DFS Issues Guidance Instructing Regulated Mortgage Lenders and Servicers Not to Charge Consumers for Mortgage Default Registration Fees

Mortgage Lenders and Servicers Must Provide Refunds to Consumers
Mortgage Lenders and Servicers Must Keep Log of all Consumers who Paid Registration Fees for DFS Examination

Press Release 

September 01, 2020

 

DFS ISSUES GUIDANCE INSTRUCTING REGULATED MORTGAGE LENDERS AND SERVICERS NOT TO CHARGE CONSUMERS FOR MORTGAGE DEFAULT REGISTRATION FEES    

Mortgage Lenders and Servicers Must Provide Refunds to Consumers    

Mortgage Lenders and Servicers Must Keep Log of all Consumers who Paid Registration Fees for DFS Examination 

The New York State Department of Financial Services (DFS) today took action to protect consumers (mortgagors) from fees collected or charged by mortgage lenders and servicers related to the registration or renewal of registration of mortgages declared in default.    

Certain counties, cities and other municipalities in New York State require mortgage lenders and servicers (mortgagees) to register mortgages declared to be in default.  As a requirement for registration and for any renewal of such registration, the mortgagee is required to pay a fee to the municipality. 

“Imposing these fees on consumers is not only impermissible under Part 419 of New York regulations, but is also particularly troubling for consumers who are already grappling with the financial hardship arising from the pandemic, said Superintendent of Financial Services Linda A. Lacewell. “DFS is putting a stop to this practice to ensure that mortgage lenders and servicers do not pass the burden of these fees on to consumers.”   

“Consumers are facing financial hardship now more than ever and cannot afford to pay mortgage default registration fees,” said New York State Assembly Majority Leader Peoples-Stokes. “I thank DFS for taking swift action to help bring a measure of financial relief to consumers during this challenging time.”   

In today’s guidance, DFS states mortgagees may not charge or collect registration fees from mortgagors. If the registration fee was charged to a mortgagor’s account but was not collected, mortgagees are instructed to remove and reverse any and all registration fees charged to the mortgagor’s account.    

DFS also directed mortgagees to create a log of all mortgagors that were either charged, or paid any registration fee to any such mortgagees at any time, for inspection during DFS’s next examination of the mortgagee.    

Read a copy of the guidance letter on the DFS website.    

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