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Mortgage Industry Resources | Proposed Regulations

DFS is proposing regulations to eliminate certain application requirements and clarify other requirements. Comments will be due 45 days from publication of this proposal in the State Register. Upon such publication, this page will be updated with information on how to comment and the date on which comments are due.

Mortgage Banking Proposed Regulations

Title 3 of the NYCRR is amended as follows:

Section 410.1 is amended to read as follows:

§410.1. Mortgage Banking License; minimum standards.

(c) Business background. Applicants for a mortgage banking license shall demonstrate to the superintendent's satisfaction that they [have] are, or have in their employ, a qualifier who is a licensed mortgage loan originator with five years verifiable experience in the business of making residential mortgage loans or similar lending and credit evaluation experience [or that they have engaged or shall engage in their employ one or more persons having such experience].  At the superintendent's sole discretion, other relevant educational or business experience may be substituted for some of the lending and credit evaluation experience described in this subdivision.

Section 410.3 is amended to read as follows:

§410.3. Mortgage Broker registration; minimum standards.

(b) Experience and educational background. Applicants for a mortgage broker registration shall demonstrate to the superintendent's satisfaction that they are, or have in their employ, a qualifier who is a licensed mortgage loan originator and meets at least one of the following criteria:

(1) is a licensed real estate broker[s], as defined in section 440 of the Real Property Law, who is [are] in good standing with the Secretary of State[, and attorneys-at-law shall not be required to demonstrate their experience to engage in the mortgage brokerage business] or an attorney-at-law.

(2) is a licensed real estate [salesmen] salesman, as defined in section 440 of the Real Property Law, [must demonstrate] and has two years of active participation in the residential mortgage brokerage business, the nature and length of which experience shall be established by affidavit duly sworn to under penalty of perjury by the applicant.

(3) [Applicants with] has a minimum of two years of credit analysis or underwriting experience with an exempt organization, mortgage banker, mortgage broker or licensed lender and has [shall] attached to the [their] application a statement, verified under penalty of perjury, indicating:

(i) the specific duties and responsibilities of [their] employment;

(ii) the term of [their] employment; and

(iii) the name, address and telephone number of a business reference or a current or former supervisor.

(4) [Applicants who have] has relevant business experience or has [have] a relevant educational background [must demonstrate that their experience or education qualifies them to be a registered mortgage broker. Such applicants] and has [shall] attached to the [their] application a statement, verified under penalty of perjury, indicating:

(i) If relevant business experience:

(a) the specific duties and responsibilities of [their] employment;

(b) the term of [their] employment; and

(c) the name, address and telephone number of a business reference or a current or former supervisor.

(ii) If relevant educational background, the specific courses taken and dates of completion.

 

Part 413 is repealed.

Supervisory Procedure MB Section 101.4 is amended to read as follows:

§101.4. Information and documents required to be submitted.

(h) Personal information.

(1) As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. All of the above shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current, personal financial statement.

(2) An applicant that does not have three executive officers should provide the information required in subparagraph (1) above with respect to two executive officers plus a compliance officer acceptable to the department.

(k) Other documents to be submitted:

(2) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, compliance officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant;

(3) fingerprint cards (New York State NON-CRIMINAL and FBI) for each individual applicant, executive officer, compliance officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant, together with such fees as may be required for processing the fingerprints;  

(4) a background report for each individual applicant, executive officer, compliance officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant [(names of acceptable companies that supply such reports may be obtained from the department's Mortgage Banking Division)];

(6) taxpayer identification information form for the applicant; [and]

(8) Business plan outlining marketing strategy, products, target markets and operating structure the applicant intends to employ in its mortgage banking activities within the State of New York;

(9) Compliance program summary addressing: (i) employee training; (ii) method of delivering training to employees; (iii) frequency of training; (iv) training timeline for newly hired employees; (v) frequency of compliance reviews; (vi) compliance risk rating methodology and escalation process; and (vii) compliance oversight and reporting structure; and

(10) Fair Lending plan addressing how the applicant ensures that loans are made in conformance with fair lending laws.

(l)  Incomplete application.

(1) No application shall be deemed to be complete until the superintendent has received all required information, documents and fees to the satisfaction of the superintendent.   If an application is determined by the superintendent to be incomplete, the superintendent will send written notification to the applicant identifying the items and matters that must be addressed in order for the department to continue the application review process.

(2) If a complete response fully addressing all such items and matters to the satisfaction of the superintendent is not received by the department within 30 days of sending such notice, the superintendent shall  consider the application withdrawn.

(3) Any applicant seeking an initial license following withdrawal or deemed withdrawal of an application shall submit a new application that must include all required information, documents and fees.

(m) Conferral Meeting.  The superintendent may require that the applicant and any officers, directors, principal stockholders, control persons  and/or representatives of the applicant appear before the department either in person, by telephone or via teleconference for conferral of the license and to review regulatory requirements associated with holding such a license.

 

Supervisory Procedure MB Section 102.4 is amended to read as follows:

§102.4. Information and documents required to be submitted.

(g) Personal and financial information.

(1) As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the registered mortgage broker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall file a credit report and a personal history questionnaire which may be obtained from the department. Each principal stockholder shall complete a personal financial questionnaire. All of the above shall file an authority to release information form.

(2) An applicant that does not have three executive officers should provide the information required in subparagraph (1) above with respect to all executive officers.

(k) Other documents to be submitted:

(4) taxpayer identification information form for the applicant; [and]

(5) credit report for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant[.];

(6) Surety bond, as described in Part 410 of this Title, at any time prior to obtaining a registration;

(7) Business plan outlining marketing strategy, products, target markets and operating structure the applicant intends to employ in its mortgage brokering activities within the State of New York;

(8) Compliance program summary addressing: (i) employee training; (ii) method of delivering training to employees; (iii) frequency of training; (iv) training timeline for newly hired employees; (v) frequency of compliance reviews; (vi) compliance risk rating methodology and escalation process; and (vii) compliance oversight and reporting structure;

(9) Fair Lending Plan addressing how the applicant ensures that loans are made in conformance with fair lending laws; and

(10) Executed certificate of compliance in accordance with section 296-a of the Executive Law.

(l) Incomplete application.

(1) No application shall be deemed to be complete until the superintendent has received all required information, documents and fees to the satisfaction of the superintendent.   If an application is determined by the superintendent to be incomplete, the superintendent will send written notification to the applicant identifying the items and matters that must be addressed in order for the department to continue the application review process.

(2) If a complete response fully addressing all such items and matters to the satisfaction of the superintendent is not received by the department within 30 days of sending such notice, the superintendent shall  consider the application withdrawn.

(3) Any applicant seeking an initial license following withdrawal or deemed withdrawal of an application shall submit a new application that must include all required information, documents and fees.

(m) Conferral Meeting.  The superintendent may require that the applicant and any officers, directors, principal stockholders, control persons  and/or representatives of the applicant appear before the department either in person, by telephone or via teleconference for conferral of the license and to review regulatory requirements associated with holding such a license.

Supervisory Procedure MB Section 103.4 is amended to read as follows:

 

§103.4.  Information and documents required to be submitted.

(i) Personal information.

(1) As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. All of the above shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current, personal financial statement.

(2) An applicant that does not have three executive officers should provide the information required in subparagraph (1) above with respect to two executive officers plus a compliance officer acceptable to the department.

(l) Other documents to be submitted:

(2) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, compliance officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant;

(3) fingerprint cards (New York State NON-CRIMINAL and FBI) for each individual applicant, executive officer, compliance officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant, together with such fees as may be required for processing the fingerprints;

(4) a background report for each individual applicant, executive officer, compliance officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant [(names of acceptable companies that supply such reports may be obtained from the department's Mortgage Banking Division)];

(6) taxpayer identification information form for the applicant; [and]

(8) Business plan or statement outlining the impact, if any, of the proposed change of control on the licensee’s marketing strategy, products and services, operational structure and geographical services area; and

(9) Fair Lending plan addressing how the applicant ensures that loans are made in conformance with fair lending laws.

(m) Incomplete application.

(1) No application shall be deemed to be complete until the superintendent has received all required information, documents and fees to the satisfaction of the superintendent.   If an application is determined by the superintendent to be incomplete, the superintendent will send written notification to the applicant identifying the items and matters that must be addressed in order for the department to continue the application review process.

(2) If a complete response fully addressing all such items and matters to the satisfaction of the superintendent is not received by the department within 30 days of sending such notice, the superintendent shall consider the application withdrawn.

(3) Any applicant seeking an initial license following withdrawal or deemed withdrawal of an application shall submit a new application that must include all required information, documents and fees.

 

Supervisory Procedure MB Section 104.4 is amended to read as follows:

§104.4. Information and documents required to be submitted.

(e) Personal and financial information.

(1) As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the registered mortgage broker and principal stockholder of a corporate applicant, controlling member of a partnership applicant or trustee and principal beneficiary of a trust applicant shall file a credit report and a personal history questionnaire which may be obtained from the department. Each principal stockholder shall complete a personal financial questionnaire. All of the above shall file an authority to release information form.

(2) An applicant that does not have three executive officers should provide the information required in subparagraph (1) above with respect to all executive officers.

(k) Other documents to be submitted:

(4) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant; [and]

(5) taxpayer identification information form for the applicant[.];

(6) Business plan or statement outlining the impact, if any, of the proposed change of control on the registrant’s marketing strategy, products and services, operational structure and geographical services area; and

(7) Fair Lending Plan addressing how the applicant ensures that loans are made in conformance with fair lending laws.

(l) Incomplete application.

(1) No application shall be deemed to be complete until the superintendent has received all required information, documents and fees to the satisfaction of the superintendent.   If an application is determined by the superintendent to be incomplete, the superintendent will send written notification to the applicant identifying the items and matters that must be addressed in order for the department to continue the application review process.

(2) If a complete response fully addressing all such items and matters to the satisfaction of the superintendent is not received by the department within 30 days of sending such notice, the superintendent shall  consider the application withdrawn.

(3) Any applicant seeking an initial license following withdrawal or deemed withdrawal of an application shall submit a new application that must include all required information, documents and fees.

Supervisory Procedure MB Section 106 is repealed.

*          *          *

Upon final adoption of the above regulatory amendments, as they may be amended following public comment, the Department of Financial Services intends to make certain conforming changes to Supervisory Procedure MB Section 107.3 pertaining to applications to become mortgage loan originators and to Supervisory Procedure Sections 109.4 and 110.4 relating to applications to become registered mortgage loan servicers, at the next succeeding adoption of changes to Supervisory Procedure MB Sections 107, 109 and 110.

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