To define the meaning of certain terms in Section 6-m of the Banking Law.
Text of final rule:
PART 43
SUBPRIME HOME LOANS – MEANING OF TERMS
§ 43.1 Background.
Section 6-m of the Banking Law provides for the regulation of subprime home loans as defined in the statute.
Pursuant to the authority provided by Section 302(2) of the Financial Services Law and Section 14 of the Banking Law, the Superintendent of Financial Services is authorized to prescribe regulations interpreting the provisions of the Banking Law, including Section 6-m. This Part is issued pursuant to this authority, and it applies to all subprime home loans as defined in the Banking Law.
§ 43.2 Meaning of Certain Terms.
The following interpretations shall be used in determining whether a loan is a subprime home loan within the meaning of Section 6-m of the Banking Law:
a. The term “Week” referred to in the phrase the “week prior to the week in which the lender provides the ‘good faith estimate’” used in Section 6-m(1)(c) shall in all cases mean the seven-day period from Friday through Thursday, the day on which the Federal Home Loan Mortgage Corporation publishes its Primary Mortgage Market Survey (“PMMS”). Therefore, the relevant PMMS for purposes of Section 6-m(1)(c) is the one published on the Thursday prior to receiving the good faith estimate. For example, if a lender provides a good faith estimate on any day including Friday, June 14 through Thursday, June 20, the relevant PMMS is the one published on Thursday, June 13. For a good faith estimate issued on Friday, June 21 through Thursday, June 27, the relevant PMMS is the one published on Thursday, June 20.
b. The term “Good Faith Estimate” referred to in the phrase “‘good faith estimate’ required under 12 USC § 2601 et seq.” used in Section 6-m(1)(c) shall in all cases mean the good faith estimate used to establish the terms of the mortgage loan. If a revised good faith estimate is required under section 1024.7(f) of Regulation X (12 CFR Part 1024), the term “Good Faith Estimate” shall mean such revised good faith estimate.
c. The term “Commitment” referred to in the phrase “the time the lender issues its commitment” used in Section 6-m(1)(b) shall in all cases where a commitment is not issued by the lender mean the “Good Faith Estimate”.
Final rule as compared with last published rule:
Nonsubstantive changes were made in sections 43.1 and 43.2.
Text of rule and any required statements and analyses may be obtained from:
Harry Goberdhan, New York State Department of Financial Services, One State Street, New York, NY 10004, (212) 709-1669, email: Harry.Goberdhan@DFS.ny.gov
Revised Regulatory Impact Statement, Revised Regulatory Flexibility Analysis, Revised Rural Area Flexibility Analysis and Revised Job Impact Statement
The Department amended the first sentence of 3 NYCRR, Part 43.2, as proposed to clarify the scope and purpose of the regulation.
Additionally, after receiving a comment from a trade association regarding which good faith estimate should be used to calculate the annual percentage rate, the Department amended the last sentence of 3 NYCRR, Part 43.2(b) as proposed to include a reference to Regulation X (12 CFR Part 1024) to clarify the term “Good Faith Estimate.”
These changes made to the proposed rule does not necessitate a revision to the RIS, RFA, RAFA or JIS because they are minor clarifications of the text which do not affect the accuracy or completeness of the impact statements.
Initial Review of Rule
As a rule that requires a RFA, RAFA or JIS, this rule will be initially reviewed in the calendar year 2017, which is no later than the 3rd year after the year in which this rule is being adopted.
Assessment of Public Comment
Summary of Comments:
Two comments on the proposal were received:
1. A comment filed on behalf of the Mortgage Bankers Association, Central New York Mortgage Bankers Association, Empire State Mortgage Bankers Association, Mid-Hudson Valley Mortgage Bankers Association, Mortgage Bankers Association of New York, Mortgage Bankers Association of Northeastern New York, and Mortgage Bankers Association of the Genesee Region (the “Associations”) applauded the Department for taking the necessary action to adopt 3 NYCRR, Part 43 as the new regulation would give consumers and mortgage lenders in New York a more precise rate calculation when purchasing or refinancing a home. Additionally, the Associations requested that the Department take note of the fact that they would support a statutory change to Section 6-m of the Banking Law to effectively permit mortgage lenders to “use the rate lock date to establish the APR calculation, instead of the date of the revised GFE [good faith estimate].”
2. A comment filed on behalf of the New York Bankers Association (NYBA) paralleled that received from the Associations stating the action taken by the Department would significantly reduce negative borrower impact in the state and ensure the continued availability of credit. The comment also recommended that 3 NYCRR, Part 43.2(b) as proposed be amended to include a reference to 12 CFR Part 1024 (Regulation X) that would effectively clarify which good faith estimate should be used to calculate the APR.
Change Made to Proposed Rule
In response to the comments by the NYBA, the last sentence of 3 NYCRR, Part 43.2(b) as proposed is amended to read as follows: “If a revised good faith estimate is required under section 1024.7(f) of Regulation X (12 CFR Part 1024), the term “Good Faith Estimate” shall mean such revised good faith estimate.”
