Banking Interpretations


May 25, 2010


Re: High-Cost Home Loan


Your facsimile dated May 4, 2010 has been referred to me for a response. In your facsimile, you ask whether a "seller paid rate buy down" on a mortgage is considered part of the cost when determining whether such loan is a high-cost home loan.

Under Section 6-L of the Banking Law, a loan is deemed a high-cost home loan if the total points and fees exceed particular thresholds. Section 6-L(f) of the Banking Law defines "points and fees" to include, inter alia, items listed in 15 U.S.C. Section 1605(a)(1)-(4), which includes any amount payable under a point system. As I understand it, a "seller paid rate buy down" means that the seller is paying points and fees to the lender. Although the "point and fees" referenced to in Section 6-L are typically paid by the borrower, it is the Banking Department's position that a seller paid rate buy down is included in the point and fees calculation as the statute does not limit points and fees to those only paid by borrowers. Thus, it is included in the definition of "points and fees" and is used to determine whether a loan is a high cost home loan.

If you have any further questions, please do not hesitate to contact me at (212) 709-1653.

Monique E. Holmes
Assistant Counsel