Banking Interpretations

NYSBL 590(1)

From: Steven Barras




Subject: Re: Fw: joint ventures 

There is no general policy of the Banking Department or statutory or regulatory provision in the New York Banking Law or Regulations adopted there under, respectively, that would prohibit an owner of a title agency from entering into a joint venture with the owner of a mortgage banker or brokerage. However, as you do not specify the nature and conduct of the business of the proposed joint venture, I note that certain activities and conduct relating to the origination of mortgage loans subject to Article 12-D of the Banking Law would be deemed unlawful. Specifically, this joint venture could not directly or indirectly force an applicant for a covered mortgage loan to obtain title insurance through the owner's title agency or buy a title policy from a specific tile company. Additionally, the joint venture would not be able to engage in any activities requiring a license or registration under Article 12-D (mortgage origination activities by the owner of a title agency may also require authorization under Article 12-E of the Banking Law). Finally, if the joint venture will engage in mortgage-related activities, you may wish to peruse the HUD Affiliated Business Arrangement Rules for applicability.

In any event, if the activities of the joint venture will not involve residential mortgage loan origination of any other activity subject to regulation under the Banking Law, there should be no objection from this Department. As title insurance is regulated by the New York Insurance Department, you may wish to also contact that Department for its opinion on the matter raised.

I trust that the foregoing is responsive to your question.

Steven Barras
First Assistant Counsel