Banking Interpretations

NYSBL  6-h
General Regulations Part 79

February 8, 2008


Re: Reverse Mortgages

Dear [---]:

Your letter, dated November 7, 2007, to the New York State Banking Department (the "Banking Department"), has been referred to me for response.  In your letter you asked whether: (i) a licensed mortgage banker may provide reverse mortgages to homeowners in this state under the Demonstration Program of Insurance of Home Equity Conversion Mortgages for Elderly Homeowners ("HUD/HECMs"); and (ii) an authorized lender may charge a monthly servicing fee of more than $30.00 on a HUD/HECM loan.

In connection with your first question, Section 6-h of the Banking Law provides that:

Notwithstanding any inconsistent provision of law, in addition to any other power exercised by it, every authorized lender, as defined by section two hundred eighty or two hundred eighty-a of the real property law, shall have the power to offer reverse mortgage loans  ... 

(2)       which conform to the requirements of the federal housing administration's home equity conversion mortgage insurance demonstration program for as long as such program exists as provided for in section 1715z-20 of title 12 of the United States Code. "Reverse mortgage" shall mean the mortgage, deed of trust or other security instrument relating to a particular reverse mortgage loan transaction.

An Authorized Lender, as defined by section two hundred eighty and two hundred eighty-a of the real property law includes, " ... any licensed mortgage banker approved for the making of reverse mortgage loans by the superintendent of banks."

And, under Section 79.1 of Part 79 of the General Regulations of Banking Board ("GRBB"), the Superintendent's approval is not required prior to a licensed mortgage banker being involved in making HUD/HECM loans.  As stated in Section 79.1(b), "[n]either this Part nor Parts 38, 39, 80 and 82 shall apply to any loans which conforms to the requirements of … ‘HUD/HECM’  reverse mortgage loan program, 12 USC § 1715z-20."

As to your question relating to whether an authorized lender can charge a monthly fee in excess of $30 on a HUD/HECM, note that, as stated in Part 79.1(b) above, the Banking Department does not regulate any aspect of the HUD/HECM loans, including fees charged in connection therewith.

I trust the foregoing is responsive to your inquiry.

Very truly yours,

Harry C. Goberdhan
Assistant Counsel