Bill Text: NY A05407 | 2011-2012 | General Assembly | Introduced

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Bill Title: Prohibits compensation based on home loan terms by mortgage brokers or mortgage lenders.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Introduced - Dead) 2011-04-20 - enacting clause stricken [A05407 Detail]

Download: New_York-2011-A05407-Introduced.html

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                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         5407
                              2011-2012 Regular Sessions
                                 I N  A S S E M B L Y
                                   February 18, 2011
                                      ___________
       Introduced  by M. of A. TOWNS -- read once and referred to the Committee
         on Banks
       AN ACT to amend the banking law, in relation to prohibiting compensation
         based on the terms of a home loan by  mortgage  brokers  and  mortgage
         lenders
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Section 590-b of the banking law is amended by adding a new
    2  subdivision 3-a to read as follows:
    3    3-A. IN CONNECTION WITH THE MAKING OR BROKERING OF  A  HOME  LOAN,  NO
    4  PERSON  MAY  PROVIDE,  AND  NO  MORTGAGE  BROKER  OR MORTGAGE LENDER MAY
    5  RECEIVE, DIRECTLY OR INDIRECTLY, ANY COMPENSATION THAT IS BASED  ON,  OR
    6  VARIES  WITH,  THE  TERMS  OF  ANY HOME LOAN. THIS SUBDIVISION SHALL NOT
    7  PROHIBIT COMPENSATION BASED ON THE PRINCIPAL BALANCE OF THE LOAN.
    8    S 2. Paragraph (s) of subdivision 2 of section 6-l of the banking law,
    9  as amended by chapter 507 of the laws of 2009, is  amended  to  read  as
   10  follows:
   11    (s) No [abusive] yield spread premiums. [In arranging a high-cost home
   12  loan,  the  mortgage broker shall, within three days after receipt of an
   13  application, disclose the exact amount and methodology of total  compen-
   14  sation  that  the broker will receive. Such amount may be paid as direct
   15  compensation from the lender, direct compensation from the borrower,  or
   16  a combination of the two if permitted by applicable law.  The provisions
   17  of  this  paragraph  shall  not  restrict  the  ability of a borrower to
   18  utilize a yield spread premium in order to offset any up front costs  by
   19  accepting  a higher interest rate if permitted by applicable law. If the
   20  borrower chooses this option, any  compensation  from  the  lender  that
   21  exceeds  the  amount  of  total  compensation owed to the broker must be
   22  credited to the borrower. The superintendent shall  prescribe  the  form
   23  that  such  disclosure  shall  take. This provision shall not restrict a
   24  broker from accepting a lesser amount of  compensation.]  IN  CONNECTION
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD03866-01-1
       A. 5407                             2
    1  WITH  THE MAKING OR BROKERING OF A HOME LOAN, NO PERSON MAY PROVIDE, AND
    2  NO MORTGAGE BROKER OR MORTGAGE LENDER MAY RECEIVE, DIRECTLY OR INDIRECT-
    3  LY, ANY COMPENSATION THAT IS BASED ON, OR VARIES WITH, THE TERMS OF  ANY
    4  HOME  LOAN.  THIS PARAGRAPH SHALL NOT PROHIBIT COMPENSATION BASED ON THE
    5  PRINCIPAL BALANCE OF THE LOAN.
    6    S 3. Paragraph (n) of subdivision 2 of section 6-m of the banking law,
    7  as amended by chapter 507 of the laws of 2009, is  amended  to  read  as
    8  follows:
    9    (n)  No [abusive] yield spread premiums. [In arranging a subprime home
   10  loan, the mortgage broker shall, within three days after receipt  of  an
   11  application,  disclose  the exact amount and methodology for determining
   12  the total compensation that the broker will receive. Such amount may  be
   13  paid  as  direct  compensation from the lender, direct compensation from
   14  the borrower, or a combination of the two  if  permitted  by  applicable
   15  law.  The provisions of this paragraph shall not restrict the ability of
   16  a borrower to utilize a yield spread premium  in  order  to  offset  any
   17  upfront costs by accepting a higher interest rate if permitted by appli-
   18  cable  law.  If  the borrower chooses this option, any compensation from
   19  the lender that exceeds the exact amount of total compensation  owed  to
   20  the  broker  must  be credited to the borrower. The superintendent shall
   21  prescribe the form that such disclosure shall take. This paragraph shall
   22  not restrict a broker from accepting a lesser amount  of  compensation.]
   23  IN CONNECTION WITH THE MAKING OR BROKERING OF A HOME LOAN, NO PERSON MAY
   24  PROVIDE, AND NO MORTGAGE BROKER OR MORTGAGE LENDER MAY RECEIVE, DIRECTLY
   25  OR  INDIRECTLY,  ANY  COMPENSATION THAT IS BASED ON, OR VARIES WITH, THE
   26  TERMS OF ANY HOME LOAN. THIS PARAGRAPH SHALL NOT  PROHIBIT  COMPENSATION
   27  BASED ON THE PRINCIPAL BALANCE OF THE LOAN.
   28    S 4. This act shall take effect immediately.