September 1, 2020

To:  The Chief Executive Officers or the Equivalents of New York Regulated Mortgage Lenders and Servicers

RE:  Guidance to New York State Regulated Mortgage Lenders and Servicers Relating to Fees Paid to Register Mortgages in Default

It has come to the attention of the New York State Department of Financial Services (“DFS”) that certain counties, cities and other municipalities in New York State, by ordinance or otherwise, are requiring mortgage lenders and servicers, (“Mortgagees”), to register mortgages declared to be in default by the Mortgagee with the county, city or other municipality in which the real property is situated.  As a requirement for registration, as well as for any renewal of such registration, the Mortgagee is required to pay a fee to the county, city, municipality or its agent (a “Registration Fee”).  It has also come to the attention of DFS that such Registration Fees have been charged to, or collected from, mortgagors’ accounts by some Mortgagees.

Section 419.5 of the Superintendent Regulations (3 NYCRR Part 419), only permits Mortgagees to collect certain specified types of fees from a mortgagor, consisting of attorney’s fees, late and delinquency fees, property valuation fees, and fees for services actually rendered to a mortgagor when such fees are reasonably related to the cost of rendering the service to the borrower.  A Registration Fee is neither an attorney fee, late or delinquency fee, property valuation fee, or fee for a service rendered to a mortgagor. Therefore, a Registration Fee may not be charged to, or collected from, a mortgagor under Part 419.

Mortgagees that are subject to the requirements of Part 419 and who, at any time, have collected any Registration Fees from a mortgagor, are hereby directed and instructed to refund and credit the full amount of such Registration Fees to the account of the mortgagor.  If the Registration Fee was charged to a mortgagor’s account but was not collected, Mortgagees are hereby directed and instructed to remove and reverse any and all Registration Fees charged to the mortgagor’s account.

Mortgagees are also directed and instructed to create a log of all mortgagors that were either charged, or paid any Registration Fee to any such Mortgagees at any time, containing details of the full amounts of such Registration Fees, whether collected or charged, and the date(s) the full amounts of collected Registration Fees were  refunded  and  credited to the mortgagors’ accounts, and the date(s) that any  charged Registration Fees were removed or reversed from the mortgagors’ accounts, for inspection during DFS’s next examination of the Mortgagee.

Should you have any questions regarding this letter, please contact Rholda Ricketts at (212) 709-5540.


Very truly yours,

Rholda Ricketts
Deputy Superintendent