3 CRR-NY 38.4NY-CRR
3 CRR-NY 38.4
3 CRR-NY 38.4
38.4 Commitment disclosures and procedures.
(a) Disclosure requirements for mortgage loans for acquisition of a dwelling and for all other mortgage loans for which a commitment fee or points are paid to the lender.
At time of commitment, and in any case prior to the acceptance of a commitment fee or any points, each mortgage banker and exempt organization making a mortgage loan shall disclose in writing or by electronic transmission to each applicant for a mortgage loan the fees to be paid in connection with the commitment and the terms and conditions under which such fees may be refundable. Each mortgage banker and exempt organization shall also disclose the items listed below in the written or electronically transmitted commitment:
(1) Terms and conditions of the mortgage loan.
(i) identification of entity making commitment;
(ii) identification of borrower(s);
(iii) identification of property securing loan;
(iv) principal amount of the loan;
(v) term of the loan;
(vi) initial interest rate;
(vii) initial monthly payment of principal and interest;
(viii) a statement that a balloon payment will be required (if applicable);
(ix) if the loan is an adjustable rate loan, in addition to the foregoing, the lender shall disclose the frequency of change, the index, the margin, and any relevant caps;
(x) a statement that private mortgage insurance will be required (if applicable) and the conditions under which such insurance would no longer be required;
(xi) a statement that flood insurance may be required if the property is in a flood zone;
(xii) a statement that negative amortization may apply (if applicable);
(xiii) whether and under what conditions the mortgage is assumable;
(xiv) a statement that funds are to be escrowed (if applicable);
(xv) total points to be accepted directly or indirectly by or on behalf of the mortgage banker or exempt organization at or prior to closing;
(xvi) the mortgage banker or exempt organization shall separately identify the points, including premium pricing, payable by the lender to a mortgage broker or a mortgage banker or exempt organization when acting in a mortgage brokerage capacity and briefly explain the basis for the premium pricing payment. Upon receipt of a copy of the separate fee agreement between the broker and the applicant, which fee agreement may be in writing or electronically transmitted, the lender is required to disclose any fees or points to be paid by the applicant directly to the mortgage broker;
(xvii) if applicable, the mortgage banker or exempt organization shall separately identify any premiums or bonuses to be paid to the mortgage broker by the lender and the basis of the mortgage broker's eligibility to receive premiums or bonuses; and
(xviii) if applicable, the amount of, or formula for calculating, the pre-payment penalty and terms of the pre-payment penalty.
(2) Terms and conditions of the commitment.
(i) time during which the commitment is irrevocable and may be accepted by the borrower, which time shall not be less than seven calendar days from the date of commitment or date of mailing, whichever is later;
(ii) amount of fees and charges payable at time of commitment including points or other discounts, origination fees or add-ons, however denominated by the mortgage banker or exempt organization; and
(iii) expiration date of the commitment, which must be a reasonable time for a consumer to arrange for a closing date.
(3) Mandatory disclaimer.
The following disclosure which shall be no less conspicuous than any other disclosure, made pursuant to this section, shall be included:
“IF YOU SIGN THIS COMMITMENT, AND YOU DO NOT CLOSE THIS LOAN IN ACCORDANCE WITH THE DESCRIBED TERMS, YOU MAY LOSE SOME OR ALL OF THE FEES OR CHARGES YOU HAVE PAID.”
(4) Conditions precedent to closing.
Either as part of the commitment or on a separate form given in conjunction with the commitment.
(i) a list of those items relating to the real property which must be produced prior to closing, including but not limited to the following items (if applicable):
(a) title report and insurance;
(b) property survey;
(c) copy of certificate of occupancy for use;
(d) satisfactory final inspection (if new construction);
(e) evidence of appropriate hazard insurance;
(f) evidence of flood insurance as appropriate;
(g) master policy insurance certificate (if applicable in the case of condominiums);
(h) termite inspection report;
(i) radon test report;
(j) well water test report; and
(k) septic inspection report.
(ii) a list of those items relating to the cooperative housing unit which must be produced prior to closing, including but not limited to the following items (if applicable):
(a) proprietary lease;
(b) recognition agreement;
(c) pledge of shares of stock;
(d) warranty and representation that no outstanding claims against the proprietary lease or stock will exist at closing; and
(e) copy of certificate of occupancy and title policy for the entire building if conversion has occurred within the last six months.
(iii) a list of foreseeable conditions and documents that will be required for closing of a mortgage loan. This list shall include, but need not be limited to, those property related items listed in this paragraph, as applicable, and any other specific property related documents and conditions and underwriting documents and conditions which the lender knows or reasonably should know, based upon the information contained in the applicant's file maintained by the lender at the time the commitment is issued, will be required. Underwriting documents refers only to those documents which the borrower must submit to the lender. The lender does not have to include specific title exceptions in the list. Documents that only require a borrower's signature need not be included in the list of foreseeable documents and conditions.
(b) Disclosure requirements for all residential mortgage loan transactions in which the proceeds of the mortgage loan will not be used to finance the acquisition of the dwelling and no commitment fee or points are paid to the lender prior to closing. A mortgage banker or exempt organization making a mortgage loan, the proceeds of which are not used to finance the acquisition of the dwelling securing the mortgage loan shall not be required to make such loan in accordance with section 38.3 of this Part and this section with the exception of the disclosure requirements contained in sections 38.3(b)(2)(vi), and 38.3(d) at application and subparagraphs (a)(1)(xvi) and (xviii) of this section upon loan approval provided the mortgage banker or exempt organization does not accept any fees prior to closing other than an application fee, property appraisal fee and credit report fee.
(c) Procedures for mortgage loans for the acquisition of a dwelling and for all other mortgage loans for which a commitment fee or points are paid to the lender.
(1) Every mortgage banker and exempt organization shall provide each applicant with a written or electronically transmitted commitment which incorporates the items listed in paragraphs (a)(1), (2), (3) and (4) of this section. All commitments must be signed by the mortgage banker or exempt organization. All commitment agreements must be signed by the mortgage banker or exempt organization and the applicant. Such signatures may be hand-written or digital to the extent such digital signatures are recognized as binding under New York State law.
(2) With regard to written commitments, every mortgage banker and exempt organization shall provide each applicant with a duplicate hard-copy original of the signed commitment agreement.
(3) With regard to electronic commitments, within three business days of receipt of a commitment agreement, a hard-copy of such commitment agreement shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such commitment agreement. The mortgage banker or exempt organization shall keep a copy of the digitally signed commitment agreement. Furthermore, in those instances in which a hard-copy of the commitment agreement is not mailed to the applicant, the mortgage banker or exempt organization must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such commitment agreement.
(4) No commitment given by a mortgage banker or exempt organization may contain any clause which conditions the commitment on the mortgage banker or exempt organization obtaining necessary funding or financing. This requirement shall not be deemed to be violated if the commitment discloses that the commitment is only for a particular loan product with a particular denominated third-party purchaser or investor, and discloses that the commitment is subject to the review and prior approval of that third-party purchaser or investor. No mortgage banker or exempt organization shall make a commitment for such a loan product unless the third-party purchaser or investor has committed to purchase such mortgage loan products from the mortgage banker or exempt organization. If such approval is not obtained the mortgage banker or exempt organization shall refund any points or commitment fees previously collected from the consumer.
(5) No points, however denominated by the mortgage banker or exempt organization, may be required by the mortgage banker or exempt organization as a condition for closing a mortgage loan if they have not previously been disclosed pursuant to this Part.
(6) Any additional settlement costs, documents or other items required to close the loan which are found to be necessary after the commitment has been issued must be disclosed in writing or electronically transmitted to the applicant in a reasonable and timely manner.
(7) All commitment fees accepted pursuant to this Part must be refundable in full if the property appraisal report is not favorable for the product for which the commitment was issued.
(8) A commitment fee and any points taken by a mortgage banker or exempt organization prior to closing must be refunded in full if an applicant who has provided complete and correct credit information as required by the application form is rejected as not creditworthy.
(d) Notice of expiration.
The notice of expiration of the commitment period required by section 595-a(3)(c) of the Banking Law must be a separate document and must be mailed or electronically transmitted to each individual applicant and, in any joint application, either to a notice recipient, if one has been designated as such by the applicants or, if none, then to all the applicants not less than 12 business days nor more than 20 business days prior to the expiration of the commitment period. This notice need not be given if the expiration of the commitment period is less than 12 days from the date the commitment is accepted, provided that the lender complies with the requirements of subparagraphs (a)(2)(i) and (iii) of this section. This notice may refer to both the expiration of the commitment period and the lock-in period provided that the notice is timely with regard to the expiration of each.
3 CRR-NY 38.4
Current through January 31, 2023
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