3 CRR-NY 41.1NY-CRR
3 CRR-NY 41.1
3 CRR-NY 41.1
41.1 Definitions.
The following definitions shall apply for the purpose of this Part.
(a) Lender means a mortgage banker licensed pursuant to article 12-D of the Banking Law or an exempt organization as defined in paragraph (e) of subdivision one of section 590 of such article. The mortgage banker or exempt organization to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract, shall be deemed to be the lender.
(b) Affiliate means any company that controls, is controlled by, or is under the common control of another company. Control shall have the same meaning as control of a bank or any other company is defined pursuant to 12 USC* at 1841(a)(2), (3) and (4).
(c) Annual percentage rate means the annual percentage rate for the loan calculated according to the provisions of the Federal Truth-in-Lending Act (15 U.S.C.* section 1601 et seq.), the regulations promulgated thereunder by the Federal Reserve Board, and the official staff commentary thereto. For open-end lines of credit, the annual percentage rate is the highest corresponding annual percentage rate required to be disclosed under sections 226.6(a)(2) and 226.14(b) of title 12 of the Code of Federal Regulations,* excluding any annual percentage rate imposed solely in the event of default.
(d) Bona fide loan discount points means loan discount points knowingly paid by the borrower and funded through any source for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate or time-price differential applicable to the loan, provided the amount of the interest rate reduction purchased by the discount points is reasonably consistent with established industry norms and practices for secondary mortgage market transactions. For purposes of this Part and section 6-l(1)(c) of the Banking Law, it shall be presumed that a point is a bona fide loan discount point if it reduces the interest rate by a minimum of 25 basis points or ΒΌ of a point provided all other terms of the loan remain the same.
(e) High cost home loan means a residential mortgage loan, including an open-end line of credit but not including a reverse mortgage transaction, in which:
(1) the principal amount of the loan does not exceed the lesser of:
(i) the conforming loan size limit for a comparable dwelling as established from time to time by the Federal National Mortgage Association; or
(ii) $300,000;
(2) the borrower is a natural person;
(3) the debt is incurred by the borrower primarily for personal, family or household purposes;
(4) the loan is secured by a mortgage or deed of trust on real estate upon which there is located or there is to be located a structure or structures, intended principally for occupancy of from one to four families, which is or will be occupied by the borrower as the borrower's principal dwelling;
(5) the property is located in New York State; and
(6) the terms of the loan exceed one or more of the following thresholds:
(i) the loan is secured by a first mortgage on the borrower's principal dwelling and the annual percentage rate at consummation, including without limitation any points and/or bona fide discount points, will exceed by more than eight percentage points the yield on United States Treasury securities having comparable periods of maturity to the loan maturity measured as of the 15th day of the month immediately preceding the month in which the application for the residential mortgage loan is received by the lender; provided, however, if the terms of such loan offer any initial or introductory rate, and the annual percentage rate is less than such rate that will apply after the end of the period of such initial or introductory rate, then the annual percentage rate for purposes of determining the application of this threshold to such loan shall be the rate which applies after such initial or introductory period; or
(ii) the loan is secured by a junior mortgage on the borrower's principal dwelling and the annual percentage rate at consummation, including without limitation any points and/or bona fide discount points, will exceed by nine or more percentage points the yield on United States Treasury securities having comparable periods of maturity to the loan maturity measured as of the 15th day of the month immediately preceding the month in which the application for the residential mortgage loan is received by the lender; provided, however, if the terms of such loan offer any initial or introductory rate, and the annual percentage rate is less than such rate that will apply after the end of the period of such initial or introductory rate, then the annual percentage rate for purposes of determining the application of this threshold to such loan shall be the rate which applies after such initial or introductory period; or
(iii) the total points and fees payable exceed:
(a) five percent of the total loan amount if such amount is $50,000 or more; or
(b) six percent of the total loan amount if such amount is $50,000 or more and the loan is a purchase money loan guaranteed by the Federal Housing Administration or the U.S. Department of Veterans' Administration; or
(c) the greater of six percent of the total loan amount or $1,500 if such amount is less than $50,000. Bona fide loan discount points payable by the borrower in connection with the loan transaction, up to and including two such points, may be excluded from the calculation of the total points and fees payable by the borrower for purposes of this paragraph but only if the loan's interest rate that is to be discounted is not greater than one percent above the yield on United States Treasury securities having comparable periods of maturity to the loan maturity measured as of the 15th day of the month immediately preceding the month in which the application is received; or bona fide discount points may be discounted that are funded directly or indirectly through a grant from a Federal, State or local government agency or a not-for-profit organization having a taxable status under section 501(c)(3) of the Internal Revenue Code;
(iv) in determining the applicable yield on United States Treasury securities pursuant to subparagraphs (i) and (ii) of this paragraph, the lender may utilize the yield published by the department on its website or the yield as determined by reference to section 226.32(a) of title 12 of the Code of Federal Regulations and the official staff commentary thereto, provided that the lender notes in the loan file which yield is being utilized and uses that yield consistently. This publication may be viewed at the New York City office of the New York State Department of Financial Services located at the address stated in Supervisory Policy G1 of this Title and the Department of State located at 41 State Street, Albany, NY 12231.
(f) Total loan amount means the principal of the loan minus those points and fees as defined in subdivision (h) of this section that are included in the principal amount.
(g) Borrower refers to a natural person and shall be deemed to include a co-borrower or co- signer obligated to repay a high cost home loan.
(h) Points and fees means:
(1) all items listed in 15 U.S.C.*section 1605(a)(1) through (4), except interest or the time-price differential;
(2) all charges for items listed under section 226.4(c)(7) of title 12 of the Code of Federal Regulations,* as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; and
(3) all compensation paid directly or indirectly to a mortgage broker not otherwise included as points and fees pursuant to paragraphs (1) and (2) of this subdivision. Any payments to finance premiums for any credit life, credit disability, credit unemployment, or credit property insurance, or any other life or health insurance, or any debt cancellation or suspension agreement or contract, whether or not interest is charged, shall constitute points and fees for purposes of this Part and section 6-l of the Banking Law. Credit property insurance shall not be deemed to include insurance coverage for fire, miscellaneous property, or water damage, as defined pursuant to section 1113 of the Insurance Law, placed upon such mortgaged property. Payments for title insurance premiums related to such mortgaged property and payments for premiums for insurance required by the lender that guarantees payment of all or part of the outstanding principal loan amount upon the default of the borrower, which shall include but not be limited to private mortgage insurance, the Federal Housing Administration mortgage insurance premium fee, and the U.S. Veterans Administration funding fee, or any fee charged by the Federal National Mortgage Association or the Federal Mortgage Assistance Corporation that provides for a similar guarantee of such payment, shall not constitute points and fees for purposes of this Part and section 6-l of the Banking Law. Any payments for a mortgage recording tax shall not constitute points and fees for purposes of this Part and section 6-l of the Banking Law.
(i) Scheduled monthly payments means minimum sums required to be paid with respect to all of the borrower's debts that are reported on a nationally recognized consumer credit bureau report and the monthly mortgage payment due under the high cost home loan (ignoring any reduction arising from a lower introductory rate) plus one twelfth of the annualized cost of real estate tax and insurance premium payments during the immediately preceding 12 months. Scheduled monthly payments shall not include any debts that are consolidated with or paid off by the high cost home loan.
(j) Unconscionable means oppressive or unreasonably harsh or unfair, considering all of the circumstances of the loan transaction as such term unconscionable is described in the Official Comment and New York Annotations for section 2-302 of the Uniform Commercial Code. For purposes of this Part, the singular shall include the plural.
Footnotes
*
For information regarding the United States Code (USC or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see Supervisory Policy G 1.
*
For information regarding the United States Code (USC or U.S.C.), the Code of Federal Regulations (CFR) and the Federal Register, see Supervisory Policy G 1.
3 CRR-NY 41.1
Current through January 31, 2023
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