part 419. servicing mortgage loans: business conduct regulations relating to mortgage loan...
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PART 419. SERVICING MORTGAGE LOANS: BUSINESS CONDUCT RULES (Statutory Authority: Banking Law Article 12-D) § 419.1 Definitions § 419.2 Servicer duty of fair dealing § 419.3 Compliance with federal and state laws § 419.5 Payments of tax or insurance premiums § 419.6 Crediting of payments § 419.7 Statement of account § 419.8 Late payment notices § 419.9 Payoff balances § 419.10 Fees § 419.11 Residential mortgage loan delinquencies and loss mitigation efforts § 419.12 Quarterly reporting § 419.13 Books and records and annual reports § 419.14 Servicing prohibitions § 419.1 Definitions For purposes of this part, unless otherwise stated herein, terms shall have the same meaning as set forth in section 418.3 of Part 418. (a) “Authorized representative” means a person designated by the borrower in a written authorization signed by the borrower, including an attorney, employee or agent of a not-for- profit housing counseling or legal services organization, provided that nothing herein shall restrict the ability of a servicer to share information and communicate verbally with a person acting on behalf of a borrower following a tape recorded or other verifiable verbal consent by the borrower. (b) “Home Affordable Mortgage Program” or “HAMP” means the program established by the U.S. Department of the Treasury pursuant to sections 101 and 109 of the Emergency Economic Stabilization Act of 2008, as section 109 of the Act has been amended by section 7002 of the American Recovery and Reinvestment Act of 2009. (c) “Loan modification” means waiver, modification or variation of any material term of the mortgage loan, irrespective of whether the duration is short-term, long-term or life-of-loan, that changes the interest rate, forbears or forgives the payment of principal or interest or extends the final maturity date of the loan. (d) “Loss mitigation option” means an alternative to foreclosure, including loan modification, reinstatement, forbearance, deed-in-lieu and short sale. (e) “Servicer” means a person engaging in the servicing of mortgage loans in this state whether or not registered or required to be registered pursuant to paragraph (b-1) of subdivision two of Banking Law section 590.
(f) “Qualified Written Request” means, as set forth in RESPA, 24 C.F.R. section 3500.21(e)(2), a written correspondence (other than notice on a payment coupon or other payment medium supplied by the servicer) that includes, or otherwise enables the servicer to identify, the name and account of the borrower, and includes a statement of the reasons that the borrower believes the account is in error, if applicable, or that provides sufficient detail to the servicer regarding information relating to the servicing of the loan sought by the borrower. (g) “RESPA” means the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. section 2601 et seq. and regulations adopted thereunder, also sometimes known as Regulation X, and found at 24 C.F.R. Part 3500. § 419.2 Servicer duty of fair dealing A Servicer has a duty of good faith and fair dealing in its communications, transactions, and course of dealings with each borrower in connection with the servicing of the borrower’s mortgage loan. This includes, but is not limited to, the duty to:
(a) Safeguard and account for any money handled for the borrower;
(b) Follow reasonable and lawful instructions from the borrower consistent with the underlying note and mortgage;
(c) Act with reasonable skill, care and diligence;
(d) Promptly provide the borrower with an accurate statement of account in accordance with Part 419.7(b);
(e) Make borrowers in default aware of loss mitigation options and services offered by the Servicer in accordance with Part 419.11;
(f) Provide trained personnel and telephone facilities sufficient to respond promptly to borrower inquiries regarding their mortgage loans; and
(g) Pursue loss mitigation with the borrower whenever possible in accordance with Part 419.11. § 419.3 Compliance with federal and state laws In addition to applicable provisions of Banking Law Article 12-D and the requirements of Part 418 and this Part, a Servicer shall comply with all applicable federal and New York state laws and regulations relating to mortgage loan servicing, including but not limited to RESPA, the Truth-in- Lending Act, 15 U.S.C. section 1600 et seq. and Regulation Z adopted thereunder, 12 C.F.R. section 226 et seq., section 6-k of the Banking Law and Article 9, Title 3-A, of the Real Property Tax Law.
§ 419.4 Consumer complaints and inquiries (a) A Servicer shall follow the requirements relating to “Qualified Written Requests” pursuant to RESPA, 24 C.F.R. section 3500.21. (b) In addition to the requirements of RESPA, a Servicer shall have procedures and systems in place to respond to and resolve borrower inquiries and complaints in a prompt and appropriate manner. A Servicer shall designate a customer service department staffed by trained personnel to whom borrowers may direct complaints and inquiries and provide a toll-free telephone number or collect calling services through which any borrower may direct telephone inquiries on the borrower’s mortgage loan during regular business hours. (c) A Servicer shall clearly and conspicuously disclose with its welcome packet to borrowers, with each periodic billing statement, including as applicable either the monthly mortgage statement or annual coupon book, and with each annual statement pursuant to Part 419.7(a):
1. an address to which borrowers can direct complaints and inquiries;
2. a toll-free telephone number or collect calling services that gives the borrower access to a live person trained to answer inquiries and resolve or help resolve complaints, provided that the Superintendent in his or her discretion may waive or modify this requirement for good cause; and
3. statements, (A) if applicable, that the Servicer is registered with the Superintendent, (B) that the borrower may file complaints about the Servicer with the New York State Department of Financial Services and (C) that the borrower may obtain further information from the New York State Department of Financial Services by calling the Department’s Consumer Assistance Unit at 1-800-342-3736 or by visiting the Department’s website at www.dfs.ny.gov.
(d) Within 10 days of receiving a request in writing from a borrower or the borrower’s authorized representative, a Servicer shall provide the borrower with the name, address, phone number or email address, if available, and other relevant contact information for the owner or assignee of the mortgage loan. (e) In addition to the information required to be disclosed under this section, a Servicer may, at its option, provide any other information regarding the servicing of the loan that it believes would be helpful to a borrower, provided that such additional information does not contradict or obscure the required disclosures. § 419.5 Payments of tax or insurance premiums (a) Any Servicer that receives funds from a borrower to be held in escrow for payment of taxes or insurance premiums shall make payments of the taxes or insurance premiums due under the mortgage in accordance with the requirements of RESPA, 24 C.F.R section 3500.17,
Real Property Tax Law Article 9, Title 3-A and Banking Law section 6-k, and shall be liable to the borrower as provided therein.
(b) A Servicer shall disclose any payments from the escrow account clearly and conspicuously in the next periodic statement provided to the borrower.
(c) Where an escrow account has been established and a Servicer advances funds in paying a disbursement, which is not the result of a borrower's payment default under the underlying mortgage document, the Servicer shall conduct an escrow account analysis to determine the reasons for and extent of the deficiency and shall provide a written explanation to the borrower before seeking repayment of the funds from the borrower. § 419.6 Crediting of payments (a) In general. Except as provided in subsection (d), all amounts received by a Servicer on a mortgage loan at the address where the borrower has been instructed in writing to make payments shall be accepted and credited, or treated as credited, on the business day received, to the extent that the borrower has provided sufficient information to credit the account. For all mortgage loans originated after January 1, 2011, except where inconsistent with federal law or regulation such payments shall be credited to the interest and principal due on the home loan before crediting the payments to taxes, insurance, or fees.
(b) Reasonable payment requirements. Requirements for making payments must be reasonable. It should not be difficult for most consumers to make conforming payments. A cut- off time of 5 p.m. for receipt of a mailed check at the location specified by the Servicer for receipt of such check would be considered reasonable.
(c) Non-conforming payments. If a Servicer specifies in writing requirements for the