substantial risk of public harm, suspend any authorization as a Mortgage Loan Originator for a period of not more than 60 days, pending investigation.   For purposes of this Section, “good cause” exists when the Superintendent has reason to believe the MLO has engaged or is engaging in any of the following practices which may cause substantial harm to the persons protected by article 12-D of the Banking Law:

1.dishonest or inequitable practices; or

2. practices demonstrating incompetent mortgage loan originating.

(c) Disciplinary action requiring a hearing.  Except as provided in paragraph (b) of this Section 420.16, an authorization of an MLO may be revoked or suspended only after notice and a hearing as provided in Supervisory Procedure G111.

(d)Restitution.  Any order of suspension of an MLO issued after notice and hearing may include, as a condition of reinstatement, that restitution be made to consumers with respect to fees or other charges that the MLO has improperly charged or collected, as determined by the Superintendent.

(e) Fines.  Pursuant to Section 44 of the Banking Law, the Superintendent may impose a fine against an  MLO for any violation of the Banking Law, any regulation promulgated thereunder, any final or temporary order issued pursuant to Section 39 of the Banking Law, any condition imposed by the Superintendent or Banking Board in connection with the grant of any application or request or any written agreement entered into with the Superintendent.

(f) Grounds for disciplinary action.  An MLO may be subject to such disciplinary action as may be determined appropriate by the Superintendent after notice and hearing, except as otherwise provided for in Article 12-E, subject but not limited to the following grounds:

  1. Fraud or bribery in securing an authorization;

  2. Making false statements in an application for authorization, which false statements would have been grounds for rejection of the application;

  3. Making of false statement on any form or document requested by the Superintendent for examination or review pursuant to Banking Law and regulations promulgated thereunder;

  4. A pattern of conduct indicating incompetence or untrustworthiness;

  5. Conviction of any crime which would have a bearing on the fitness or ability of an MLO to engage in Mortgage Loan Originating activities; or

  6. Failure to perform his or her duties and responsibilities in an honest, fair and reasonable manner.

(g) Administrative hearings.  Administrative hearings to revoke the authorization of an MLO shall be conducted in accordance with Supervisory Procedure G111.

§ 420.17 Effective date.

This Part will be effective immediately upon adoption.

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