3 CRR-NY 413.3NY-CRR
3 CRR-NY 413.3
3 CRR-NY 413.3
413.3 Minimum standards required for approval.
(a) For purposes of this Part, in addition to any other requirements of New York or Federal law, an applicant must satisfy the following requirements before obtaining approval from the superintendent to make FHA insured mortgage loans:
(1) be a registered mortgage broker in good standing in New York State;
(2) comply with all Federal requirements to act as an FHA mortgage loan correspondent as promulgated by the Secretary of the Department of Housing and Urban Development;
(3) irrespective of any law or regulation to the contrary, have a minimum adjusted net worth of $50,000;
(4) file with the superintendent an audited financial statement for its latest fiscal year end;
(5) file with the superintendent, in addition to any bond required under section 410.14 of this Title or otherwise by law or regulation, a corporate surety bond in the principal amount of $25,000 which shall be issued by a bonding company or insurance company authorized to do business in this State and which shall comply with the requirements set forth in subdivision (b) of this section. In lieu of a corporate surety bond, the applicant may elect to deposit $25,000 in assets pursuant to subdivision (c) of this section;
(6) obtain a written agreement with one or more federally approved sponsors. Such sponsors must be satisfactory to the superintendent; and
(7) have a satisfactory supervisory and consumer complaint record.
(b) The form of the surety bond shall be obtained from Mortgage Banking Division of the department or such other form as is satisfactory to the superintendent. Such bond shall be in favor of the superintendent for the protection of the superintendent and residential mortgage consumers located in New York State and shall contain substantially the following language:
“The proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees determined by the Superintendent to be improperly charged or collected and to pay banking department examination costs and assessments, solely in the event of the insolvency, liquidation or bankruptcy of such mortgage broker or the surrender, expiration or revocation of such mortgage broker's registration or approval to make loans as an FHA Mortgage Loan Correspondent. In the event of the insolvency or bankruptcy of the mortgage broker, the proceeds of the bond shall be paid to the Superintendent forthwith for disposition in accordance with the applicable provisions of the Banking Law.”
(c) The form of the deposit agreement shall be obtained from Mortgage Banking Division of the department or such other form as is satisfactory to the superintendent. The deposit agreement shall be for the protection of the superintendent and residential mortgage consumers located in New York State. An executed copy of such deposit agreement shall be filed with the superintendent. The assets which comprise the deposit shall be valued at the lower of principal amount or market value and must be deposited in a New York State chartered commercial bank, trust company, savings bank, savings and loan association, private banker or national bank, Federal savings bank or Federal savings and loan association located in New York State. As part of the deposit agreement, the applicant shall agree that prior to the release or substitution of any assets subject to the deposit agreement, the applicant shall file a certificate with the depository which shall specify the following:
(1) the complete title of each security being withdrawn;
(2) the complete title of each security being deposited in place thereof;
(3) the interest rate, series, serial number (if any), face value maturity date, call date, principal amount and market value of each replacement security;
(4) the aggregate principal amount of all such replacement securities;
(5) the amount, if any, of the funds being withdrawn or deposited; and
(6) certify that any securities being deposited in exchange for securities being withdrawn comply as to type with the provisions of subdivision 4 of section 591 of the Banking Law, and that, after giving effect to the exchange, the aggregate amount of all securities and funds remaining on deposit by the applicant, based in the case of securities upon the principal amount or market value, whichever is lower, is at least equal to $25,000.
In addition, as part of the deposit agreement, the applicant shall agree that the superintendent may revoke the authority of the depository to pay dividends or interest on the securities, funds or other assets deposited pursuant to this deposit agreement.
(d) The superintendent, in his or her sole discretion, may withdraw approval as to one or more sponsors at any time should the superintendent determine that the sponsor's funding capability, financial standing, character and fitness, and/or supervisory or consumer complaint record is such as to give the superintendent reasonable cause to doubt the ability of such sponsor to meet its obligations to the loan correspondent. Notification of any such disapproval will be sent in writing to the loan correspondent. Within five business days from receipt of such notification, the loan correspondent shall cease doing business with the sponsor.
(e) Paragraph (a)(5) and subdivisions (b) and (c) of this section shall remain in full force and effect until 24 months from the effective date of this Part provided that the Superintendent of Banks shall monitor the effects of the operation of such paragraph and subdivisions and shall submit to the Governor's Office of Regulatory Reform a report after this Part shall have been in effect for 22 months. This report shall include findings on the effects of this operation of such paragraph and subdivisions and, in addition, shall contain recommendations regarding the extension or re-adoption of such paragraph and subdivisions. Specifically, such report shall include the following information:
(1) the number of loan correspondents in New York State;
(2) the number of loan correspondents which have:
(i) become insolvent or bankrupt;
(ii) had their approval to make loans as an FHA mortgage loan correspondent terminated; or
(iii) had their mortgage broker's registration terminated either by surrender, expiration or revocation; and
(3) the number of instances in which a claim was presented against the bond or pledged deposit, the dollar amount of each claim and the number of claims which were successful or which remain unresolved.
3 CRR-NY 413.3
Current through March 31, 2022
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IMPORTANT NOTE REGARDING CONTENT CURRENCY: JULY 31, 2023, is the date of the most recently produced official NYCRR supplement covering this rule section. For later updates to this section, if any, please: consult editions of the NYS Register published after this date; or contact the NYS Department of State Division of Admisnistrative Rules at [email protected]. See Help for additional information on the currency of this unofficial version of the NYS Rules.