3 NYCRR — Banking

Chapter I GENERAL REGULATIONS OF THE SUPERINTENDENT

Part 2 SUPERINTENDENT’S REGULATIONS: PROCEDURE IN REMOVAL PROCEEDINGS

3 CRR-NY 2.1 Rights of parties {#sec-3-crr-ny-2.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.1}

Parties to removal proceedings before the superintendent shall at all stages thereof have all fundamental rights, including the rights of counsel, cross-examination, presentation of evidence, objection and motion.

3 CRR-NY 2.2 Notice of hearing {#sec-3-crr-ny-2.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.2}

(a) Upon receipt of any certification of facts pursuant to Banking Law, section 41, the superintendent shall cause notice to be served as provided in said section.

(b) Such notice shall specify when and where a hearing is to be held. Such hearing shall be held not less than 30 days from the date of service of such notice upon the director, trustee or officer sought to be removed (hereinafter referred to as the “respondent”), unless the respondent or the superintendent shall in writing, for good cause shown, request a hearing at an earlier date, in which event the superintendent may, in its discretion, direct a hearing at such earlier date.

(c) A copy of the superintendent's certification and of this Part shall be annexed to the aforesaid notices served pursuant to Banking Law, section 41.

3 CRR-NY 2.3 Answer {#sec-3-crr-ny-2.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.3}

The respondent may file an answer to the superintendent's certification within 20 days after service upon the respondent of the notice of hearing. The answer shall be filed with the superintendent.

3 CRR-NY 2.4 Hearing {#sec-3-crr-ny-2.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.4}

(a) The respondent and the superintendent shall appear for hearing before the superintendent at the place and time fixed in the notice of hearing.

(b) If it shall appear at the hearing that there are material disputed issues of fact, or if the superintendent or respondent requests oral testimony, or if the superintendent for any reason desires oral testimony, the superintendent shall direct that sworn evidence be taken, before a hearing officer designated by the superintendent.

3 CRR-NY 2.5 Hearing officer {#sec-3-crr-ny-2.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.5}

The superintendent may designate a hearing officer to take any evidence for the superintendent. The hearing officer shall have all powers necessary for the taking of evidence, including but not limited to the following powers:

(a) to fix the time or times when, and the place or places where, the evidence shall be taken;

(b) to regulate the course of the hearings and the conduct of the parties and their counsel;

(c) to consider and rule upon all objections to evidence and motions regarding the same, and to receive any offers of proof.

3 CRR-NY 2.6 Transcripts {#sec-3-crr-ny-2.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.6}

All hearings, whether before the Banking Board or a hearing officer, shall be stenographically recorded and transcribed. Copies of such transcript may be purchased from the reporter by the respondent and the superintendent.

3 CRR-NY 2.7 Briefs and argument after taking evidence {#sec-3-crr-ny-2.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.7}

After the evidence has been taken, whether before the superintendent or a hearing officer, and within such time as may be fixed by the superintendent or the hearing officer as the case may be, the respondent and the superintendent shall be afforded an opportunity to file briefs and proposed findings with, and shall be allowed oral argument before the hearing officer as the case may be.

3 CRR-NY 2.8 Hearing officer's report {#sec-3-crr-ny-2.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.8}

(a) If the evidence has been taken before a hearing officer, he shall, after considering the briefs and proposed findings that may have been filed with him and any oral argument that may have been made before him, make and file a report with the superintendent, and shall thereupon serve a copy of such report on the respondent. Such report shall contain:

(1) recommended findings of fact, together with the page numbers of the transcript supporting those findings;

(2) recommended conclusions of law;

(3) any statement as to the credibility of witnesses that the hearing officer may deem desirable.

(b) Together with his report, the hearing officer shall file with the superintendent the entire record of the proceedings before him, including the transcript, any exhibits, and the briefs and proposed findings of the parties, if any were filed.

3 CRR-NY 2.9 Exceptions to hearing officer's report and argument thereon {#sec-3-crr-ny-2.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.9}

(a) Within 15 days after service of the hearing officer's report, the respondent and the superintendent may respectively serve upon each other, exceptions to the report and briefs in support of the exceptions. Answering briefs may be served and filed with the superintendent within 15 days after service of the original brief. Argument in opposition to recommended findings of fact shall include specific page references to the transcript.

(b) If either the respondent or superintendent desires oral argument before the hearing officer, written request therefore shall be made no later than the last date for filing briefs. Upon such request, or on its own motion, the superintendent shall direct oral argument and shall serve notice upon the respondent of the time when and the place where such oral argument shall be heard.

3 CRR-NY 2.10 Service of all papers {#sec-3-crr-ny-2.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.10}

Except as otherwise provided by statute:

(a) All papers to be served upon the superintendent may be served personally or by registered mail upon him, upon such deputy superintendent as he may designate for that purpose, or upon his attorney of record in the proceeding.

(b) All papers to be served upon the respondent may be served personally or by registered mail upon such respondent or upon his attorney of record.

3 CRR-NY 2.11 Copies of papers {#sec-3-crr-ny-2.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.11}

(a) Any certification of facts filed by the superintendent shall be filed in sufficient copies.

(b) There shall be filed 16 copies of any other documents or papers filed with the superintendent.

(c) The requirement as to copies shall not apply to transcripts of testimony or exhibits, the number of copies of which shall be prescribed by the superintendent for each individual case.

(d) If any party shall in any particular case deem the filing of the required number of copies to be onerous, he may make written application upon good cause to the superintendent, or to such member or members as it may designate, for leave to file a lesser number of copies.

3 CRR-NY 2.12 Counsel {#sec-3-crr-ny-2.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.12}

(a) The superintendent may retain counsel to advise and assist it, or the hearing officer, in the conduct of the proceedings and the preparation of any documents. The name of such counsel shall be placed upon the record at the outset of the hearings.

(b) The appearance of any party by attorney shall be noted by filing with the superintendent a statement signed by the party setting forth the name and address of such attorney.

3 CRR-NY 2.13 Extension of time {#sec-3-crr-ny-2.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.13}

The superintendent may designate, may extend the time for the commencement or continuance of any hearing before the superintendent, or for the service and filing of any paper or document authorized or required by this Part to be filed with the superintendent.

3 CRR-NY 2.14 Construction {#sec-3-crr-ny-2.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 2.14}

This Part shall be liberally construed and shall not be deemed to limit the powers conferred on the superintendent by the Banking Law.

Part 3 SUPERINTENDENT’S REGULATIONS: FALSE REPORTING

3 CRR-NY 3.1 Making of false entries and omission of true entries {#sec-3-crr-ny-3.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 3.1}

No director, trustee or officer of any corporate banking organization or bank holding company (as such term is defined in Banking Law, § 141), and no person or persons in charge of, and no officer of, a branch of a foreign banking corporation, shall knowingly make or cause to be made any false entry in any book, report or statement of such corporate banking organization or branch, nor shall any such director, trustee, officer or person knowingly omit or cause to be omitted therefrom a true entry of any material particular pertaining to the business of such corporate banking organization or branch, which false entry or omission is intended or may reasonably be expected to deceive or mislead any director, trustee or officer of such corporate banking organization or branch, or the superintendent or any deputy superintendent or any examiner or other employee of the department.

3 CRR-NY 3.2 Superintendent's findings {#sec-3-crr-ny-3.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 3.2}

The superintendent hereby finds that violation of any of the provisions of section 3.1 of this Part:

(a) is inconsistent with and prejudicial to the safe and sound conduct of the business of banking organizations;

(b) is inconsistent with and prejudicial to the interest of the public, and is inconsistent with and prejudicial to the interests of depositors, creditors, shareholders and stockholders, as the case may be; and

3 CRR-NY 3.3 Violation basis for removal proceeding {#sec-3-crr-ny-3.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 3.3}

The superintendent hereby finds that violation of any of the provisions of section 3.1 of this Part by any director, trustee, officer or other person, as described in such section affords a proper basis for a removal proceeding pursuant to the provisions of Banking Law, section 41, upon certification by the superintendent, in his discretion, of the facts relating to such violation.

Part 4 SUPERINTENDENT’S REGULATIONS: MAXIMUM INTEREST RATE ON CERTAIN LOANS

3 CRR-NY 4.1 Interest rate {#sec-3-crr-ny-4.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.1}

For the purpose of General Obligations Law sections 5-501 and 5-524, and Banking Law sections 108(1), 173(1), 202(1), 235-b, 380-e, 454(6), 510-a(1) and 577(1), and except as otherwise provided by law, the maximum rate of interest to be charged, taken or received, upon a loan or forbearance of any money, goods, or things in action is as follows:

3 CRR-NY 4.2 Amounts included as interest {#sec-3-crr-ny-4.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.2}

The term interest as used in section 4.1 of this Part:

(a) when applied to any loan or forbearance secured primarily by an interest in real property improved by a one- or two-family residence occupied by the owner, shall include origination fees, points and other discounts and all other amounts paid or payable, directly or indirectly, by any person, to or for the account of the lender in consideration for making the loan or forbearance. The fees, charges and costs described in section 4.3 of this Part do not constitute amounts paid or payable, directly or indirectly, to or for the account of the lender in consideration for making the loan or forbearance and are not included in “interest”;

(b) when applied to any other loan or forbearance, shall mean all amounts paid or payable, directly or indirectly, by any person, to or for the account of the lender which would be includible as interest under New York law as it existed prior to the enactment of chapter 349 of the Laws of 1968;

(c) when applied to any loan or forbearance insured by the New York City Rehabilitation Mortgage Insurance Corporation, shall not include premiums paid for insurance pursuant to section 654(13)(a) of the Private Housing Finance Law.

3 CRR-NY 4.3 Amounts not included as interest in certain home mortgage loans {#sec-3-crr-ny-4.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.3}

The term interest for purposes of subdivision (a) of section 4.2 of this Part shall not include the following amounts payable in connection with the loan or forbearance, if itemized in writing to the borrower:

(a) a reasonable fee in consideration for the legally enforceable written commitment of the lender to reserve funds for future disbursement to the borrower, provided such commitment was made prior to November 1, 1968;

(b) reasonable fees, charges and costs for the following services actually and necessarily rendered:

(1) appraisal of property securing the loan or forbearance;

(2) preparation of surveys, abstracts or similar documents;

(3) title examinations, examinations of public records or similar procedures;

(4) title insurance;

(5) legal services and reasonable disbursements related thereto;

(6) notarizations, authentications or similar procedures; and

(7) periodic inspections related to advances to be made under the loan agreement;

(c) fees and charges prescribed by law for determining the existence of or for filing, recording or otherwise perfecting or releasing or satisfying any security, or the premiums, not in excess of such fees and charges, payable for any insurance in lieu of perfecting the security;

(d) actual and lawful charges or premiums for:

(1) completion or performance bonds;

(2) insurance against loss of or damage to property securing the loan or forbearance;

(3) insurance against liability arising out of the ownership or use of property securing the loan or forbearance; and

(4) credit life, accident or health insurance if the same is:

(i) not a condition of the loan or forbearance and such fact is clearly disclosed in writing to the borrower; and

(ii) requested in writing by the borrower after written disclosure to him of the cost thereof;

(5) mortgage guaranty insurance as and to the extent:

(i) premiums for such insurance are excepted from interest for the purposes of section 5-501 of the General Obligations Law; and

(ii) the mortgagor may be required to pay such premiums;

as provided in article 65 of the Insurance Law or such other law or laws and regulations promulgated pursuant thereto as may be applicable;

(e) charges for the payment of transfer, mortgage recording and other taxes and governmental charges;

(f) funds held by the lender for future payments of taxes, assessments, water or sewer charges and insurance premiums described in subdivision (d) of this section;

(g) fees and charges paid or payable pursuant to a written agreement or modification thereof between the lender and the borrower upon the occurrence of specific acts or defaults of the borrower, such as:

(1) prepayment penalties;

(2) charges for delinquent or late payments; and

(3) collection fees;

(h) any amount paid or payable by or for a third-party employer to a lender to aid in financing the sale of a residence owned by an employee of such third-party employer or the purchase of a residence by such employee, provided the third-party employer certifies in writing to the borrower that he will not be required to reimburse the third party, either in whole or in part, directly or indirectly, for any such payment; and

(i) such other fees and charges as may be specifically authorized by Federal or State law or regulation.

3 CRR-NY 4.4 Calculation of maximum rate of interest {#sec-3-crr-ny-4.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.4}

The term maximum rate of interest as used in sections 4.1 and 4.5 of this Part, when applied to any loan or forbearance, secured primarily by an interest in real property, improved by a one- or two-family residence occupied by the owner, shall mean that annual percentage rate which will yield a sum equal to the amount of “interest” as defined in subdivision (a) of section 4.2 of this Part when such rate is applied to the unpaid balances of the amount financed, calculated according to the actuarial method (United States rule) by allocating payments between the amount financed and the amount of such “interest” so that a payment is applied first to such “interest” and the balance to the unpaid amount financed. The term amount financed as used in this section shall mean the sum of (a) the amount of the loan paid to, receivable by, or paid or payable for the account of the borrower, plus (b) such fees, charges or costs not included in “interest” as defined in subdivision (a) of section 4.2 of this Part but which at the time of any calculation of interest have been added to the loan or forbearance. Such term maximum rate of interest, when applied to any loan or forbearance not secured primarily by an interest in real property improved by a one- or two-family residence occupied by the owner, shall mean that annual percentage rate calculated according to any method authorized under New York law as it existed prior to the enactment of chapter 349 of the Laws of 1968.

3 CRR-NY 4.5 Interest rate applicable to subsequent advances {#sec-3-crr-ny-4.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.5}

Where an agreement with the borrower provides that the lender shall advance funds from time to time, the maximum rate of interest applicable to each advance shall be the maximum rate of interest authorized by law at the time the first advance was made.

3 CRR-NY 4.6 Escalation provisions in amortization loans {#sec-3-crr-ny-4.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.6}

For the purpose of General Obligations Law, section 5-501(3) and (4), if a loan or forbearance secured primarily by an interest in real property improved by a one- or two-family residence occupied by the owner, providing for regular payments of principal and interest designed fully or partially to amortize the principal amount thereof, is extended or a new loan substituted therefor by the original lender or a subsequent assignee as a consequence of:

(a) the exercise or forbearance from exercising an option to declare the loan due and payable prior to its normal maturity date; or

(b) the loan, by its terms, becoming due and payable prior to its normal maturity date, the original loan or forbearance together with such extended or substituted loan shall constitute a single loan or forbearance, provided that this section shall not apply in the event:

(1) exercise of the option, forbearance from exercising the option or accelerated maturity of the loan results from the obligor's act or default; or

(2) the extended or new loan or forbearance is made in consideration for additional funds, a release of a portion of the mortgaged property or other change in the terms of the loan or forbearance specifically requested in writing by the obligor.

As used in this section, the term normal maturity date shall mean the date on which the principal amount of the loan would be fully amortized by regular payments of principal and interest each substantially equal to the first required regular payment.

3 CRR-NY 4.7 Applicability {#sec-3-crr-ny-4.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 4.7}

This Part shall apply only to a loan or forbearance made on or after July 1, 1968.

Part 5 SUPERINTENDENT’S REGULATIONS: INTERNAL AND EXTERNAL AUDITS AT BRANCHES AND AGENCIES OF FOREIGN BANKING CORPORATIONS

3 CRR-NY 5.1 Purpose {#sec-3-crr-ny-5.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.1}

In order to maintain and enhance the safety and soundness of foreign banks' New York offices, the Banking Board is establishing criteria which would require under certain circumstances that such offices utilize independent external and internal auditors satisfactory to the superintendent. The superintendent believes that the foreign bank office's annual ROC-A examination rating serves as a straightforward and meaningful measure to determine whether foreign bank offices require such additional assistance. Nothing contained in this Part shall be deemed to limit the authority of the superintendent under the provisions of the Banking Law.

3 CRR-NY 5.2 Definitions {#sec-3-crr-ny-5.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.2}

For purposes of this Part:

(a) The term foreign bank office means a branch or an agency of a foreign banking corporation licensed by the superintendent to conduct a banking business in New York.

(b) The term GAAP means United States generally accepted accounting principles.

(d) The term ROC-A examination rating means the examination rating system for a foreign bank office conducting a banking business in the United States, in which the term ROC-A stands for risk management, operational controls, compliance, and asset quality.

(e) The term independent external auditor means an independent public accountant registered or licensed to practice as a public accountant in New York State.

3 CRR-NY 5.3 External audits {#sec-3-crr-ny-5.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.3}

(a) Those foreign bank offices with a composite ROC-A rating of four or worse, and a separate operational controls (“O”) rating of four or worse, and, on a case-by-case basis as determined by the superintendent, foreign bank offices with an “O” rating of three or worse, regardless of the composite rating, must engage an independent external auditor, subject to the superintendent's approval, to:

(1) Issue a report on the foreign bank office's balance sheet and accompanying disclosures, which shall include off-balance sheet amounts and assets held on behalf of others. The balance sheet and disclosures must be stated under GAAP and audited under GAAS. The balance sheet and disclosures must be audited as of a quarter-end date within six months following the date the department issues its transmittal letter corresponding to an examination report and annually thereafter for such period as the foreign bank office shall be subject to this subdivision.

(2) Attest to management's assertions regarding the effectiveness of the foreign bank office's internal control structure over financial reporting based on reasonable criteria established by management. Independent external auditor attestation reports must be performed in accordance with United States generally accepted standards for attestation engagements. These reports must be dated as of the same date chosen in paragraph (1) of this subdivision.

(b) The superintendent may, in the superintendent's discretion, require foreign bank offices, in addition to the requirements imposed in subdivision (a) of this section, to engage an independent external auditor, subject to the superintendent's approval, to perform agreed-upon procedures or other additional engagements in accordance with United States auditing or attestation standards. The superintendent will identify specific objectives based on the examination findings, and permit the foreign bank office to draft the procedures with its independent external auditors for the superintendent's approval and agreement.

(c) For balance sheet and disclosures audits required pursuant to subdivision (a) of this section, a consolidating balance sheet must be provided where applicable.

(d) When an independent external auditor determines that a “disclaimer of opinion” is required for a report pursuant to this Part, management and the independent external auditor must consult with the superintendent before such report is issued.

(e) The reports of independent external auditors required pursuant to subdivisions (a) and (b) of this section shall be submitted by management to the superintendent no later than six months from the date the superintendent approves the appointment of the independent external auditor. For each report issued, independent external auditors also must provide a formal management letter containing recommendations to improve internal controls, and include management's response to each recommendation. Management letters are to be provided to the superintendent within two months of the initial report's issuance. Extensions of deadlines shall require the written approval of the superintendent.

(f) The reports of independent external auditors together with supporting workpapers must be in English. Workpapers shall be made available to the superintendent upon the superintendent's request.

(g) Management of the foreign bank office shall notify the superintendent in writing if the services of the independent external auditor are terminated prior to the end of the engagement and issuance of the reports, and the reasons for the termination. The notification must be provided within 15 days of such termination.

3 CRR-NY 5.4 Internal audits {#sec-3-crr-ny-5.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.4}

(a) The superintendent encourages all foreign bank offices to employ qualified internal auditors as an important aspect of adequate internal control. The superintendent may, in his or her discretion, require a foreign bank office to follow requirements similar to those set forth in paragraph (b) of this section.

(1) Internal auditors, whether head office, resident or regional, are expected to be well-qualified to perform their duties. Qualified internal auditors should possess significant experience in bank accounting, auditing and control functions, and attend relevant professional education courses on an annual basis.

(b) Foreign bank offices with a composite ROC-A rating of four or worse, and an “O” rating of four or worse, and, on a case-by-case basis as determined by the superintendent, foreign bank offices with an “O” rating of three or worse, regardless of the composite rating, must have comprehensive on-site internal audits performed annually by either the foreign banking corporation's head office internal auditors or foreign bank office resident or regional internal auditors who report directly to the head office.

(1) A “comprehensive internal audit” shall include the performance of annual detailed internal audit procedures on all high risk areas which represent significant potential exposure to the foreign bank office. The designation of high risk areas will require the internal auditor's judgment, and will be reviewed during examinations of the office.

(2) Foreign bank office resident or regional internal auditors should be hired with the approval of the foreign banking corporation's head office and be authorized to communicate directly with the head office without any foreign bank office management intervention. The superintendent requires such resident or regional internal auditors to remain independent of foreign bank office management.

(c) The superintendent may, in his or her discretion, require foreign bank offices subject to subdivision (b) of this section to have the comprehensive on-site internal audits performed annually by part-time or full-time regional or resident internal auditors who report directly to head office. The superintendent shall decide whether the internal auditors shall be part-time or full-time, taking into consideration the size and activities of the foreign bank office. Any such internal audit shall follow the requirements described in subdivision (b) of this section. In addition, at the time of each onsite examination, the foreign bank office shall present to the examiner in charge the formal qualifications of the internal auditors and the internal auditors' actual work plan since the previous examination and the internal auditors' program for the next 12 month period.

(d) Reports of internal auditors required under this Part together with supporting workpapers must be in English. Workpapers shall be made available to the superintendent upon request.

3 CRR-NY 5.5 Compliance with laws and regulations {#sec-3-crr-ny-5.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.5}

Coincidental with the reports issued pursuant to section 5.3 of this Part, management shall assert its compliance with applicable laws and regulations.

3 CRR-NY 5.6 Additional actions and orders {#sec-3-crr-ny-5.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.6}

The requirements outlined in this Part are in addition to any other additional supervisory or enforcement actions that the superintendent may impose against a foreign bank office.

3 CRR-NY 5.7 Compliance with Federal regulations {#sec-3-crr-ny-5.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 5.7}

Compliance by an insured foreign bank office with section 112 of the Federal Deposit Insurance Corporation Improvement Act (12 U.S.C. § 1831m), as it may be amended from time to time, shall be deemed compliance by that insured foreign bank office with section 5.3(a) of this Part, subject to the superintendent's authority to require additional procedures as may be deemed to be necessary.

Part 6 SUPERINTENDENT’S REGULATIONS: ADDITIONAL AUTHORITY OF BANKS, TRUST COMPANIES, SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS PURSUANT TO BANKING LAW, SECTIONS 14-G AND 14-H

3 CRR-NY 6.1 Statement of purpose {#sec-3-crr-ny-6.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.1}

In enacting section one of chapter three of the Laws of 1997, the Legislature found and declared "that the rapid expansion of Federal banking powers requires a means to ensure parity, in a timely manner, between banks and trust companies and national banks, in order to preserve and enhance the State banking charter." It was the stated intention of the Legislature that section one of chapter three of the Laws of 1997 “be construed in such a manner as to ensure that banks and trust companies may exercise the same rights and powers and engage in the same activities as national banks, on substantially the same terms and conditions as national banks.” It was the further stated intention of the Legislature “that in exercising any right or power or engaging in any activity pursuant to section one of chapter three of the Laws of 1997, that is subject to licensing or regulation by any authority or agency of this State other than the superintendent, a bank or trust company be subject to the same licensing and supervisory requirements that apply to other persons who are authorized to exercise such rights or powers or engage in such activities.”

3 CRR-NY 6.2 Application procedure {#sec-3-crr-ny-6.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.2}

In addition to such rules or regulations adopted by the superintendent at the request of the superintendent, any bank, trust company or other person may make a request to the superintendent to promulgate a rule or regulation pursuant to the authority of section 14-g of the Banking Law to enable banks and trust companies to exercise any right, power, privilege, or benefit, to engage in any activity, or enter into any loan, investment or transaction that a national bank may lawfully exercise or into which it may lawfully engage or enter, acting either directly or through a subsidiary or subsidiaries. Such bank, trust company or other person shall submit a written application to the superintendent, which shall include the following information:

(a) a citation to the relevant Federal authority that enables a national bank to exercise the right, power, privilege or benefit, engage in the activity, or enter into the loan, investment or transaction which the superintendent is being requested to extend to banks and trust companies;

(b) an analysis supporting the conclusion that the exercise of such right, power, privilege or benefit, or the engagement in such activity, or the entering into such loan, investment or transaction is:

(1) consistent with the policy of the State of New York as declared in section 10 of the Banking Law and is thereby in the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers; and

(2) necessary to achieve or maintain parity between banks and trust companies and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions;

(c) a statement as to whether the exercise of the right, power, privilege, or benefit, the engaging in the activity, or the entering into of the loan, investment or transaction sought to be extended to banks and trust companies is subject to regulation by any other governmental authority, State or Federal, and a discussion of such regulatory requirements; and

(d) such other information as the superintendent may require.

3 CRR-NY 6.3 Additional insurance powers of banks and trust companies {#sec-3-crr-ny-6.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.3}

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between banks and trust companies and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.

(b) The superintendent hereby finds that title 12, United States Code, section 92, and title 12, Code of Federal Regulations,* section 7.1001, permit national banks located and doing business in places the population of which does not exceed 5,000 persons to sell insurance directly. Such power of national banks to sell insurance directly pursuant to title 12, United States Code,* section 92, was unanimously upheld by the United States Supreme Court in the case of Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 116 S. Ct. 1103 (1996).

(c) Banks and trust companies located and doing business in any place the population of which does not exceed 5,000 inhabitants, as shown by the last preceding decennial census, may act as the agent for any fire, life, or other insurance company authorized by the authorities of the state in which the bank is located to do business in such state, by soliciting and selling insurance and collecting premiums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreed upon between the bank or trust company and the insurance company for which it may act as agent; provided, however, that no such bank or trust company shall in any case assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal; and provided further, that the bank shall not guarantee the truth of any statement made by an assured in filing his or her application for insurance.

(d) This section is applicable to any office of a bank or trust company when the office is located in a place with a population of less than 5,000, even though the principal office of such bank or trust company is located in a place with a population exceeding 5,000.

(e) Banks and trust companies engaging in the business of insurance pursuant to this section shall do so subject to regulation by the department and pursuant to all the insurance laws, rules and regulations, provided, however, that the superintendent, in consultation with the Superintendent of Insurance, may exempt banks or trust companies from any insurance law, rule or regulation which has been preempted under Federal law, rule or regulation for national banks if such law, rule or regulation has been preempted because it applies to insurance activities of banks or trust companies and not to insurance activities of other entities.

(f) Banks and trust companies engaging in the business of insurance pursuant to this section shall comply with the following requirements relating to the sale of insurance.

(1) Except with respect to a credit unemployment insurance policy, group credit life insurance policy, a group credit health, group credit accident or group credit health and accident policy, or similar group credit insurance covering the person of the insured, banks, trust companies and any person soliciting the purchase of or selling insurance on the premises thereof, must disclose or cause to be disclosed in writing, in clear and concise language, to their customers and prospective customers who are solicited therefor that any insurance offered or sold:

(i) is not a deposit;

(ii) is not insured by the Federal Deposit Insurance Corporation; and

(iii) is not guaranteed by the bank or trust company.

(2) Except with respect to a flood insurance policy, or a credit unemployment insurance policy, group credit life insurance policy, a group credit health, group credit accident or group credit health and accident policy, or similar group credit insurance covering the person of the insured, when a customer obtains insurance and credit from a bank or trust company, then the credit and insurance transactions shall be completed through separate documents. The expense of insurance premiums may not be included in the primary credit transaction without the express written consent of the customer.

(3) Banks and trust companies shall not extend credit, lease or sell property of any kind, or furnish any services, or fix or vary the consideration for any of the foregoing, on the condition or requirement that the customer obtain insurance from the bank or trust company, its affiliate or subsidiary, or a particular insurer, agent or broker. This prohibition shall not prevent a bank or trust company from informing a customer that insurance is required in order to obtain a loan or credit, that loan or credit approval is contingent upon the customer's procurement of acceptable insurance, or that insurance is available from the bank or trust company; provided, however, that the bank or trust company shall also inform the customer in writing that his or her choice of insurance provider shall not affect the bank or trust company's credit decision or credit terms in any way. Such disclosure shall be given again prior to or at the time that a bank, trust company or person selling insurance on the premises thereof solicits the purchase of any insurance from a customer who has applied for a loan or extension of credit.

(g)

(1) Preemption of Insurance Law, section 2501. Pursuant to section 2501 of the Insurance Law, a licensed insurance agent or broker who is owned or controlled, directly or indirectly, by a bank shall not negotiate any insurance policy covering real or personal property which is the subject matter of, or security for, a loan or extension of credit made by the bank or by any other bank which is owned or controlled, directly or indirectly, by such bank. For purposes of section 2501 of the Insurance Law, the term bank includes, among other entities, a national bank whose principal office is located in New York.

(2) The superintendent hereby finds that the restrictions of section 2501 of the Insurance Law are preempted with respect to banks and trust companies. The superintendent further finds, that section 2501 of the Insurance Law has been preempted because it applies to insurance activities of banks and trust companies and not to insurance activities of other entities. In support of such findings, the superintendent takes note that the United States District Court for the Western District of New York has ruled in the case of New York Bankers Association, Inc. et al. v. Neil D. Levin, et al., 97-CIV-6423T, March 27, 1998, that section 2501 of the New York State Insurance Law is preempted by title 12, United States Code, section 92, and the superintendent may not impose the restrictions of section 2501 of the Insurance Law against a national bank doing business pursuant to title 12, United States Code, section 92, in a place the population of which does not exceed 5,000 inhabitants.

3 CRR-NY 6.4 Additional insurance powers of savings banks and savings and loan associations {#sec-3-crr-ny-6.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.4}

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between savings banks and savings and loan associations and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions relating to engaging in the insurance business.

(b) Savings banks and savings and loan associations may engage in the insurance business to the extent that banks and trust companies may engage in the insurance business pursuant to section 6.3 of this Part, as such section may be amended from time to time. All conditions, restrictions and disclosure requirements imposed upon banks and trust companies in section 6.3 of this Part with respect to engaging in such insurance business shall apply with equal force and effect to savings banks and savings and loan associations engaging in business pursuant to the authority granted by this section.

3 CRR-NY 6.5 Investments in community development entities or projects {#sec-3-crr-ny-6.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.5}

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York State Banking Law and thereby protects the public interest, including the interest of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between banks and trust companies and national banks with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.

(b) The superintendent hereby finds that title 12, United States Code,* sections 93a, 481 and 1818, 1994 edition, and title 12, Code of Federal Regulations,* part 24, permits national banks to make investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income areas or individuals, such as by providing housing, services or jobs.

(c) A bank or trust company may make equity investments in community development entities or projects provided that any such entity or project primarily serves a public purpose. An entity or project will be deemed to serve a public purpose if it primarily benefits low- and moderate-income individuals, low-and moderate-income areas, or other areas targeted for redevelopment by the local, State, tribal or Federal government (including Federal enterprise communities and Federal empowerment zones) by providing or supporting one or more of the following activities:

(1) affordable housing, community services, or permanent jobs for low- and moderate- income individuals;

(2) equity or debt financing for small businesses;

(3) area revitalization or stabilization; or

(4) other activities, services, or facilities that primarily promote the public welfare.

(d) In addition, the bank or trust company should demonstrate that is not reasonably practicable to obtain other private market financing for the proposed investment, the extent to which the investment benefits communities otherwise served by the bank and non-bank community support for or participation in the investment. Community support or participation may be demonstrated in a variety of ways, including but not limited to:

(1) in the case of an investment in a CD entity with a board of directors, representation on the board of directors by non-bank community representatives with expertise relevant to the proposed investment;

(2) establishment of an advisory board for the bank's community development activities that includes non-bank community representatives with expertise relevant to the proposed investment;

(3) formation of a formal business relationship with a community-based organization in connection with the proposed investment;

(4) contractual agreements with community partners to provide services in connection with the proposed investment;

(5) joint ventures with local small businesses in the proposed investment; and

(6) financing for the proposed investment from the public sector or community development organizations.

(e) A bank or trust company's aggregate outstanding investments under this Part may not exceed five percent of its capital and surplus, unless the bank or trust company is at least adequately capitalized and the Department of Financial Services determines, by written approval of the bank or trust company's proposed investment(s), that a higher amount will pose no significant risk. In no case may a bank or trust company's aggregate outstanding investments under this Part exceed 10 percent of its capital and surplus. A bank or trust company may not make an investment under this Part that would expose the bank or trust company to unlimited liability.

(f) A bank or trust company shall be eligible to use a self-certification process if it:

(1) is well capitalized within the meaning of applicable Federal regulations;

(2) has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System and is not the subject of any regulatory orders or agreements; and

(3) has a Community Reinvestment Act rating of at least “satisfactory.”

A bank or trust company that is adequately capitalized and that has a composite rating of 3 with demonstrable improving trends may seek written permission from the superintendent to self- certify investments made under this Part.

(g) An eligible bank or trust company may self-certify the following investments without prior notice to or approval by the superintendent:

(1) investments in an entity that finances, acquires, develops, rehabilitates, manages, sells, or rents housing primarily for low- and moderate-income individuals;

(2) investments that finance small businesses (including equity or debt financing and investments in an entity that provides loan guarantees) that are located in low- or moderate- income areas or that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals;

(3) investments that provide credit counseling, job training, community development research, and similar technical assistance services for non-profit community development organizations, low- and moderate-income individuals or areas, small businesses located in low- or moderate-income areas or that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals;

(4) investments in an entity that acquires, develops, rehabilitates, manages, sells, or rents commercial or industrial property that is located in a low-or moderate-income area and occupied primarily by small businesses, or that is occupied primarily by small businesses that produce or retain permanent jobs, the majority of which are held by low- and moderate-income individuals;

(5) investments as a limited partner, or as a partner in an entity that is itself a limited partner in a project with a general partner that is, or is primarily owned and operated by, a 26 U.S.C. 501(c)(3) or (4) non-profit corporation and that qualifies for the Federal low-income housing tax credit. (This publication, the 1994 edition, published in 1995, may be viewed at the New York State Department of Financial Services, located at New York, NY 10004 and the Department of State located at Albany, NY 12231. The United States Code is published by the Office of Law Revision Counsel of the House of Representatives. This publication is for sale by the U.S. Government Printing Office, Superintendent of Documents, Mail Stop SSOP, Washington, DC 20402-9328);

(6) investments in low- or moderate-income areas that produce or retain permanent jobs, the majority of which are held by low- and moderate- income individuals; and

(7) investments in a banking organization that has been identified by the superintendent as a banking organization with a community development focus or in a national bank that has one or more offices or branches in New York and that has been approved by the OCC as a national bank with a community development focus.

(h) An otherwise eligible bank or trust company may not self-certify an investment if:

(1) the investment involves properties carried on the bank's or trust company's books as “other real estate owned;” or

(2) more than 25 percent of the investment funds projects in a State or metropolitan area other than the states or metropolitan areas in which the bank or trust company maintains its main office or branches; or

(3) the department determines, in published guidance, that the investment is inappropriate for self-certification.

(i) To self-certify an investment, an eligible bank or trust company shall submit to the superintendent a notice of self-certification within 10 days after it makes the investment. The notice shall include:

(1) the name of the entity or project in which the bank or trust company has invested and the date on which the investment was made;

(2) the type of investment (equity or debt), the eligible investment activity that the investment supports, and a brief description of the particular investment;

(3) the amount of the bank or trust company's total investment in the entity or project and the bank or trust company's aggregate outstanding investments under this Part, including commitments and the investment being self-certified;

(4) the percentage of the bank or trust company's capital and surplus represented by the bank or trust company's aggregate outstanding investments under this Part, including commitments and the investment being self-certified;

(5) a statement certifying compliance with subdivisions (c) and (d) of this section; and

(6) if necessary, a statement certifying that no more than 25 percent of the investment funds projects in a state or metropolitan area other than the states or metropolitan areas in which the bank or trust company maintains its main office or branches.

(j) If a bank or trust company seeking to make an investment may not self-certify the investment, it shall submit to the Superintendent a request for prior approval to make the investment, including the following information:

(1) the name of the entity or project in which the bank or trust company proposed to invest and the proposed investment date;

(2) the type of investment (equity or debt), the eligible investment activity that the investment supports, and a description of the particular investment;

(3) the amount of the bank or trust company's investment in the entity or project, and the bank or trust company's aggregate outstanding investments under this Part, including commitments and the investment being proposed;

(5) a statement certifying compliance with subdivisions (c) and (d) of this section;

(k) In reviewing a proposal, the department considers the following factors and other available information:

(1) whether the investment satisfies the requirements of subdivisions (c) and (d) of this section;

(2) whether the investment is consistent with the safe and sound operation of the bank or trust company; and

(3) whether the investment is consistent with the requirements of this Part and the Banking Department's policies.

(l) Unless otherwise notified in writing by the superintendent, the proposed investment shall be deemed approved 30 calendar days from the date on which the department receives the bank or trust company's investment proposal. The department, by notifying the bank or trust company, may extend its period for reviewing the investment proposal. If so notified, the bank or trust company may make the investment only with the department's written approval. The department may impose one or more conditions in connection with its approval of an investment under this Part. All approvals are subject to the condition that a bank or trust company must conduct the approved activity in a manner consistent with any published guidance issued by the department regarding the activity.

3 CRR-NY 6.6 Exemption from requirements of Banking Law, section 7010 concerning mandated number of meetings of boards of directors and executive committees of banks and trust companies {#sec-3-crr-ny-6.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.6}

(b) The superintendent hereby finds that section 7010 of the New York Banking Law mandates for each State-chartered bank and trust company that its board of directors must hold a regular monthly meeting at least 10 times a year and, during any three consecutive calendar months, the board must meet at least twice, and that its executive committee shall meet at least once in each 30-day period during which the board does not meet.

(c) The superintendent hereby finds that there are no provisions contained in Subchapter III —Directors, title 12, United States Code, sections 71-78, which require a national bank's board of directors to hold a specified number of meetings per annum, or which require executive committee meetings in the absence of a board meeting.

(d) The superintendent hereby finds that title 12, Code of Federal Regulations, section 7.2000(b) provides that to the extent not inconsistent with applicable Federal banking statutes or regulations, or bank safety and soundness, a national bank may elect to follow the corporate governance procedures of the law of the state in which the main office of the bank is located, the law of the state in which the holding company of the bank is incorporated, the Delaware General Corporation Law, Delaware Code Ann. title 8 (1991, as amended 1994, and as amended thereafter) or the Model Business Corporation Act (1984, as amended 1994, as amended thereafter) and that such national bank shall designate in its bylaws the body of law selected for its corporate governance procedures.

(e) The superintendent hereby finds that certain national banks which maintain their main offices in New York have not elected to follow the corporate governance procedures of New York, and finds further that the lack of any mandate to do so together act to place State-chartered banks and trust companies at a competitive disadvantage in finding qualified individuals to serve on their boards of directors.

(f) The superintendent hereby finds that if a State-chartered bank or trust company is well capitalized (as defined in 12 C.F.R. section 325.103[b][1]), well managed (as defined in 12 C.F.R. section 362.17[e]) or, in the case of a non-depository institution, is in satisfactory condition as determined upon examination by the superintendent, and has been in existence for more than five years, unless the superintendent, in his/her discretion, provides otherwise, its board of directors shall hold a regular meeting not less than six times a year, provided that during any three consecutive calendar months the board shall meet at least once, and its executive committee shall not be required to meet at least once in each 30-day period during which the board does not meet.

(g) The superintendent hereby finds that in circumstances where one or more of the required criteria set forth in subdivision (f) of this section are not present to enable a board of directors of a bank to conduct a minimum of six regular meetings, the board shall conduct no less than 10 regular meetings, and the executive committee shall meet at least once in each 30-day period during which the board does not meet, unless otherwise permitted by the superintendent upon application; and in so acting the superintendent shall take into account all of the circumstances surrounding such application, including the principles of safety and soundness.

(h) The superintendent hereby determines that qualified State-chartered banks and trust companies are hereby exempt from the requirement contained in section 7010 of the Banking Law which requires that for each State-chartered bank and trust company its board of directors shall hold a regular monthly meeting at least 10 times a year and its executive committee shall meet at least once in each 30-day period during which the board does not meet.

3 CRR-NY 6.7 Additional authority of banks and trust companies to underwrite and deal in certain securities, including municipal bonds {#sec-3-crr-ny-6.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.7}

(b) The superintendent hereby finds that section 24 (seventh) of title 12, United States Code and part 1 of title 12, Code of Federal Regulations permit a national bank to:

(1) deal in, underwrite, purchase and sell type I securities (including, in the case of a well capitalized national bank, municipal bonds as defined therein) in an amount not limited to a specified percentage of the bank's capital and surplus; and

(2) deal in, underwrite, purchase and sell type II securities, provided the aggregated par value of such securities issued by any one obligor held by the bank does not exceed 10 percent of the bank's capital and surplus.

(1) The term type I securities shall have the same meaning as in title 12, Code of Federal Regulations, section 1.2(j), except that it shall include municipal bonds only if a bank or trust company is well capitalized.

(2) The term type II securities shall have the same meaning as in title 12, Code of Federal Regulations, section 1.2(k).

(3) The term capital stock, surplus fund and undivided profits shall have the same meaning as in Banking Law, section 103.

(4) The term municipal bonds shall have the same meaning as in title 12, Code of Federal Regulations, section 1.2(g).

(5) The term well capitalized shall have the same meaning as in part 208, section 208.43(b)(1) of title 12, Code of Federal Regulations, in the case of a bank or trust company that is a member of the Federal Reserve System, and the same meaning as in part 325, section 325.103(b)(1) of title 12, Code of Federal Regulations, in the case of a bank or trust company that is not a member of the Federal Reserve System; provided, however, that in no event will a bank or trust company be considered well capitalized if it is subject to any written agreement, order, capital directive or prompt corrective action directive issued by the superintendent to meet and maintain a specific capital level for any capital measure.

(d)

(1) A bank or trust company may deal in, underwrite, purchase and sell type I securities for its own account. The amount of type I securities that the bank or trust company may deal in, underwrite, purchase and sell is not limited to a specified percentage of its capital stock, surplus fund and undivided profits.

(2) A bank or trust company may deal in, underwrite, purchase and sell type II securities for its own account. The aggregate par value of type II securities issued by any one obligor held by the bank or trust company may not exceed 10 percent of its capital stock, surplus fund and undivided profits.

(e) The authority provided in subdivision (d) of this section shall not limit any other authority contained in the Banking Law or regulations.

(f) Investments made under subdivision (d) of this section shall not be taken into account in computing the limitation on loans to one person contained in section 103 of the Banking Law.

3 CRR-NY 6.8 Overdraft protection charges {#sec-3-crr-ny-6.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.8}

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between banks and trust companies and national banks, and between savings banks and savings and loan associations and Federal savings associations, with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.

(b) The superintendent hereby finds that title 12, United States Code, section 24 (seventh) permits national banks to lend money. Title 12, United States Code, section 1464 permits Federal savings associations to accept deposits.

(c) The superintendent hereby finds that title 12, Code of Federal Regulations, section 7.4002 provides that national banks may impose charges and fees on their customers, and title 12, Code of Federal Regulations, section 557.12(f) allows Federal savings associations to impose charges and fees regardless of any State laws. The Office of the Comptroller of the Currency and the Office of Thrift Supervision, in interpreting these sections, permit national banks and Federal savings associations, respectively, to impose greater daily charges in connection with overdraft protection programs than is otherwise allowed under New York Banking Law for banks and trust companies, savings banks and savings and loan associations. (See Joint Guidance on Overdraft Protection Programs, 70 Federal Register 9127 [February 24, 2005], applicable to banks and trust companies and Guidance on Overdraft Protection Programs, 70 Federal Register 8428 [February 18, 2005], applicable to savings banks and savings and loan associations.)

(d) Notwithstanding any other provision of law or regulation, State-chartered banks and trust companies, and savings banks and savings and loan associations may impose charges, in addition to the charge provided for in section 32.1(a) of this Title, for paying or accepting checks or other written orders drawn on, or effectuating electronic transactions from, accounts containing insufficient funds in cases in which the drawer of the check or other written order, or the account holder seeking to effectuate the electronic transaction, does not have a written agreement for an overdraft line of credit pursuant to section 108(5), 235(8-b) or 380(2) of the Banking Law to the same extent, and subject to the same conditions, as national banks and Federal savings associations, respectively.

(e) Commencing no later than 90 days after the effective date of this subdivision, State-chartered banks and trust companies, savings banks, and savings and loan associations shall provide a separate clear and conspicuous notice to a customer at the time he or she opens an account or to a current accountholder at least once if such account will be subject to charges for covering overdrafts as described in subdivision (d) of this section. Such notice shall provide clear disclosure and explanation of the parameters, costs and limitations of overdraft protection, including the charges which may be incurred by the customer and how such charges would be calculated.

3 CRR-NY 6.9 Merger of a bank or trust company with a nonbank affiliate {#sec-3-crr-ny-6.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.9}

(b) The superintendent hereby finds that title 12, United States Code, section 215a-3 and title 12, Code of Federal Regulations, section 5.33(g)(4) permit a national bank to merge with one or more nonbank affiliates of such bank.

For purposes of this section:

(1) Banking institution means a banking organization as defined in section 2(11) of the Banking Law, national bank, Federal savings bank, Federal savings and loan association, Federal credit union, foreign banking corporation, or any bank, trust company, savings bank, savings and loan association or credit union organized under the laws of any other state.

(2) Company means a corporation, limited liability company, partnership, business trust, association or similar organization.

(3) Control shall be deemed to exist when:

(i) one company or shareholder, directly or indirectly, or acting through one or more other persons, owns, controls, or has power to vote 25 percent or more of any class of voting securities of the other company; or

(ii) one company or shareholder controls in any manner the election of a majority of the directors or trustees of the other company;

provided, in either case, that no company shall be deemed to own or control another company by virtue of its ownership or control of shares in a fiduciary capacity.

(4) Nonbank affiliate of a bank or trust company means any company (other than a banking institution) that controls, is controlled by, or is under common control with the bank or trust company.

(5) Receiving corporation means the bank or trust company which is to receive into itself the merging affiliate or affiliates.

(d)

(1) With the approval of the superintendent, a bank or trust company may merge with one or more of its nonbank affiliates, with the bank or trust company as the receiving corporation, in accordance with the provisions of this section, provided that the law of the state or other jurisdiction under which the nonbank affiliate is organized allows the nonbank affiliate to engage in such mergers. In determining whether to approve the merger, the superintendent shall consider the purpose of the transaction, its impact the safety and soundness of the bank or trust company, and any effect on the bank or trust company's customers, and may deny the merger if it would have a negative effect in any such respect. The transaction may also be subject to approval by the Federal Deposit Insurance Corporation under the Bank Merger Act, 12 U.S.C. 1828(c).

(2) A bank or trust company entering into the merger shall be subject to the requirements and follow the procedures set forth in section 601 of the Banking Law and the regulations of the department thereunder as if the nonbank affiliate were a bank or trust company, except as otherwise provided herein.

(3) A nonbank affiliate entering into the merger shall follow the procedures for such mergers set out in the law of the state or other jurisdiction under which the nonbank affiliate is organized.

(4) The rights of dissenting shareholders and appraisal of dissenters' shares of stock in the nonbank affiliate entering into the merger shall be determined in the manner prescribed by the law of the state or other jurisdiction under which the nonbank affiliate is organized.

(5) The corporate existence of each entity participating in the merger shall be continued in the receiving corporation, and all the rights, franchises, property, appointments, liabilities and other interest of the participating entities shall be transferred to the receiving corporation, as set forth in section 602 of the Banking Law, in the same manner and to the same extent as in a merger between two corporations subject to the provisions of Article 3 of this Chapter, as if the nonbank affiliate were a bank or trust company.

(e) A merger authorized under subdivision (d) of this section shall not have the effect of enabling a bank or trust company to exercise any right, power, privilege or benefit that it could not lawfully exercise immediately prior to such merger.

(f) The authority provided by subdivision (d) of this section shall not limit any other authority contained in the Banking Law or regulations.

3 CRR-NY 6.10 Investment in a public deposit bank subsidiary by a savings bank or savings and loan association {#sec-3-crr-ny-6.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 6.10}

(a) The superintendent hereby finds that the promulgation of this section is consistent with the policy of the State of New York as declared in section 10 of the New York Banking Law and thereby protects the public interest, including the interests of depositors, creditors, shareholders, stockholders and consumers and is necessary to achieve or maintain parity between savings banks and savings and loan associations (hereafter thrift institutions) and Federal savings associations with respect to rights, powers, privileges, benefits, activities, loans, investments or transactions.

(b) The superintendent hereby finds that title 12, Code of Federal Regulations, section 559(3)(3) and (g), promulgated pursuant to title 12 United States Code, section 1462 et seq., permit a Federal savings association to invest without limitation as to amount in the shares of a subsidiary which is an insured depository institution, including an insured depository institution which may accept deposits of public moneys.

(c) For purposes of this section, public deposit bank subsidiary means a bank as that term is defined in title 12 United States Code, section 1841(c)(1):

(1) more than 50 percent of the voting shares of which are owned, directly or indirectly, by the thrift institution with no other person or entity exercising effective operating control; and

(2) which accepts only deposits of public moneys and the other types of deposits as enumerated in title 12 United States Code, section 1841(a)(5)(E)(ii).

(d) Subject to receipt of any required regulatory approvals, a thrift institution may invest in a public deposit bank subsidiary without limitation as to amount; provided, however, that if such investment would cause the aggregate amount invested by such thrift institution in such subsidiary to exceed one per centum of the assets of such thrift institution, it may do so upon 30 days prior written notice to the superintendent unless the superintendent notifies the thrift institution within such 30-day period that:

(1) he or she requires additional time or information in connection with the proposed investment; or

(2) the proposed investment may not be made. The proposed investment must be permitted by the organization certificate of the public deposit bank subsidiary.

Part 7 SUPERINTENDENT’S REGULATIONS: INFORMATION SUBJECT TO CONFIDENTIAL TREATMENT UNDER SECTION 36.10 OF THE BANKING LAW

3 CRR-NY 7.1 Definitions {#sec-3-crr-ny-7.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 7.1}

(a) The term confidential supervisory information shall mean any information that is covered by section 36.10 of the Banking Law.

(b) The term independent auditor shall mean a certified public accountant or a firm lawfully engaged in the practice of public accountancy retained or engaged by a regulated entity to provide accounting or auditing services to such regulated entity.

(c) The term legal counsel shall mean an external attorney and counselor at law admitted to practice in any of the courts of record of the United States or a law firm retained to provide legal representation to the regulated entity.

(d) The term regulated entity shall mean an entity or individual licensed, chartered, authorized, registered, or otherwise subject to supervision by the department under the Banking Law.

(e) The term person shall include any individual, partnership, corporation, trust, association, or any other form of entity, as well as any Federal, State, or local government or any agency, instrumentality or political subdivision thereof.

3 CRR-NY 7.2 Disclosure of confidential supervisory information {#sec-3-crr-ny-7.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 7.2}

(a) General rule.

Except as provided in section 36.10 of the Banking Law, or subdivisions (b), (c) or (d) of this section, a regulated entity shall not disclose any confidential supervisory information to any person without the prior written approval of the department and subject to any terms and conditions that are imposed by the department on any such disclosure.

(b) Limited exception to prior written approval requirement.

Notwithstanding the requirements of subdivision (a) of this section, without obtaining the prior written approval of the department, a regulated entity may disclose confidential supervisory information, which is lawfully in the possession of such regulated entity, to legal counsel or an independent auditor that has been retained or engaged by such regulated entity pursuant to an engagement letter or written agreement, provided that such legal counsel or an independent auditor has in writing:

(1) acknowledged that such disclosed information is confidential supervisory information under section 36.10 of the Banking Law; and

(2) agreed to abide by, the prohibition on the dissemination of confidential supervisory information contained in subdivision (a) of this section.

A regulated entity may disclose confidential supervisory information, which is lawfully in the possession of such regulated entity, to independent auditors as part of the independent auditor’s acceptance of a new client engagement or the continuation of an existing annual audit engagement; provided that the regulated entity receives a written acknowledgement from the independent auditor that such disclosed information is confidential supervisory information under section 36.10 of the Banking Law, and the independent auditor agrees in writing to abide by the prohibition on the dissemination of confidential supervisory information contained in subdivision (a) of this section.

(d) Exception for affiliates.

When necessary and appropriate for business purposes, a regulated entity may disclose confidential supervisory information, which is lawfully in the possession of such regulated entity, to its affiliates and the directors, officers and employees thereof on the condition that such persons maintain the confidentiality of such information.

(e) Duty when served.

Any regulated entity, any affiliate, legal counsel, independent auditor or any other person served with a request, subpoena, order, motion to compel, or other judicial or administrative process to provide confidential supervisory information shall:

(1) immediately notify and inform the Office of the General Counsel of the department of all relevant facts, including the specific documents and information requested, in a timely manner so that the department will be able to intervene in the judicial, administrative, or other action if appropriate;

(2) inform the requester of the substance of this Part and the obligation to maintain the confidentiality of the confidential supervisory information described in subdivision (a) of this section; and

(3) at the appropriate time, inform the court, the tribunal, or other issuing authority, of the substance of section 36.10 of the Banking Law and this Part.

(f) Actions of the department following notice of service.

Following receipt of notice pursuant to subdivision (e) of this section, the department may direct the requester to intervene in the judicial, administrative, or other action, take all reasonable efforts to have the compulsory process withdrawn, register other appropriate objections, or take other action.

(g) Disclosure to government agencies.

Upon written request to and approval by both the Senior Deputy Superintendent for Banking (or his or her delegate) and the General Counsel (or his or her delegate), when not prohibited by law, confidential supervisory information relating to a regulated entity may be made available to a State or Federal supervisory agency having direct supervisory authority over such regulated entity.

(h) Intention of the department not to waive rights.

The possession of confidential supervisory information by any regulated entity, any affiliate, legal counsel, independent auditor or any other person does not constitute a waiver by the department of its right to control, or impose limitations on, the subsequent use and dissemination of such confidential supervisory information.

Part 8 SUPERINTENDENT’S REGULATIONS: BANKING DEVELOPMENT DISTRICTS

3 CRR-NY 8.1 Explanation; authority {#sec-3-crr-ny-8.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.1}

The stated purpose of chapter 204 of the Laws of 1997, as amended by chapter 526 of the Laws of 1998, is to encourage the establishment of bank branches in specially designated geographic locations, known as “banking development districts,” where there is a demonstrated need for banking services. The establishment of a new branch by a bank, trust company, national bank, or, on and after January 1, 1999, by a savings bank, savings and loan association, Federal savings and loan association or Federal savings bank within such a banking development district should enhance access by consumers to banking services and promote local economic development. Underserved consumers may reside in urban or rural areas which may have different income levels, demographic characteristics and population densities. Regardless of an area's characteristics, it is anticipated that greater access to banking services will encourage the area's residents, who may have no banking relationships, to become part of the financial mainstream. It is further anticipated that the establishment of a bank branch will provide a foundation to stimulate the local economy by enhancing access to capital for local businesses. This will promote long-term economic development, foster job creation, and promote community stabilization and revitalization. As provided in section 96-d(5) of the Banking Law, savings banks and savings and loan associations authorized to participate hereunder, are further authorized to furnish security for any such deposits as they may receive under the banking developments district programs in the manner and to the extent authorized in the case of commercial banks and trust companies under such program.

3 CRR-NY 8.2 Definitions {#sec-3-crr-ny-8.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.2}

For purposes of this Part:

(a) Bank shall mean a state commercial bank or trust company, a national bank, savings bank, savings and loan association, Federal savings and loan association or Federal savings bank.

(b) Alternative providers of banking services shall mean licensed check cashers, licensed money transmitters, licensed lenders and licensed mortgage bankers.

(c) Banking services shall include, but not be limited to, deposit-taking, check-cashing, sale of money orders, origination of residential or commercial mortgages, consumer loans, and commercial loans.

(d) Branch shall mean a full-service branch.

3 CRR-NY 8.3 Criteria for approval {#sec-3-crr-ny-8.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.3}

In determining whether to approve an application for the designation of a banking development district, the superintendent shall take into consideration the following criteria:

(a) the location, number, and proximity to applicant's proposed site of sites where banking services are available within the proposed banking development district;

(b) the location, number, and proximity to applicant's proposed site of sites where banking services are available within a reasonable distance of the proposed banking development district;

(d) the economic viability and local credit needs of the community within the proposed banking development district;

(e) the existing commercial development within the proposed banking development district;

(f) the impact additional banking services would have on potential economic development in the proposed banking development district;

(g) the physical size of the proposed banking development district;

(h) the nature of the community to be served, including, but not limited to, the demographic and economic characteristics of the proposed banking development district;

(i) the financial condition and managerial ability of the applicant bank as determined by the appropriate bank regulator or other reliable sources;

(j) compliance with all other applicable branching statutes and regulations;

(k) history of prolonged lack of service to the proposed banking development district; and

(l) such other criteria which the superintendent, in his or her discretion, shall identify as appropriate.

3 CRR-NY 8.4 Required information that must be included in an application to the superintendent for designation of a proposed banking development district {#sec-3-crr-ny-8.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.4}

A local government, in conjunction with a bank may submit an application to the superintendent for the designation of a proposed banking development district. The local government that applies for banking development district designation may be different from the governing board of the municipal corporation which adopts a local law, ordinance or resolution implementing section 105 of the New York Finance Law and section 485-f of the New York Real Property Tax Law. The application shall include the following:

(a) identification of the political subdivision in the State, whether county, town, city, or village, which shall constitute the proposed banking development district;

(b) in those instances in which the proposed banking development district is a portion of a political subdivision, identification of the census tracts as well as street boundaries which shall constitute the proposed banking development district;

(d) characterization of the proposed banking development district as urban or rural as such terms are defined by the United States Census Bureau;

(e) the number of residents of the proposed banking development district;

(f) distribution of banking services—provide, with regard to the following geographic areas:

(1) within the proposed banking development district;

(2) within the entire political subdivision if different from paragraph (1) of this subdivision; and

(3) within a reasonable distance of the proposed banking development district, such distance to be supported by a narrative justification:

(i) the identification and location of all full-service branches of all banking institutions;

(ii) the identification and location of all sites which offer both deposit-taking ATMs and ALMs;

(iii) the identification and location of all alternative providers of banking services;

(iv) the identification and location of deposit-taking ATMs (other than those sited at full-service branches); and

(v) the identification and location of non-deposit-taking ATMs (other than those sited at full-service branches);

(g) income measures, including, but not limited to, per capita annual income and median household annual income of the proposed banking development district utilizing either the most recent United States Census Bureau data or the most recent Department of Housing and Urban Development (“HUD”) annual income estimates;

(h) other economic indicators, where readily available, including, but not limited to, unemployment data, percentage of the population at or below the poverty level, percentage of the population at or below 200 percent of the poverty level, and percentage of the population receiving public assistance within the proposed banking development district. Unemployment data may be submitted for a political subdivision in which the proposed banking development district is located;

(i) description of the public transportation systems and major roadways, if any, in the proposed banking development district. Maps and/or diagrams may be included in the description;

(j) narrative establishing that a branch would be economically viable within the proposed banking development district if the statutory economic incentives are provided;

(k) specification of whether the proposed banking development district, or any portion thereof, lies within an area which has been designated as a New York State Empire Zone or Enterprise Community or Federal Empowerment Zone or has received similar designation from any Federal, State, or local government entity;

(l) a narrative description of the natural and man-made geographic barriers, if any, that may impede physical access to existing banking services;

(m) a narrative description of the distances and travel times from the applicant's proposed site to banking institutions and alternative providers of banking services both within the proposed banking development district and within the reasonable distance specified in paragraph (f)(3) of this section;

(n) affirmation by the applicant bank that it will not establish the proposed banking development district branch with the intention of closing or relocating any existing nearby branch or branches; and

(o) such other documents or information as the superintendent, in his or her discretion, may deem necessary.

3 CRR-NY 8.5 Optional information that may be included in an application to the superintendent for designation of a proposed banking development district {#sec-3-crr-ny-8.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.5}

An application for designation of a banking development district may also (and if the superintendent shall deem such information necessary to a determination, such application shall) include the following:

(a) a narrative description of the population demographics including, but not limited to, the following:

(1) percentage of population age 64 and over;

(2) percentage of population that is non-English speaking;

(3) percentage of population consisting of minorities; and

(4) percentage of population that is disabled;

(b) a narrative description demonstrating coordination of plans for the establishment of the proposed banking development district with other community initiatives;

(c) a narrative description of banking services which are available within the proposed banking development district or a reasonable distance as specified in section 8.4(f)(3) of this Part;

(d) a narrative description of banking services which are not available within the proposed banking development district or a reasonable distance as specified in section 8.4(f)(3) of this Part;

(e) a narrative description of local commercial establishments, including, but not limited to, the number of small, medium, and large businesses located in the proposed banking development district;

(f) a narrative description of significant recent local business developments, including, but not limited to, large corporate restructurings, plant closings, or recent or proposed business openings or expansions; and

(g) indications of community support or opposition for the application, as evidenced by letters from entities such as local chambers of commerce, local businesses, community-based organizations, non-profit organizations, government officials, or community residents.

3 CRR-NY 8.6 Other requirements {#sec-3-crr-ny-8.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 8.6}

The requirements of this Part are in addition to any requirements established by the Department of Taxation and Finance and the New York State Comptroller with respect to the deposit of public funds and the New York State Board of Real Property Services with respect to real property tax exemptions that may be available to banks within a banking development district.

Part 9 SUPERINTENDENT’S REGULATIONS: BASIC BANKING ACCOUNTS

3 CRR-NY 9.1 Statement of policy {#sec-3-crr-ny-9.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.1}

In enacting section three of chapter one of the Laws of 1994, the Legislature has found and declared that certain consumers residing in this State may be unable to afford, without undue financial hardship, the cost of maintaining a consumer transaction account at a banking institution located in this State. Consequently, as provided in section 14-f of the Banking Law, it is the policy of this State that, consistent with safe and sound banking practices, banking institutions shall make available lower cost banking services to consumers, provided that no banking institution shall be required to offer lower cost banking services at a cost to account holders which is less than the actual cost to the banking institution to provide such services.

3 CRR-NY 9.2 Definitions {#sec-3-crr-ny-9.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.2}

For purposes of this Part:

(a) The term banking institution shall mean any bank, trust company, savings bank, savings and loan association, or credit union, or branch of a foreign banking corporation the deposits of which are insured by the Federal Deposit Insurance Corporation, which institution is incorporated, chartered, organized or licensed under the laws of this State or any other state or the United States, and which, in the ordinary course of its business, offers consumer transaction accounts to the general public or, in the case of a credit union, to its members.

(b) The term consumer transaction account shall mean a demand deposit account, negotiable order of withdrawal account, share draft account or similar account used primarily for personal, family or household purposes.

(c) The term periodic cycle shall mean the period covered by the banking institution's regular consumer transaction account statement, which shall be from 28 to 31 days.

(d) The term withdrawal transaction shall mean a withdrawal from a consumer transaction account by means of a withdrawal slip, check, negotiable order of withdrawal or draft or through the use of an electronic facility operated by the banking institution.

3 CRR-NY 9.3 Required features {#sec-3-crr-ny-9.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.3}

(a) Subject to the provisions of section 9.6 of this Part, each banking institution shall offer consumer transaction accounts with the following features:

(1) The account shall be identified as a "basic banking account" or, in the case of credit unions, the term "basic share draft account" shall be used.

(2) The initial deposit amount required to open the account shall not exceed $25.

(3) The minimum balance, including any average balance, required to maintain such account shall not exceed $.01.

(4) The charge per periodic cycle for the maintenance of such account shall not exceed $3.

(5) The minimum number of withdrawal transactions which may be made during any periodic cycle at no additional charge to the account holder must be at least eight for account holders under 65 years of age, and at least 12 withdrawal transactions for account holders 65 years of age or older. For purposes of this paragraph, a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution.

(6) Except as provided in paragraph (7) of this subdivision, an account holder shall not be restricted as to the number of deposits which may be made to the account without incurring any additional charge.

(7) The banking institution may charge account holders for transactions at electronic facilities which are not operated by the account holder's banking institution as well as other fees and charges for specific banking services not specified in this Part to the same extent that it charges its regular consumer transaction account holders for such services.

(8) Every periodic statement issued for a basic banking account shall contain, either on the statement or on a separate insert, a conspicuous notice identifying the maximum number of withdrawals which are permitted during each periodic cycle without the imposition of any additional charge, the consequences of exceeding such maximum and the fee, if any, for the use of electronic facilities which are not operated by the account holder's banking institution. Such notice shall in addition indicate that a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution which is not necessarily the date that the account holder initiated the transaction.

(b) With regard to those features of the account which are not set forth in subdivision (a) of this section, a basic banking account shall be offered subject to the same rules, conditions and terms which are normally applicable to other consumer transaction accounts offered by the banking institution.

3 CRR-NY 9.4 Conditions for opening or maintaining a basic banking account {#sec-3-crr-ny-9.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.4}

A banking institution may require the following as conditions for opening or maintaining a basic banking account:

(a) that the applicant provide the same information and identification required as in the case of other consumer transaction accounts at that banking institution;

(b) that the account holder be a resident of this State;

(c) that direct deposit to the banking institution be made of recurring payments such as, but not limited to, social security, wage, or pension payments where direct deposit is available to the account holder; and

(d) that the account holder may not maintain any transaction account other than the basic banking account; provided however, that an account holder may continue to maintain one or more other transaction accounts for a reasonable period of time, which shall not be less than 60 days from the date that the basic banking account is opened. This prohibition shall not apply to any transaction account which is a burial fund account that is separately identifiable and monitored as a burial fund account or where the burial fund account is separately identifiable as a contractual funeral agreement pursuant to the terms and conditions of 42 USC 1382b or article 5 of New York's Social Services Law and any regulations promulgated thereunder.

3 CRR-NY 9.5 Required disclosures {#sec-3-crr-ny-9.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.5}

Prior to establishing a basic banking account for an account holder, the banking institution shall furnish a written disclosure to each account holder describing the following features of the basic banking account:

(a) the initial deposit amount, if any, required to open the account;

(b) the minimum balance, if any, required to maintain such account;

(d) the maximum number of withdrawal transactions during any periodic cycle which the account holder may make at no additional charge;

(e) that an account holder may make an unlimited number of deposits without incurring any additional charge;

(f) any charge imposed on transactions made at an electronic facility not operated by the account holder's banking institution;

(g) that a withdrawal shall be deemed to be made when recorded on the books of the account holder's banking institution which is not necessarily the date that the account holder initiated the transaction;

(h) such other fees and charges as may be imposed on the account, e.g., charges levied for dishonored items, certification of checks and check printing; and

(i) such other disclosures as are customarily given in connection with the opening of other consumer transaction accounts offered by the banking institution.

3 CRR-NY 9.6 Relationship to convenience accounts {#sec-3-crr-ny-9.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.6}

If a basic banking account is structured as a convenience account pursuant to the terms and conditions set forth in Part 15 of the General Regulations of the Banking Board, then the requirements set forth in section 14-f of the Banking Law shall be applicable only to the owner of the convenience account.

3 CRR-NY 9.7 Alternative accounts and banking services {#sec-3-crr-ny-9.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.7}

(a) A banking institution may submit an application to the superintendent for approval of an alternative account or other banking services which are at least as advantageous to consumers as the basic banking account.

(b) In the case of alternative accounts, each application for approval shall include, as applicable:

(1) the initial deposit amount, if any, necessary to open the account;

(2) the minimum balance, if any, required to maintain the account;

(3) the average daily balance, if any, required to maintain the account;

(4) the charge per periodic cycle to maintain the account;

(5) the number of allowable withdrawals per periodic cycle without additional charge;

(6) the per-transaction charge per month for transactions in excess of those specified above;

(7) the length of the periodic cycle of the account;

(8) any other fees which may be charged to the account holder; and

(9) such other information and documentation as shall be required by the superintendent.

(c) In the case of other alternative banking services, each application for approval shall include a complete description of such other banking service to be offered by the banking institution.

(d) In determining whether to approve an alternative account or service, the superintendent shall consider whether the account or service meets the stated purpose of Banking Law, section 14-f to make lower cost banking services available to consumers.

(e) Provided that the banking institution has submitted an application pursuant to this section prior to the effective date of this Part, any alternative account or other banking service shall be deemed to be in compliance with section 14-f of the Banking Law and this Part pending a written determination to the contrary by the department. Any banking institution which receives such a determination shall have 60 days in which to demonstrate compliance with section 14-f of the Banking Law and this Part.

3 CRR-NY 9.8 Cost of the basic banking account {#sec-3-crr-ny-9.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 9.8}

(a) If a banking institution determines that the cost imposed on basic banking account holders is less than the actual cost to the banking institution to provide such account, it may submit an application to the superintendent seeking permission to offer an alternative account or service. Such application shall include the information required in section 9.7(b) of this Part as well as data on the actual cost to the banking institution of providing the basic banking account and a description of the methodology utilized by the banking institution in obtaining such cost data.

(b) In reviewing such application, the superintendent shall consider whether the methodology utilized by the banking institution is independently verifiable.

Part 10 SUPERINTENDENT’S REGULATIONS: PAYMENT OF INTEREST ON MORTGAGE ESCROW ACCOUNTS AND INSURANCE DRAFT ESCROW ACCOUNTS

3 CRR-NY 10.1 Method of computing and crediting interest {#sec-3-crr-ny-10.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 10.1}

(a) The term mortgage escrow account, for the purposes of this Part, shall include any account established pursuant to an agreement between a mortgagor and a mortgage investing institution whereby the mortgagor pays to the mortgage investing institution or its designee amounts to be used for the payment of real estate taxes, school taxes, insurance premiums, water rents or any similar charges, except that the term mortgage escrow account shall not be deemed to include payments made to a mortgage investing institution for such purposes which are used to reduce the principal of the mortgage at the time they are received provided that the effective rate of interest thus accorded the mortgagor is no less than the rate of interest established from time to time pursuant to section 5-601 of the General Obligations Law and section 14-b of the Banking Law. The term insurance draft escrow account, for the purposes of this Part, shall include any account established pursuant to an agreement between a mortgagor and a mortgage investing institution whereby the mortgage investing institution receives from an insurance carrier a draft as compensation for damage done to a mortgaged residence.

(b) Interest on a mortgage escrow account as required by section 5-601 of the General Obligations Law and section 14-b of the Banking Law or an insurance draft escrow account as required by section 5-602 of the General Obligations Law and section 14-b of the Banking Law shall be computed on the daily balances in such account from the date the funds are received to the date the funds are disbursed and shall be credited to the escrow account as of the last business day of each quarter of a calendar year or of each quarter of a fiscal year. In computing the interest to be credited, debit balances resulting from advances made by the mortgage investing institution may be taken into account. At least once each year the mortgage investing institution shall render a statement to the mortgagor specifically indicating the interest on the mortgage escrow account or insurance draft escrow account which has been credited during the period covered by such statement.

(c) In the event that a mortgage escrow account or insurance draft escrow account shall be closed or discontinued before the last business day of a calendar quarter, or the last business day of a fiscal quarter, interest shall be computed and credited from the day as of which interest was last credited through the day on which the account is closed or discontinued.

(d) For the purposes of computing interest pursuant to subdivisions (b) and (c) of this section, the mortgage investing institution shall take into account the actual number of days in each quarter, as well as the actual number of days in each calendar year or, may elect to compute the interest on the basis of a 30-day month and 360-day year.

3 CRR-NY 10.2 Payment of interest upon sale of a mortgage; qualification for exemptions {#sec-3-crr-ny-10.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 10.2}

(a) Definitions.

The term maintains, for purposes of section 14-b of the Banking Law and section 5-601 of the General Obligations Law, shall mean maintains itself or through an agent. The term mortgage investing institution, for purposes of section 14-b of the Banking Law and section 5-601 of the General Obligations Law, shall mean and include any bank, trust company, national bank, savings bank, savings and loan association, Federal savings and loan association, private banker, credit union, investment company, insurance company, pension fund, mortgage company or other entity which makes, extends or holds a mortgage on any one- to six-family residence occupied by the owner and located in this State, or which makes, extends or holds a mortgage on any property owned by a cooperative apartment corporation as defined in subdivision 12 of section 360 of the Tax Law (as such subdivision was in effect on December 30, 1960), and located in this State, including a governmental or quasi- governmental agency and any institution which has sold or assigned such mortgage if it otherwise continues to service and maintain the escrow account maintained with respect to such mortgage.

(b) In the instance of a mortgage on any property owned by a cooperative apartment corporation, no interest shall be required to be paid on escrow accounts where there is a contract between the mortgagor and the mortgage investing institution, entered into before March 30, 1979, which contains an express disclaimer of an obligation on the part of the mortgage investing institution to pay interest on such accounts.

(c) If a mortgage investing institution sells either a mortgage on a one- to six-family residence occupied by the owner and located in this State, or a mortgage on any property owned by a cooperative apartment corporation as defined in subdivision 12 of section 360 of the Tax Law (as such subdivision was in effect on December 30, 1960), and located in this State to another mortgage investing institution (which may include a governmental or quasi-governmental agency as well as any subsequent purchaser therefrom), the following principles shall apply to the payment of interest on escrow accounts: The mortgage investing institution which owns the mortgage shall be obligated to pay interest on such account, unless such institution is exempt from the requirement to pay interest on such account under proviso (i), (ii) or (iii) of section 14-b(4) of the Banking Law or the provisions of subdivision (b) of this section. In cases where the mortgage investing institution owning the mortgage is exempt from payment of interest on the escrow account by reason of section 14-b(4)(iii), then interest shall be paid by that mortgage investing institution which does in fact have possession of such escrow account, unless such latter institution is expressly prohibited by the applicable servicing contract from earning or receiving a return from the investment of funds of such escrow account. Notwithstanding the foregoing, with respect to any mortgage or class of mortgages, the mortgage investing institution owning a mortgage and the mortgage investing institution having possession of the escrow account may by mutual agreement establish which institution shall pay interest on such account.

(d) The exemption under section 14-b(4)(iii) of the Banking Law shall apply only if:

(1) the date of the servicing contract as well as the mortgage in question predate April 1, 1974; and

(2) the servicing contract expressly precludes the mortgage investing institution owning such mortgage from earning or receiving a return from the investment of funds of such escrow accounts, or if the contract, though silent on the question, effectively does not permit such institution from earning or receiving such return.

(e) No party acquiring a mortgage from or through a party which was not liable to pay interest on escrow accounts may take advantage of a statutory exception available only to such predecessor in interest.

Part 11 INSIDER TRANSACTIONS

3 CRR-NY 11.1 Definitions {#sec-3-crr-ny-11.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.1}

For the purpose of this Part:

(a) The term affiliate shall mean any person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the person specified.

(b) The term bank shall mean a bank, trust company, savings bank, savings and loan association and credit union.

(c)

(1) The term business transaction shall include, but not be limited to, the following types of transactions:

(i) loans or other extensions of credit (including, but not limited to, standby letters of credit and guarantees);

(ii) purchase of assets or services or agreements to purchase assets (including, but not limited to, forward foreign exchange contracts) from the bank;

(iii) sales of assets or services or agreements to sell assets (including, but not limited to, forward foreign exchange contracts) to the bank;

(iv) use of the bank's facilities, its real or personal property, or its personnel;

(v) leases of real or personal property to or from the bank;

(vi) payment of commissions and fees by the bank, including brokerage commissions and management, consultant, architectural, legal and appraisal fees; and

(vii) payments on time deposits or other obligations of the bank by the bank if the payments would result in a yield which is more favorable than for a comparable transaction made in the ordinary course or business to persons not deemed insiders of the bank.

(2) For the purpose of this Part, the term business transaction shall not include (i) deposit account activities, other than those specified in subparagraph (1)(vii) of this subdivision, (ii) safekeeping transactions, (iii) credit card transactions, (iv) trust or fiduciary activities, (v) activities undertaken in the capacity of securities transfer agent, registrar, exchange agent, or in a similar corporate fiduciary capacity, and (vi) activities undertaken as a government or municipal securities dealer.

(d) The term control (including the terms controlling, controlled by, and under common control with) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Occupation of an office or directorship shall not be deemed by itself, to constitute control.

(e) The term insider shall mean:

(1) the chairman of the board of directors, president, executive vice president, secretary and treasurer of a bank;

(2) any other officer or employee of a bank who participates or has authority to participate, otherwise than in the capacity of a director or trustee of the bank, in major policy-making functions of the bank, regardless of whether he or she has an official title or whether his or her title contains a designation of assistant and regardless further, of whether he or she is serving without salary or other compensation;

(3) any director or trustee of a bank; and

(4) any other person who has direct or indirect control over the voting rights of 10 percent of the shares of any class of voting stocks of a bank or otherwise controls the management or policies of a bank.

(f)

(1) The term insider transaction shall mean any business transaction or series of related business transactions by, between or on behalf of a bank and:

(i) a insider of the bank;

(ii) a person related to an insider of the bank; or

(iii) any other person where the transaction is made in contemplation of such person becoming an insider of the bank.

The phrase series of related business transactions shall include transactions which are in substance part of an integrated business arrangement or relationship, such as borrowings on a line of credit, recurring transactions of a similar nature within a holding company system, or law firm billings to the bank.

(2) For the purpose of this Part, the term insider transaction shall not include (i) any business transaction between a bank holding company (as defined in the Federal Bank Holding Company Act of 1956 as amended) and one or more of its subsidiary banks or between a subsidiary bank of a holding company and any other subsidiary of such company if the terms of the transaction are no less favorable to the bank than the terms which would be available in an arm's length transaction, (ii) any business transaction by a bank which is a member of the Federal Reserve System or is a non-member bank insured by the Federal Deposit Insurance Corporation if the transaction is subject to the requirements and limitations of section 23A of the Federal Reserve Act (12 U.S.C. § 371c), (iii) any business transaction between a bank and its Edge Act subsidiary or a wholly owned subsidiary of such affiliate, (iv) any business transaction between a bank and an affiliate of the bank engaged solely in holding the bank premises of the bank, in maintaining and operating properties acquired for banking purposes, in mortgage-servicing or in the conduct of a safe-deposit business or the business of an agricultural credit corporation or livestock loan company, or (v) any business transaction between a bank and a wholly owned subsidiary of the bank which is conducted at locations at which the bank is authorized to conduct business and which consists of functions which the bank is empowered to perform directly.

(3) For the purpose of this Part, the term insider transaction shall not include a loan or an extension of credit to an executive officer or a director of a bank made under section 103(8) of the Banking Law and Part 321 of this Title; except that any such loan or extension of credit shall be treated as an insider transaction for the purpose of section 11.4 of this Part.

(g) The term net worth shall mean (1) the aggregate of the capital stock, surplus, undivided profits and contingency reserves of the bank in the case of a bank or trust company, and (2) the excess of assets at book value, less allocated reserves, over known liabilities in the case of a savings bank, savings and loan association or credit union.

(h) The term person shall mean a corporation, partnership, association, or other business entity, any trust or any natural person.

(i) The phrase person related to an insider shall mean:

(1) any corporation or other organization or association in which the insider or any of the persons specified in paragraph (2) of this subdivision are the beneficial owners, either singly or in the aggregate, of 10 percent or more of any class of equity securities or 10 percent of the equity interests;

(2) in the case of a natural person, (i) an insider's spouse, (ii) any relative of the insider or the insider's spouse, if such relative has the same home as the insider, and (iii) an insider's parent, stepparent, child or stepchild; and

(3) any affiliate of the insider.

(j) The term subsidiary shall mean any affiliate of a specified person which is controlled by such person, whether controlled directly or indirectly, through one or more intermediaries.

3 CRR-NY 11.2 Violations; unauthorized and unsafe banking practices {#sec-3-crr-ny-11.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.2}

Any insider transaction effected in violation of this Part or failure by a bank or an insider to comply with the provisions of this Part shall be deemed an unauthorized and unsafe banking practice in the conduct of the business of the bank within the meaning of the Banking Law.

3 CRR-NY 11.3 Approval and disclosure of insider transactions {#sec-3-crr-ny-11.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.3}

(a) Any insider transaction which, either alone or when aggregated in accordance with section 11.4 of this Part involves assets or services having a fair market value or payments in excess of the following amounts:

(1) $20,000 or one half of one percent of the net worth of the bank, whichever is less, if the total assets of the bank are $100,000,000 or less;

(2) $50,000 or one half of one percent of the net worth of the bank, whichever is less, if the total assets of the bank are more than $100,000,000 and not more than $500,000,000;

(3) $100,000 or one half of one percent of the net worth of the bank, whichever is less, if the total assets of the bank are more than $500,000,000 and not more than $1,000,000,000; and

(4) one half of one percent of the net worth of the bank if the total assets of the bank are more than $1,000,000,000;

shall be specifically reviewed and approved by the bank's board of directors or board of trustees. Notwithstanding the foregoing, no approval of a separate insider transaction shall be required if the transaction is part of a series of related business transactions involving the same insider and the bank's board of directors or board of trustees has reviewed and approved the entire series of related transactions and the terms and conditions under which such transactions may take place.

(b) The minutes of the meeting at which approval is given shall indicate the nature of the transaction or transactions, the parties to the transaction or transactions, that such review was undertaken and approval given, and the names of individual directors or trustees who voted to approve or disapprove the transaction or transactions. In the case of negative votes, a brief statement of each dissenting director's or trustee's reason for voting to disapprove the proposed insider transaction or transactions shall be included in the minutes if the dissenting director or trustee so requests.

3 CRR-NY 11.4 Aggregation of insider transactions {#sec-3-crr-ny-11.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.4}

(a) Any loan or extension of credit to or on behalf of an insider or a person related to an insider shall be aggregated with the outstanding balances of (1) all other loans or extensions of credit to the insider, and (2) all other loans or extensions of credit to a person related to that insider, and (3) any loan or extension of credit to any other person where the loan or extension of credit inures to the tangible economic benefit of the insider or person related to the insider.

(b) Any purchase or sale of assets or services to, by, or on behalf of an insider or a person related to an insider shall be aggregated with the fair market value of, or payments made or to be made for, all other assets or services purchased or sold to, by, or on behalf of (1) such insider, and (2) a person related to that insider and (3) any other person where the purchase or sale inured to the tangible economic benefit of the insider or person related to the insider; provided, however, that such other assets or services shall have been purchased or sold within 12 consecutive months of the purchase or sale in question.

3 CRR-NY 11.5 Information pertaining to insider transactions; files {#sec-3-crr-ny-11.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.5}

(a) Each bank shall maintain a record of the insider transactions which require review and approval under section 11.3 of this Part in a manner and form that will enable examiner personnel to identify such insider transactions. To comply with the requirements of this provision each bank shall cause each insider thereof to disclose to the bank in writing on or before July first of each year the identity of every person related to an insider within the meaning of such terms insider and person related to an insider as defined in sections 11.1(e) and (i) of this Part, and to update such disclosures as circumstances change. Information pertaining to each such insider transaction shall be readily accessible to examiners and shall include all documents and other material relied upon by the board in approving such transaction, including the name of the insider, the position or relationship which causes such person to be considered an insider, the date on which the transaction was approved by the board, the type of insider transaction involved, the relevant terms of the transaction, any other pertinent facts which may serve to explain or support the basis for the board's decision, and any statement submitted for the minutes or the file by directors or trustees who voted not to approve the transaction.

(b) A separate chronological record shall be currently maintained to show the date on which the insider transaction was approved by the board of directors or trustees, the date the transaction was entered into, the name of the insider and the name of the person related to the insider, if the business transaction was with the related person.

3 CRR-NY 11.6 Discovery of insider relationship {#sec-3-crr-ny-11.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.6}

If a bank becomes aware of the existence of an insider relationship after entering into a transaction for which approval would have been required under section 11.3 of this Part, the bank shall promptly report such transaction to the superintendent at the address of the department set forth in section 1.1 of Supervisory Policy G 1 of this Title, except that no such report need be made by a New York bank other than a credit union if the amount involved is less than $5,000 or by a credit union if the amount involved is less than $4,000.

3 CRR-NY 11.7 Knowledge of proposed insider transaction {#sec-3-crr-ny-11.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.7}

Any insider, having knowledge of an insider transaction between the bank and:

(a) that insider;

(b) another insider;

(d) any other person where the transaction inures to the tangible economic benefit of that insider or such other insider, or a person related to that insider;

which is subject to approval and disclosure under section 11.3 of this Part, shall give timely notice of such transaction to the bank's board or directors or trustees.

3 CRR-NY 11.8 Action by executive or other committee of bank {#sec-3-crr-ny-11.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.8}

Whenever in this Part there is a requirement that action be taken by a board of directors or by a board of trustees, such provision may be complied with by a duly constituted and authorized executive committee of the bank or by any other duly constituted and authorized committee of the bank composed entirely of directors or trustees of the bank and having at least five members. In that event, a dissenting member of such committee may note his or her dissent on the minutes of the committee. No member of such committee may vote on any insider transaction which requires the approval of the committee if the transaction involves the member or a person related to the member within the meaning of section 11.1(i) of this Part.

3 CRR-NY 11.9 Compliance with other laws and regulations {#sec-3-crr-ny-11.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 11.9}

Nothing in this Part shall be deemed to modify, amend, or repeal any restriction and limitation imposed by law on an officer, director, trustee or employee of a bank and all such restrictions and limitations shall remain in full force and effect.

Part 12 ACQUISITION OF RESIDENCES AND SIMILAR FACILITIES BY BANKS AND TRUST COMPANIES

3 CRR-NY 12.1 Statement of policy {#sec-3-crr-ny-12.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 12.1}

The superintendent recognizes that banks and trust companies have valid business reasons for acquiring, by purchase, lease or rental, residences and similar or related facilities (including the acquisition of shares together with a lease in the case of cooperative apartment purchases) to house directors, officers and employees under circumstances where arranging for conventional housing is impractical, whether within or without the United States. Such acquisitions would be considered inappropriate by the superintendent, however, if motivated principally by investment objectives.

3 CRR-NY 12.2 Limited authorization; delegation {#sec-3-crr-ny-12.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 12.2}

(a) The superintendent hereby grants permission to banks and trust companies to acquire any single residence or similar facility within or without the United States, as described in section 12.1 of this Part in an amount not exceeding $700,000 or two and one half percent of capital stock, surplus and undivided profits, whichever is greater or lease any single residence or similar facility where total payments over the term of the lease and the term or terms of any renewal option provided in the lease will not exceed $700,000 or two and one half percent of capital stock, surplus and undivided profits, whichever is greater. Individual acquisitions or leases exceeding these limits will require prior approval of the superintendent.

(b) All investments by the bank or trust company in such real property, including leasehold improvements and capitalized leases, when added to the amount invested by the bank or trust company pursuant to section 98(1)(a) of the Banking Law, shall not exceed the limitations set forth in section 98(1)(a).

(c) The bank or trust company shall agree in writing that within one year after the cessation of the use of said real property as the residence or similar facility for use of any director, officer or employee of the bank or trust company, it shall dispose of such real property or shall terminate its liability as tenant or sublessee, if applicable, on any leased premises; provided, however, that the superintendent may, upon a showing of good cause, extend the time within which the bank or trust company must dispose of such real property.

3 CRR-NY 12.3 Annual report {#sec-3-crr-ny-12.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 12.3}

Each bank or trust company availing itself of the limited authorization provided in section 12.2 of this Part shall, within one year of the initial acquisition or lease of such property and annually thereafter, as to properties or leases held on the date of such report, provide to the superintendent a list of:

(a) all property purchased or leased under the limited authorization of section 12.2 of this Part which shall, with respect to each such acquisition or lease, include the following:

(1) address of the residence or similar facility;

(2) type of acquisition (e.g., lease or purchase);

(3) reason for acquisition of such real property;

(4) date of purchase of such real property, or date of commencement of the lease and date of its expiration, including description of any renewal rights;

(5) cost of purchase or rental; description of any sale-back, cancellation or similar clauses;

(6) a written assurance in accordance with section 12.2(c) of this Part; and

(7) such additional information or submit such documents, as the superintendent may require;

(b) all property purchased or leased with specific superintendent approval under section 98(1)(d) of the Banking Law; and

3 CRR-NY 12.4 [Renumbered] {#sec-3-crr-ny-12.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 12.4}

Part 13 DEPOSITOR SAVINGS INFORMATION (“TRUTH-IN-SAVINGS”)

3 CRR-NY 13.1 Definitions {#sec-3-crr-ny-13.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.1}

As used in this Part:

(a) The term banking organization shall mean all banks, trust companies, savings banks, savings and loan associations, credit unions and insured branches of foreign banking corporations licensed or chartered by the State of New York. An insured branch of a foreign banking corporation is a branch of a foreign banking corporation whose deposits are required to be insured by the Federal Deposit Insurance Corporation.

(b) The term savings account shall mean a deposit accepted by a:

(1) savings bank, in accordance with Banking Law section 245, subdivision 3-a or 3-b;

(2) savings and loan association, in accordance with Banking Law section 378(4) and 12 CFR § 526.1(d), (e) or (l) of the Federal Savings and Loan Insurance Corporation (FSLIC) regulations;

(3) bank or trust company, in accordance with Banking Law section 96(1) and 12 CFR § 217.1(e) of the Federal Reserve Board regulations (Regulation Q) or 12 CFR § 329.1(e) of the FDIC regulations; and

(4) credit union, in accordance with the provisions of Banking Law section 453(1) (share accounts) and 12 CFR 701.35(1) of the National Credit Union Administration regulations.

(1) savings bank, in accordance with Banking Law, section 234, subdivision 1-a;

(2) savings and loan association, in accordance with Banking Law, section 378-a and 12 CFR 526.1(b) or (c) of the FSLIC regulations;

(3) bank or trust company, in accordance with Banking Law, section 96(1), and 12 CFR 217.1(b), (c) or (d) of the Federal Reserve Board regulations (Regulation Q) or 12 CFR 329.1(b), (c) or (d) of the FDIC regulations; and

(4) credit union, in accordance with Banking Law, section 453(1) (share certificate accounts), and 12 CFR 701.35(2) of the National Credit Union Administration regulations.

(d) The terms savings account and time deposit shall not include:

(1) the acceptance of a deposit by a bank or trust company when the amount of such deposit is $100,000 or more;

(2) the acceptance of a deposit maintained and payable at a branch of a bank or trust company located outside of the State of New York; or

(3) the acceptance of a deposit from any depositor whose address is outside of the United States. Nonetheless, each banking organization shall provide such depositors with a notice of change in accordance with the provisions of section 13.2(d) of this Part.

(e) The terms interest, dividend and earnings shall mean any amount accruing to or for the account of any depositor(s) in connection with the use of funds deposited in a savings or time deposit account, regardless of whether such earnings have been paid to the account of its holder(s).

(f) Compounding period, expressed as a length of time or a fraction of a year, is the period at the end of which the periodic percentage rate is applied to compute the earnings payable for that period.

(g) The term periodic percentage rate (PPR) shall mean the rate applied at the end of each compounding period to the principal amount for that period to determine the amount of earnings for that period. The period may be expressed in equal fractional parts of a year or in actual numbers of days even though the compounding period is less than one day. The fractional part of a year may be substituted for the word “periodic” in such manner as “daily percentage rate,” “quarterly percentage rate,” “annual percentage rate.”

(h) The term annual interest rate (AIR) shall mean the annual rate of simple interest whose maximum is prescribed by Federal or State regulations (e.g., FRB Regulation Q, section 217.7, FDIC Regulation sections 329.6 and 329.7, and Banking Board General Regulation Part 20).

(i) The term annual percentage yield (APY) shall mean a rate expressing the amount of earnings per $100 of principal which would accrue in one year as the result of the successive applications of the periodic percentage rate at the end of each period to the sum of the principal amount, plus any earnings credited and not withdrawn during that year.

3 CRR-NY 13.2 Distribution of disclosure brochures {#sec-3-crr-ny-13.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.2}

(a) Each banking organization shall provide to any potential depositor upon request, and to any depositor at the time of the first deposit of funds into a savings or time deposit account, the information required by this Part. In the case of an account opened by mail, such information shall be provided, by mail or in person, when the depositor receives acknowledgment of the opening of the account.

(b) In order to notify existing depositors of the availability of the disclosure information required by this Part, each banking organization shall either:

(1) prominently post a notice in the lobby of each office of the banking organization located in the State of New York (other than electronic branches);

(2) periodically prominently include a notice in existing advertising or in separate advertising; or

(3) mail a notice to each depositor.

(c)

(1) In all future advertising which solicits savings or time deposit accounts, each banking organization shall include a prominently placed notice which shall state that further information about the account may be obtained at any branch of the banking organization or by calling a specified person or department of the banking organization.

(2) Paragraph (1) of this subdivision shall not apply to radio advertisements.

(d)

(1) Not more than 10 business days after a banking organization adopts any change in the following, which is less favorable to the depositor:

(i) annual interest rate;

(ii) annual percentage yield;

(iii) periodic percentage rate;

(iv) compounding period;

(v) the frequency of crediting interest;

(vi) grace periods mandated by any regulatory authority; or

(vii) minimum balance requirements mandated by any regulatory authority;

the banking organization shall notify in writing each depositor affected by such change.

(2) Not less than 30 days before a banking organization adopts any change (unless such change is mandated by any regulatory authority) in the grace periods or minimum balance requirements of a savings account, which is less favorable to a depositor, the banking organization shall notify in writing each depositor affected by such change. As to such existing accounts, no such change in the minimum balance requirements or grace periods shall become effective prior to the commencement of an interest or dividend period.

(3) When notice of maturity for a time account is sent to the depositor, the banking organization shall include a statement of any changes in the annual interest rate, annual percentage yield, periodic percentage rate, the compounding period and frequency of crediting interest on a new time deposit having substantially the same terms.

(4) The provisions of paragraphs (1) through (3) of this subdivision do not apply to a savings or time account which is offered at a rate which varies in accordance with market interest rates as long as the underlying formula is not changed by the banking organization (e.g., “money market certificates”).

(5) Not less than 30 days before a banking organization elects to convert a passbook or statement savings account paying a fixed annual rate of interest to a savings account paying a variable rate of interest, the banking organization shall notify in writing each depositor affected by such change. The notice shall clearly describe the change including the banking organization's method of fixing the rate thereafter. The banking organization shall also prominently display a notice describing the change in the lobby of each branch for the 30-day period prior to the change and shall keep such notice posted for a minimum of three months after the change becomes effective. As to existing savings accounts, no such change shall become effective prior to the commencement of an interest period. In the event the savings account is a statement savings account, then the banking organization shall also comply with the notification provisions of section 13.7(d) of this Part.

(e) Written notice of the date on which a time deposit with a term of one year or longer will mature shall be furnished to each depositor not less than 14 and not more than 30 days prior to the expiration of the term of the time deposit.

3 CRR-NY 13.3 Form of disclosure {#sec-3-crr-ny-13.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.3}

(a) The disclosure required by this Part shall be made clearly, conspicuously, in meaningful sequence, subdivided under descriptive headings and printed in at least eight-point typeface. (Appendix 13 suggests how the required information may be disclosed in a clear, concise and simple form.)

(b) A banking organization may provide the required information in a single, consolidated disclosure document or may provide separate disclosure documents for each type of account.

(c) Banking organizations are encouraged to supplement the narrative statements with illustrations (i.e., give particular examples), tables, charts, drawings or other means which may aid the depositor in comprehending the disclosure information.

(d) The disclosure statement shall provide the name of a person or department or branch that can be contacted in order to answer any questions relating to the disclosure required by this Part.

(e)

(1) Each branch of the banking organization (excluding electronic branches and branches located outside of the State of New York) shall have a copy of its interest factor tables which will be available to any depositor in order to verify the interest in his (her) account. (Each branch need only have a copy available for depositor review on the branch premises.)

(2) Paragraph (1) of this subdivision shall not apply to any savings or time account which is offered at a rate which varies in accordance with market interest rates (e.g., the so-called “money market certificate”). Nevertheless, interest factor tables applicable to a savings or time account which is offered at a rate which varies in accordance with market interest rates must be available at one of the banking organization's offices located in the State of New York.

3 CRR-NY 13.4 Disclosure of information on savings accounts {#sec-3-crr-ny-13.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.4}

Each banking organization shall disclose the following information on savings accounts, if applicable:

(a) the annual interest rate;

(b) the annual percentage yield;

(d) the periodic percentage rate paid in each compounding period;

(e) the principal amount to which the periodic percentage rate is applied ( e.g., balance at the end of each day, the average balance for the quarter, the low balance for the quarter, etc.), including the following information, if applicable:

(1) if interest is not paid on the 31st day of the month for those months with 31 days;

(2) the time or day the deposit begins to earn interest, if other than the day on which the deposit is made;

(3) the manner in which a withdrawal affects the interest calculation, e.g., Last In First Out (LIFO), First In First Out (FIFO), etc.; and

(4) the manner in which interest is paid on funds which are transferred from one account to another account within the banking organization, if such a transfer is treated differently from any other deposit;

(f) the frequency of crediting interest:

(1) state the periods for which interest is paid (e.g.,quarterly, semiannually, etc.);

(2) state the manner in which interest is distributed (e.g.,added to the balance, mailed by check, credited to another account);

(g) any delay in crediting a deposited instrument or any delay before a customer may draw against a deposited instrument;

(h) the “grace” periods for deposits and withdrawals:

(1) define the “grace” periods;

(2) state the effect the “10th day” has if it occurs on a nonbusiness day;

(i) minimum balance required to earn interest (e.g., whether there is a minimum balance under which no interest will be paid, or whether earned interest on a DOD/DOW account will be lost if $25 is not left in the account until the end of the quarter);

(j) the minimum length of time funds must remain on deposit to earn interest;

(k) whether a withdrawal request can be refused (e.g., privilege to require notice of intent to withdraw as provided by law or regulations);

(l) under what circumstances a service charge may be imposed on a savings account (e.g., any service charge for checks deposited and returned because of insufficient funds or payment stopped; any penalties for closing of the account before a specific date, as in promotional accounts); and

(m) what constitutes an inactive account, any fees levied on inactive accounts, how a depositor can avoid having the account become inactive and how an inactive account can be reinstated as an active account.

3 CRR-NY 13.5 Disclosure of information on time deposits {#sec-3-crr-ny-13.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.5}

Each banking organization shall disclose the following information on time deposits, if applicable:

(a) the annual interest rate;

(b) the annual percentage yield;

(d) the periodic percentage rate paid each compounding period;

(e) The principal amount to which the periodic percentage rate is applied, including the following information, if applicable:

(1) if interest is not paid on the 31st day of the month for those months with 31 days;

(2) the time or day the deposit begins to earn interest, if other than the day on which the deposit is made; and

(3) the consequence of a maturity date which falls on a Saturday, Sunday or legal holiday;

(f) The frequency of crediting interest:

(1) state the periods for which interest is paid (e.g.,quarterly, semiannually, etc.);

(2) state the manner in which interest is distributed (e.g.,added to the balance, mailed by check, credited to another account);

(g) Any delay in crediting a deposited instrument or any delay before a customer may draw against a deposited instrument;

(h) Whether additional deposits can be made to a time deposit after the account is opened (state what effect this has on extending the term);

(i) The banking organization's past policy or practice on withdrawals prior to maturity; the maturity date on which withdrawal is permitted (e.g., the maturity of each deposit is one year from the date of the deposit);

(j) Any penalty which will be imposed for early withdrawal:

(1) state those instances in which no penalty will be imposed;

(2) state any service charges or penalties and whether they are required by the FDIC or other regulatory agency;

(k) The conditions under which interest may be withdrawn with or without penalty or service charge (distinguish between interest earned by the specific account as opposed to interest carried over from another account);

(l) When notice of maturity will be sent to the depositor;

(m) Whether the time deposit will be automatically renewed:

(1) what happens if the banking organization does not offer an automatic renewal option;

(2) if the banking organization does offer the automatic renewal option:

(i) disclose the provisions relating to automatic renewal;

(ii) disclose whether the depositor may accept or decline the automatic renewal feature; and

(iii) indicate what happens if the depositor declines the automatic renewal feature;

(n) What constitutes an inactive account, any fees levied on inactive accounts, how a depositor can avoid having the account become inactive and how an inactive account can be reinstated as an active account; and

(o) Any other fee, charges or penalties imposed on the time account.

3 CRR-NY 13.6 Compliance with Federal regulation {#sec-3-crr-ny-13.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.6}

Banking organizations which comply with Regulation DD of the Board of Governors of the Federal Reserve System (12 CFR Part 230) issued on September 14, 1992 with respect to consumer accounts shall be deemed to be in compliance with this Part. In addition, a banking organization may satisfy this Part, in the case of business accounts, by providing either a disclosure statement in the form required by 12 CFR 230 or a disclosure statement meeting the requirements of this Part. Those banking organizations which choose to satisfy the requirements of this Part with respect to business accounts by complying with 12 CFR 230, need only comply with those portions of 12 CFR 230 which contain provisions to the same effect as those contained in this Part.

3 CRR-NY 13.7 Disclosure of information for variable rate deposits or money market deposits {#sec-3-crr-ny-13.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 13.7}

(a) This section contains the sole informational and disclosure requirements for variable rate deposits or money market deposits (i.e.,savings or time deposits with interest rates which vary during the term or duration of the deposit), to the exclusion of the provisions of sections 13.2 and 13.5 of this Part except as expressly provided herein.

(b) Disclosures for variable rate deposits or money market deposits may be provided in a separate document for each type of account. The following provisions apply:

(1) The disclosures shall contain the items listed in section 13.4 or 13.5 of this Part, to the extent such items are applicable to any specific account, except that:

(i) no reference may be made to a periodic percentage rate;

(ii) no statement may be made of an annual percentage yield unless the statement is accompanied by a disclosure which indicates the hypothetical nature of the yield statement and which discloses the period of time during which the interest rate used to determine the annual yield will remain in effect; and

(iii) only the annual interest rate in effect on the date that the disclosure statement is distributed shall be provided, but the disclosure shall include the date up to which or period for which such rate shall apply and the frequency of rate adjustment thereafter.

(2) The disclosure statement shall identify the index, formula or schedule to be used in calculating rate changes or, if none of the above is applicable, the disclosure shall state so and generally describe the method to be used in calculating the rate changes for the account.

(3) Where the annual interest rate in effect on the date that the disclosure statement is distributed exceeds the rate which would otherwise have applied under the index, formula or other method of interest rate calculation employed by the banking institution, that fact should be clearly disclosed.

(1) upon request, the banking institution shall provide the date on which the account started to earn interest and the rate in effect for the account on that date; and

(2) the banking institution shall provide sufficient information to allow the depositor to independently calculate the interest yield on the deposit, based on the history of the account (e.g., the daily interest rate factor to be applied to the principal amount for each period that a specific rate was in effect and the dates on which accumulated interest was added to principal for purposes of compounding). Such information may be provided in such form as the banking institution shall determine to accomplish the purposes of this provision. Such information must be available from one of the banking institution's offices located in the State of New York, upon written or phoned request.

(d) Included with each regular account statement sent to depositors by a banking institution, either appearing on the statement or a separate sheet, shall be a notice of the annual interest rate or rates in effect during the period covered by the statement and the dates when each such rate was in effect.

Part 14 INVESTMENTS IN CORPORATIONS BY BANKS AND TRUST COMPANIES

3 CRR-NY 14.1 Purpose and scope {#sec-3-crr-ny-14.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 14.1}

Section 97(4-a) of the Banking Law authorizes the superintendent to adopt regulations to permit banks and trust companies to own or make investments in the stock and other equity of subsidiary corporations engaged in the transaction of any business in which a bank or trust company may engage directly (“operating subsidiaries”) and corporations organized pursuant to section 25(a) of the Federal Reserve Act (“Edge Act subsidiaries”). Banks and trust companies may also make investments in the capital stock (which for the purposes of this Part shall be deemed to include contributions to capital surplus) of other corporations if specifically authorized by the superintendent pursuant to section 97(5) of the Banking Law. This Part implements the superintendent's authority to authorize investments in operating and Edge Act subsidiaries pursuant to section 97(4-a) and to establish the procedures to make applications to invest in the capital stock of other corporations pursuant to section 97(5).

3 CRR-NY 14.2 Limitations {#sec-3-crr-ny-14.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 14.2}

The investment procedures of section 14.3 of this Part are limited to corporations of which a bank or trust company is or will become the owner of at least a majority of the voting stock and which are controlled by no other person.

3 CRR-NY 14.3 Investment procedures for operating subsidiaries and Edge Act subsidiaries {#sec-3-crr-ny-14.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 14.3}

(a) Except as provided in subdivisions (b) and (c) of this section, a bank or trust company which seeks to acquire, establish, make an additional investment (exceeding the lesser of one percent of the bank or trust company's capital stock, surplus fund and undivided profits or five million dollars) in, or perform new activities in an operating subsidiary, or acquire, establish, or make an additional investment in an Edge Act subsidiary, shall submit a notice to the superintendent containing a detailed description of the applicant's investment in the subsidiary (including, but not limited to, the purchase price, whether any shares are to be purchased from officers or executive officers of the bank or trust company, and the identity of any other investors), the activities or proposed activities of the subsidiary, the location of the subsidiary's offices and records, the organizational structure and management of the subsidiary, the relations between the applicant and the subsidiary (including, but not limited to, whether the bank or trust company intends to lend money to or guaranty the obligations of the subsidiary), and any other information the superintendent may request. The investment may be made or the new activity performed 30 days after the superintendent's receipt of the notice unless within that 30-day period the superintendent notifies the bank or trust company in writing that:

(1) it may make the investment or perform the new activity earlier;

(2) it may not make the investment or perform the new activity; or

(3) the superintendent requires additional time or information. In the event the superintendent notifies the bank or trust company that he or she requires additional time or information, the bank or trust company may not make the investment or perform the new activity prior to receiving written approval from the superintendent.

(b) A bank or trust company which establishes or makes an additional investment in a subsidiary engaged in, or to be formed to engage in, factoring, personal property leasing, or, in the case of investments in excess of five thousand dollars, the ownership or operation of real or personal property acquired through foreclosure or in settlement or in reduction of debts or obligations to such bank or trust company which were previously contracted in the regular course of its business, or additional investments in operating subsidiaries not reportable under subdivision (a) of this section, shall notify the superintendent within 30 days after the investment is made. The notice shall provide the name of the subsidiary, the location of its head office, and the amount and form of the investment. The bank or trust company also shall provide a certification that the investment was made in conformity with the terms of this Part. No notification shall be required with respect to investments in a subsidiary which shall own or operate real property for use as a bank premises.

(1) is “adequately capitalized” or “well capitalized” as those terms are defined in title 12, Code of Federal Regulations,* part 325;

(2) at its immediately prior examination, had a composite CAMELS rating of 1 (strong) or 2 (satisfactory) under the Uniform Financial Institution Rating System (UFIRS) as those terms are defined in the UFIRS notice in the December 19, 1996 Federal Register* (61 Fed. Reg. 67021); and

(3) is currently not subject to a cease and desist order, a consent order, or a formal written agreement, issued by the superintendent, the Federal Deposit Insurance Corporation or any other Federal banking agency; may acquire or establish an operating subsidiary, make an additional investment in an existing operating subsidiary or perform a new activity in an existing operating subsidiary, by providing the superintendent with written notice within 30 days after acquiring or establishing the subsidiary, making the additional investment or commencing the activity, provided that the activity is listed in subdivision (d) of this section. The written notice must contain a detailed description of the applicant's investment in the subsidiary (including, but not limited to, the purchase price, whether any shares are to be purchased from officers or executive officers of the bank or trust company, and the identity of any other investors), the activities or proposed activities of the subsidiary, the location of the subsidiary's offices and records, the organizational structure and management of the subsidiary, the relations between the applicant and the subsidiary (including, but not limited to, whether the bank or trust company intends to lend money to or guarantee the obligations of the subsidiary), a representation that the activity will be conducted in accordance with the terms of this Part, and any other information that the superintendent may request. A bank or trust company providing notice pursuant to this subdivision is deemed to have agreed that the subsidiary will conduct the activity in a manner consistent with New York State Banking Department statutes, regulations and supervisory guidance.

(d) The following activities qualify for the preapproved notice procedures under subdivision (c) of this section:

(1) business services for the bank or trust company and its affiliates: furnishing services for the internal operations of the bank or trust company, or its affiliates, including accounting, auditing, appraising, advertising and public relations, data processing and data transmission services, databases or facilities;

(2) financial advice and consulting for the bank or its affiliates;

(3) selling money orders, savings bonds or travelers checks;

(4) management consulting, operational advice and specialized services for other depository institutions;

(5) courier services between financial institutions;

(6) providing check guaranty and verification services;

(7) data processing and warehousing products, services, and related activities, included associated equipment and technology, for the operating subsidiary, its parent bank and their affiliates;

(8) acting as investment or financial advisor (not involving the exercise of investment discretion), or providing financial counseling, including:

(i) serving as the advisory company for a mortgage or real estate investment trust;

(ii) furnishing general economic information and advice, general economic statistical forecasting services and industry studies;

(iii) providing financial advice to state or local governments or foreign governments with respect to issuance of securities;

(iv) providing tax planning and preparation; and

(v) providing consumer financial counseling;

(9) providing financial and transactional advice to customers and assisting customers in structuring, arranging and executing various financial transactions (provided that the bank and its affiliates do not participate as a principal), including mergers, acquisitions, divestitures, joint ventures, leveraged buyouts, recapitalizations, capital structurings and financial transactions (including private and public financings and loan syndications); conducting financial feasibility studies; and arranging commercial real estate equity financing;

(10) investment advice (not involving the exercise of investment discretion) on futures and options on futures;

(11) making, purchasing, selling, servicing, or warehousing loans or other extensions of credit, or interests therein, for the subsidiary's account, or for the account of others, including consumer loans, credit card loans, commercial loans, residential mortgage loans, and commercial mortgage loans; provided, however, that the preapproved notice procedure set forth in subdivision (c) of this section is not available if the notice involves the direct or indirect acquisition by the bank of any low quality asset from an affiliate in connection with a transaction subject to this section; for purposes of this paragraph, the terms low quality asset and affiliate have the same meaning as provided in section 23A of the Federal Reserve Act (title 12, United States Code,*371(c); and

(12) owning, holding, and managing all or part of the parent bank's investment securities portfolio.

3 CRR-NY 14.4 Investment procedures for other stock investments {#sec-3-crr-ny-14.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 14.4}

(a) A bank or trust company which seeks to acquire, establish, make an additional investment in, or perform new activities in any other corporation (whether or not the bank or trust company will own a majority of its stock) shall submit an application to the superintendent containing a detailed description of the applicant's investment (including, but not limited to, the purchase price, whether any shares are to be purchased from officers or executive officers of the bank or trust company, and the identity of any other investors), the activities or proposed activities of the corporation, the location of the corporation's offices and records, the organizational structure and management of the corporation, the relations between the applicant and the corporation (including, but not limited to, whether the bank or trust company intends to lend money to or guaranty the obligations of the corporation), and any other information the superintendent may request. The investment may be made or the new activity performed only upon receipt of superintendent approval.

(b) A bank or trust company that seeks to make an additional investment in a corporation, the initial investment in which was approved by the superintendent pursuant to subdivision (a) of this section, shall be required to follow only the notice procedures of section 14.3(a) of this Part.

3 CRR-NY 14.5 [Repealed] {#sec-3-crr-ny-14.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 14.5}

Part 15 JOINT DEPOSITS AND SHARES; CONVENIENCE DEPOSITS AND SHARES

3 CRR-NY 15.1 Definitions {#sec-3-crr-ny-15.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 15.1}

(a) Joint account.

For purposes of this Part, a joint account shall mean any deposit of cash (including purchases of shares in the case of mutual savings and loan associations and credit unions), securities or other property made in or with any banking organization or foreign banking corporation transacting business in this State, in the name of the depositor and another person or persons and in form to be paid or delivered to any or the survivor of them.

(b) Owner of a joint account.

For purposes of this Part, the owner of a joint account shall refer to the depositor and any other person or persons named on the account.

For purposes of this Part, a convenience account shall mean any deposit of cash (including purchases of shares in the case of mutual savings and loan associations and credit unions), securities or other property made in or with any banking organizations or foreign banking corporation transacting business in this State, in the name of the depositor and another person or persons and in a form to be paid or delivered to any of them “for the convenience” of the depositor without any right of survivorship in the account existing in favor of the other person or persons so named solely by virtue of such account designation.

(d) Owner of a convenience account.

For purposes of this Part, the owner of a convenience accountshall refer only to the depositor and he or she shall be clearly designated as such on the records of the depositary. In the account title, “FCO” may be used to represent the term “For the Convenience Of” or “For Convenience Only” whichever is appropriate in the context of the account title. The word “owner” need not appear in the account title.

3 CRR-NY 15.2 Requirement to furnish notice {#sec-3-crr-ny-15.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 15.2}

(a) Every banking institution referred to in section 15.1 of this Part shall furnish a written notice to each owner named in every joint account. Such notice shall include, but need not be limited to, the disclosures set forth in section 15.3 of this Part.

(b) Every banking institution referred to in section 15.1 of this Part shall furnish a written notice to the owner and other person or persons named on every convenience account which shall be established or into which funds currently on deposit with the institution shall be transferred or “rolled over” on or after the effective date of this section, which notice shall include, but need not be limited to, the disclosures set forth in section 15.3 of this Part.

3 CRR-NY 15.3 Disclosures {#sec-3-crr-ny-15.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 15.3}

(a) Joint accounts.

The notice referred to in section 15.2 of this Part shall reasonably inform the joint owners, in plain language, of the terms and conditions of the account, including the relationship and consequences between the parties in the account and the responsibilities of the depositary with which the account is established. Without limiting the foregoing, such disclosures shall indicate:

(1) that such deposit, and any additions thereto, shall become the property of each owner as joint tenants and, as such, that the depositary may release the entire account to any owner during the lifetime of all owners;

(2) that the depositary may honor checks or orders drawn by, or withdrawal requests from, any owner during the lifetime of all owners;

(3) that the depositary may be required by service of legal process to remit funds held in the joint account to satisfy a judgment entered against, or other valid debt incurred by, any owner of the account;

(4) that the depositary may honor checks or orders drawn by, or withdrawal requests from, the survivor(s) after the death of any owner(s);

(5) the depositary may treat the account as the sole property of the survivor(s) after the death of any owner(s);

(6) unless the depositary receives written notice signed by any owner not to pay or deliver any joint deposit, or addition or accrual thereon, the depositary shall not be liable to any owner for continuing to honor checks or other orders drawn by, or withdrawal requests from, any owner; and

(7) after the receipt of the notice referred to in subdivision (f) of this section, the depositary may require the written authorization of any or all joint owners for any further payments or deliveries.

(b) Convenience accounts.

The notice referred to in section 15.2 of this Part shall reasonably inform the owner, in plain language, of the terms and conditions of the account, including the relationship and consequences between the parties in the account and the responsibilities of the depository with which the account is established. Without limiting the foregoing, such disclosures shall indicate:

(1) that such deposit, and any additions or accruals thereto, is the property of the owner individually and, as such, only the owner may request that the account be closed during the lifetime of the owner;

(2) that the depositary may honor checks or orders drawn by, or withdrawal requests from, the owner or the other named person or persons during the lifetime of the owner even if said checks or orders or withdrawal requests reduce the account balance to zero;

(3) that the depositary may be required by service of legal process to remit funds held in the convenience account to satisfy a judgment entered against, or other valid debt incurred by, the owner of the convenience account but not the other named person or persons except as otherwise ordered by a court of competent jurisdiction;

(4) that prior to receipt by the depositary of written notice of the death of the owner, and for such reasonable period thereafter as shall enable the depositary to act, the depositary may honor checks or orders drawn by, or withdrawal requests from, the other named person or persons after the death of the owner;

(5) that upon the death of the owner and prior to service upon the depositary of a restraining order, injunction or other appropriate process from a court of competent jurisdiction prohibiting payment and for such reasonable period thereafter as shall enable the depositary to comply, the depositary may make payment to the executor, administrator or voluntary administrator as defined in article 13 of the Surrogate's Court Procedure Act of the deceased owner's estate or to any person designated in section 1310 of the Surrogate's Court Procedure Act;

(6) that the depositary will not treat the account as the property of the other named person or persons during the lifetime of the owner nor after the death of the owner;

(7) that prior to the receipt by the depositary of written notice signed by the owner not to pay or deliver any monies in the account, and for such reasonable period thereafter as shall enable the depositary to act, the depositary shall not be liable to the owner for continuing to honor checks or other orders drawn by, or withdrawal requests from, the other named person or persons; and

(8) after the receipt of the notice referred to in paragraph (7) of this section, the depositary may require the written authorization of the owner for any further payments or deliveries.

The other named person or persons shall sign a statement at the depositary's request agreeing to immediately notify the depositary in writing of the owner's death and acknowledging that the account shall not be used after the owner's death.

3 CRR-NY 15.4 Retention of record of disclosures {#sec-3-crr-ny-15.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 15.4}

(a) A record of acknowledgement of the account owner's or owners' receipt of such disclosures, as well as an acknowledgement of receipt of such disclosure by the other person or persons which acknowledgments may appear on the signature card or on any other form at the discretion of the depositary, shall be maintained by every banking institution referred to in section 15.1 of this Part during the term of each joint or convenience account, and for a period of not less than two years after the termination date of the account.

(b) In the case of joint or convenience accounts opened by mail (including a depositor's return of a newspaper coupon or other marketing device) the depositary shall be deemed to have complied with this section if disclosures are mailed by separate envelope to the owner(s) and to the other person or persons at their addresses in the depositary's records not more than 10 days after establishment of the account, and a record of the mailing date of such notice is maintained as above in the file for each account. For any joint or convenience account opened in the name of an owner who does not appear in person, disclosures shall be sent as if that owner were opening the account by mail.

Part 16 CERTAIN MERGERS AND ACQUISITIONS OF ASSETS INVOLVING BANKING INSTITUTIONS

3 CRR-NY 16.1 Definitions {#sec-3-crr-ny-16.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 16.1}

For the purposes of this Part:

(a) stock-form thrift institutions shall include both stock-form savings banks and stock-form savings and loan associations organized under New York law;

(b) mutual thrift institutions shall include both mutual savings banks and mutual savings and loan associations organized under New York law;

(d) Federal thrift institutions shall include both federally chartered savings banks and federally chartered savings and loan associations, whether in mutual or stock form; and

(e) investment companies shall have the same meaning as in subdivision 10 of section 2 of the Banking Law.

3 CRR-NY 16.2 Scope {#sec-3-crr-ny-16.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 16.2}

This Part implements the superintendent’s authority to permit mergers and acquisitions of assets not otherwise authorized by the Banking Law between and among banking institutions.

3 CRR-NY 16.3 Authorized transactions {#sec-3-crr-ny-16.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 16.3}

(a) The following mergers are hereby authorized:

(1) one or more stock-form thrift institutions with another stock-form thrift institution;

(2) one or more stock-form thrift institutions with one or more commercial banks;

(3) subject to the conditions contained in subdivision (e) of this section, one or more mutual thrift institutions with one or more stock-form thrift institutions or commercial banks;

(4) one or more stock-form thrift institutions with one or more Federal thrift institutions or national banks;

(5) subject to the conditions contained in subdivision (e) of this section, one or more mutual thrift institutions with one or more Federal thrift institutions or national banks.

(6) one or more commercial banks with one or more Federal thrift institutions; and

(7) one or more investment companies into a commercial bank or a national bank.

(b) The following acquisitions of all or a substantial part of the assets of banking institutions, whether by purchase or otherwise, other than by merger, are hereby authorized:

(1) one or more stock-form savings banks by a stock-form savings and loan association, mutual thrift institution or commercial bank, and one or more stock-form savings and loan associations by a stock-form savings bank, mutual thrift institution or commercial bank;

(2) one or more mutual savings banks by a mutual savings and loan association, stock- form thrift institution or commercial bank, and one or more mutual savings and loan associations by a mutual savings bank, stock-form thrift institution or commercial bank, provided that acquisitions of all or substantially all of the assets of mutual thrift institutions are subject to the conditions contained in subdivision (e) of this section;

(3) one or more mutual thrift institutions by a Federal thrift institution or national bank, provided that acquisitions of all or substantially all of the assets of mutual thrift institutions are subject to the conditions contained in subdivision (e) of this section;

(4) one or more commercial banks by a stock-form thrift institution or mutual thrift institution;

(5) one or more Federal thrift institutions by a stock-form thrift institution, mutual thrift institution or commercial bank;

(6) one or more national banks by a stock-form thrift institution or mutual thrift institution; and

(7) one or more investment companies by a commercial bank or national bank.

(c)

(1) Except as provided in paragraph (2) of this subdivision, any merger of a commercial bank or stock-form thrift institution authorized by this Part shall be approved by the board of directors and the stockholders of such institution in accordance with the procedure prescribed in Banking Law, section 601(1)-(2).

(2) In those cases where a mutual thrift institution plans to convert to stock form, and immediately thereafter merge with a stock-form banking institution, the plan of conversion shall contain a full description of the entire transaction. The conversion from mutual to stock form shall, in the case of a supervisory conversion, be approved by the board of trustees, in the case of a savings bank, or the board of directors in the case of a savings and loan association, in the manner prescribed in section 86.12 of this Title; in all other cases, the conversion shall be approved by the board of trustees and depositors, in the case of a savings bank, or the board of directors and shareholders, in the case of a savings and loan association, in the manner prescribed in section 86.4 of this Title. The approval of the plan of conversion by the board of trustees, in the case of a savings bank, or board of directors, in the case of a savings and loan association, of the converting institution shall also constitute the only corporate approval required for any merger described in this paragraph.

(3) Any merger of a mutual thrift institution authorized by this Part shall be approved by the board of trustees in the case of a savings bank, or the board of directors, in the case of a savings and loan association, in accordance with the procedure prescribed in Banking Law, section 601(1) and (3).

(4) Any Federal thrift institution or national bank whose merger into a State-chartered banking institution is authorized by this Part shall submit to the superintendent a certificate, prepared by an appropriate officer, certifying that all steps have been taken which are necessary under Federal law to merge.

(d)

(1) Any acquisition, authorized by this Part, of all or a substantial part of the assets of another banking institution by a commercial bank or stock-form thrift institution, or any disposal, authorized by this Part, of all or a substantial part of the assets of a commercial bank or stock-form thrift institution to another banking institution, shall be approved by the board of directors and the stockholders of such commercial bank or stock-form thrift institution in accordance with the procedure prescribed in Banking Law, section 601-a(2)-(3).

(2) Any acquisition, authorized by this Part, of all or a substantial part of the assets of another banking institution by a mutual thrift institution, or any disposal, authorized by this Part, of all or a substantial part of the assets of a mutual thrift institution, shall be approved by the board of trustees, in the case of a savings bank, or the board of directors, in the case of a savings and loan association, of such mutual thrift institution, in accordance with the procedure prescribed in Banking Law, section 601(1) and (3), for approving mergers.

(3) Any Federal thrift institution or national bank whose disposal of all or a substantial part of its assets to a State-chartered banking institution is authorized by this Part shall submit to the superintendent a certificate, prepared by an appropriate officer, certifying that all steps have been taken which are necessary under Federal law to the disposal of its assets.

(e)

(1) Where the superintendent has determined that grounds exist for him to take possession of the business and property of a mutual thrift institution, in that such institution:

(i) is or will in the immediate future be unable to meet its obligations;

(ii) is or otherwise would be in an unsafe and unsound condition; or

(iii) cannot with safety and expediency continue business;

he may authorize the institution to merge into, or dispose of all or a substantial part of its assets to, a stock-form thrift institution, commercial bank, federally chartered stock-form thrift institution or national bank, in a transaction in which the mutual thrift institution's depositors or shareholders have no right of approval or right to subscribe for shares to be issued by the surviving institution. In determining whether to authorize such a merger, the superintendent shall take into consideration the declaration of policy contained in section 10 of the Banking Law.

(2) Notwithstanding paragraph (1) of this subdivision, the superintendent may approve the merger of a mutual savings bank with outstanding certificates representing contributions to its surplus account into a phantom stock-form savings bank if there is compliance with the provisions of sections 86.4 and 86.6 of Part 86 of this Title as if the mutual thrift institution were converting to stock form.

3 CRR-NY 16.4 Application and fee {#sec-3-crr-ny-16.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 16.4}

Any application submitted pursuant to the authority of this Part shall be in the form prescribed by Supervisory Procedure CB 105 of this Title, except that the fee accompanying such application shall be in the amount specified in section 1.2 of Supervisory Policy G 1 of this Title in the case of a transaction to which one or more of the parties is a stock-form thrift institution. The application should be sent to the division of the department that supervises the acquiring or receiving institution at the address of the department set forth in section 1.1 of Supervisory Policy G 1.

Part 19 INTERNATIONAL BANKING FACILITIES

3 CRR-NY 19.1 Definitions {#sec-3-crr-ny-19.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 19.1}

For purposes of this Part:

(a) The term international banking facility or IBF shall mean a set of asset and liability accounts for international banking facility time deposits and international banking facility extensions of credit and any related accounts, segregated on the books of a banking institution in accordance with the provisions of section 19.3 of this Part.

(b) The term international banking facility time deposit or IBF time deposit shall have the same meaning as in regulations D (12 CFR § 204.8[a][2]) and Q (12 CFR § 217.1[1]) of the Board of Governors of the Federal Reserve System.

(c) The term international banking facility extension of credit or IBF extension of credit shall have the same meaning as in regulation D (12 CFR § 204.8[a][3]) of the Board of Governors of the Federal Reserve System.

(d) The term banking institution shall mean any bank, trust company, private banker, investment company, national banking association or foreign banking corporation licensed pursuant to article V of the New York Banking Law or pursuant to section 4 of the International Banking Act of 1978 (12 U.S.C. § 3102) to maintain a branch or agency in the State of New York, or agreement corporation or edge corporation authorized pursuant to section 25 or section 25(a) of the Federal Reserve Act to maintain a principal office or a branch in the State of New York.

(e) Any term used in this Part and not specifically defined herein shall have the meaning prescribed in the Banking Law.

3 CRR-NY 19.2 Notice of establishment of an IBF {#sec-3-crr-ny-19.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 19.2}

Any banking institution that is required pursuant to regulation D of the Board of Governors of the Federal Reserve System (12 CFR § 204.8[e]) to notify the Federal Reserve Bank of New York of its intention to establish and IBF shall simultaneously submit a copy of such notification to the superintendent. Any other banking institution authorized by this Part to establish an IBF shall submit to the superintendent a notice of its intention to establish an IBF in a form satisfactory to the superintendent.

3 CRR-NY 19.3 Recordkeeping and reporting requirements {#sec-3-crr-ny-19.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 19.3}

Each banking institution establishing an IBF shall, in connection with its IBF, maintain such books and records in such form as the superintendent shall prescribe; and shall submit such reports concerning the operations of its IBF as the superintendent shall prescribe.

3 CRR-NY 19.4 Credit information {#sec-3-crr-ny-19.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 19.4}

Each foreign banking corporation licensed pursuant to article V of the Banking Law to maintain a branch or agency in the State of New York that has established an IBF shall maintain at such branch or agency, credit information sufficient for adequate appraisal of IBF assets.

Part 21 RESERVES AGAINST COMMERCIAL BANK DEPOSITS

3 CRR-NY 21.1 Statement of policy {#sec-3-crr-ny-21.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.1}

A covered institution shall mean a depository institution which is required to hold reserves pursuant to the Monetary Control Act of 1980 (Public Law 96-221) and the regulations of the Board of Governors of the Federal Reserve System thereunder. It is the policy of the superintendent that, except as otherwise provided hereunder, every bank, trust company, private banker and foreign banking corporation, authorized under State law to maintain a branch or branches in this State, which is not a covered institution, shall maintain reserves at such times and in relation to such deposits and other balances as would be required if such institution were a covered institution. Except as otherwise provided by statute, regulation or order, the superintendent is authorized, but not required, to construe this Part in such manner as to require institutions to which it applies to conform to the reserve requirements imposed upon covered institutions.

3 CRR-NY 21.2 Reserve amounts {#sec-3-crr-ny-21.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.2}

Each institution subject to this Part which is not a covered institution shall maintain reserves against deposits and their equivalent (as defined or interpreted by the superintendent, taking into account Federal laws and regulations applicable to reserves of covered institutions) in such amounts as would be required of it if it were a covered institution without regard to any transitional adjustments permitted under the Monetary Control Act, except that the amount of reserves required to be held in respect of net demand deposits (or net transaction accounts, after November 13, 1980) pursuant to this Part shall be one per centum less of such deposits than the amount required to be held by covered institutions.

3 CRR-NY 21.3 Foreign exclusion {#sec-3-crr-ny-21.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.3}

The provisions of this Part shall not apply to any deposit account or equivalent which is payable only at an office located outside of the United States.

3 CRR-NY 21.4 [Repealed] {#sec-3-crr-ny-21.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.4}

3 CRR-NY 21.5 [Repealed] {#sec-3-crr-ny-21.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.5}

3 CRR-NY 21.6 [Repealed] {#sec-3-crr-ny-21.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 21.6}

Part 22 COMMON TRUST FUNDS

3 CRR-NY 22.1 Plan of operation {#sec-3-crr-ny-22.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.1}

A copy of each plan of operation of a common trust fund and any amendments thereto shall be filed with the superintendent at least 30 days prior to the date on which the plan or amendments thereto become effective. Each trust company acting as trustee of a common trust fund shall make available for inspection by anyone during banking hours, a copy of the plan of operation of such fund with amendments thereto.

3 CRR-NY 22.2 Trust investment committee {#sec-3-crr-ny-22.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.2}

Responsibility for the management and conduct of each common trust fund shall be vested in a trust investment committee composed of at least three members, who shall be capable and experienced officers or directors of the trust company. This committee shall keep minutes of all its decisions and activities.

3 CRR-NY 22.3 Limitation on participations {#sec-3-crr-ny-22.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.3}

No account shall participate, or increase its participation, in a common trust fund if by doing so the total investment of that account in such fund would exceed 10 percent of the market value of the fund. For the purpose of this limitation, if two or more accounts are created by the same person or persons and at least one half of the income or principal of each account is payable or applicable to the use of the same person or persons, such accounts shall be considered as one.

3 CRR-NY 22.4 Time of valuation {#sec-3-crr-ny-22.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.4}

At least once during each three-month period, investments shall be valued by the trust investment committee. The intervals between valuation dates shall be substantially equal. Any valuation shall be filed as a permanent record of the common trust fund within a reasonable period after the valuation date.

3 CRR-NY 22.5 Method of valuation {#sec-3-crr-ny-22.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.5}

The following method shall be used in the valuation of investments:

(a) Investments shall be valued by reference to appropriate valuations applied by a generally accepted pricing service, or by the methods set forth in this section. All estimates, quotation sheets and valuations used for valuation shall be retained in the records of the common trust fund.

(b)

(1) In the case of an obligation of the United States, or of an obligation for which the faith of the United States is pledged for the payment of interest and principal, the trust investment committee may use for the valuation of such investment the mean of the most recent dealer bid and asked prices appearing within the five business days next preceding the valuation date in newspapers of general circulation published in the City of New York, in standard financial periodicals or in current dealer communications. Obligations of the United States which may be redeemable at less than par prior to maturity, or which are not salable without exchange, shall be valued at par.

(2) In the case of a security listed on a national securities exchange registered under section 6 of the Federal Securities Exchange Act of 1934 or on the NASDAQ National Market, the trust investment committee shall use for the valuation thereof the last reported sales price, unless there have been no reported sales within the five business days preceding the valuation date in which event the most recent bid price shall be used. For the purposes of this paragraph, reported sales prices and bid prices shall be those appearing in newspapers of general circulation published in the City of New York, in standard financial periodicals, or on the records of a registered national exchange or the National Association of Securities Dealers. If the trust investment committee believes that the last reported sales price or bid price does not fairly represent the value of the security, then the committee may, after expressing that view in writing for its records along with the reasons for it, use as an alternative, the valuation method in paragraph (3) of this subdivision.

(3) If neither recorded sales nor bid and asked prices are available, and in the case of all investments other than those mentioned above, except investments in mortgages, the trust investment committee shall obtain written estimates of the value of any such investment as of the valuation date from not less than two bankers, brokers, dealers or other persons qualified in the opinion of the trust investment committee to give an opinion as to the value of the investment in question. The average of such estimates shall be used.

(c) For the purposes of this section, a business day shall mean a day when the New York Stock Exchange or the American Stock Exchange is open for business.

(d) In the case of investment in any mortgage at least 50 percent of which is guaranteed pursuant to the provisions of the Act of Congress entitled the “Servicemen's Readjustment Act of 1944,” as from time to time amended, and in investments in mortgages insured by the Federal Housing Commissioner, the trust investment committee shall obtain from not less than two bankers, brokers, or other persons qualified in the opinion of the trust investment committee to give an opinion as to the value of the investment in question a written estimate of the value of such investment as of the valuation date. The average of such estimates shall be used and each such estimate shall be retained in the records of the common trust fund.

(e) In the case of investments in other mortgages, the trust investment committee shall secure, prior to any valuation date, from not less than two persons qualified in the opinion of the trust investment committee to give an opinion as to the value of the mortgage in question a written estimate of the value of such mortgage. At least one of the persons making such valuation shall not have participated in the making of the last preceding valuation. The average of such estimates shall be used and each such estimate shall be retained in the records of the common trust fund. Notwithstanding the foregoing, in the event that the trust company shall have in its files such a written estimate of value made within one year of the valuation date, such estimate may be used. The real estate securing each such mortgage investment shall be appraised at least once every three years by two persons, one of whom shall not have participated in the last preceding appraisal of such real estate. Such persons shall be appointed by the trust investment committee and shall, in the opinion of such committee, be familiar with real estate values in the vicinity in which such real estate is situated and qualified to make such appraisals. The persons so appointed shall actually inspect such real estate and shall so certify in a written certificate of appraisal, which shall be filed and preserved in the records of the common trust fund. In preparing a written estimate of the value of any mortgage, due consideration shall be given, by the persons making such valuation, to the last written certificate of appraisal of the property covered by such mortgage.

(f) In the case of a stock where a dividend has been declared but has not been paid and the amount of such dividend has been considered as income under the provisions of the plan of operation of the common trust fund, the amount of such dividend shall be deducted from the price of the stock in determining its value unless such price shall be an ex-dividend price.

(g) An investment purchased and awaiting payment against delivery shall be included for valuation purposes as a security held, and the cash account shall be adjusted to reflect the purchase price, including brokers' commissions and other expenses incurred in the purchase thereof but not disbursed as of the valuation date.

(h) An investment sold but not delivered pending receipt of proceeds shall be valued at the net sales price.

(i) For the purpose of valuation of an investment, except an investment sold but not delivered, it shall not be necessary to deduct from the value ascertained as provided above brokers' commissioners or other expenses which would be incurred upon a sale thereof.

3 CRR-NY 22.6 Basis of admissions and withdrawals {#sec-3-crr-ny-22.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.6}

For the purpose of admissions to and withdrawals from the common trust, fund, the principal of the fund shall be determined by adding to the value of the investments, as determined in accordance with the provisions of sections 22.4 and 22.5 of this Part, the uninvested cash principal and other items of principal, and by deducting from the total thereof any liabilities, due or accrued, chargeable to principal. For the purpose of computing the value per unit, the principal thus determined shall be divided by the number of existing units and such unit value together with a sum equal to the proportionate share of any income held or accrued and remaining undistributed at the valuation date shall be the basis for admissions to and withdrawals from the common trust fund. In determining the value of a unit, fractions less than.01 percent of the original unit value may be omitted. No participation shall be admitted to or withdrawn from a common trust fund except on the basis of such valuation. A reasonable period, not to exceed five bank business days, following the completion of each valuation may be used to make the computations necessary to determine the value of the fund and of the participations therein. No participation shall be admitted to or withdrawn from a common trust fund unless a written request for or notice of intention of taking such action shall have been entered in the records of the trust company and approved by the trust investment committee.

3 CRR-NY 22.7 Distribution of income {#sec-3-crr-ny-22.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.7}

The income of a common trust fund shall be computed on the accrual basis and the apportionment of income shall be determined at each valuation date. The income shall be distributed to participating estates, trusts or funds not less frequently than quarter-annually, either on the basis of income accrued or on the basis of income actually received. To facilitate the distribution of accrued but uncollected income, the cash principal of the common trust fund may be used, to the extent necessary to purchase income accrued.

3 CRR-NY 22.8 Limitations {#sec-3-crr-ny-22.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.8}

No investment for a common trust fund shall be made in stocks, bonds or other obligations of any one person, firm or corporation if as a result of such investment the total amount invested in stocks, bonds or other obligations issued or guaranteed by such person, firm or corporation would aggregate in excess of 10 percent of the then market value of the fund, provided that this limitation shall not apply to investments in direct obligations of the United States or other obligations fully guaranteed by the United States as to principal and interest.

3 CRR-NY 22.9 Safekeeping {#sec-3-crr-ny-22.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.9}

(a) Approval of the superintendent must be obtained for the deposit of securities investments of a common trust fund with a securities depository, clearing agency, or bank subject to the laws of a jurisdiction outside the United States of America. The superintendent may approve a depository for this purpose or he may approve of a trust company choosing such depositories if the trust company's procedures warrant his confidence that the depositories chosen would be acceptable. The superintendent may also approve the use of subcustodians by such depositories.

(b) In deciding whether to grant approvals under subdivision (a) of this section, the superintendent, and trust companies given approval to choose their own depositories, shall consider the country risk of the jurisdiction where the depository is located, the legal protection given foreign securities depositories by the laws of that jurisdiction, the need for the services offered by the depository, the financial condition of the depository, the capabilities of the depository's management, and the insurance protecting the securities depositor in the event of the loss of securities. The trust company shall remain liable for the safekeeping of securities investments of its common trust funds, wherever held.

(c) Unless waived by the superintendent on the basis of the factors listed under subdivision (b) of this section, the custody agreement between the trust company and the depository shall provide that:

(1) the depository holds the security as agent for the trust company;

(2) the securities will not be subject to any claim of any kind in favor of the depository, except a claim for payment for safe custody or administration of the securities;

(3) beneficial ownership of the securities will be freely transferable without payment other than for safe custody or administration of the securities;

(4) adequate records will be maintained by the depository identifying the securities as being owned by the trust company as a fiduciary;

(5) the superintendent and the trust company's independent accountants will be afforded access to the records maintained, and the securities held, by the depository;

(6) the depository will periodically furnish detailed, current reports to the trust company with respect to the securities.

3 CRR-NY 22.10 Procedure on accountings for liquidating accounts {#sec-3-crr-ny-22.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.10}

For the purpose of subsequent admissions to and withdrawals from the common trust fund, the value of any investment transferred to a liquidating account shall be excluded. The trust company shall include in any subsequent accounting for the common trust fund an accounting for each liquidating account established in connection with such common trust fund.

3 CRR-NY 22.11 Direction of superintendent {#sec-3-crr-ny-22.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.11}

The superintendent, upon recommendation of the superintendent, may direct by a three-fifths vote of all its members that:

(a) a trust company file on account of proceedings covering a period less than 10 years, in accordance with subsection 100-c(6) of the Banking Law;

(b) any common trust fund be terminated; or

3 CRR-NY 22.12 Filing of accounts {#sec-3-crr-ny-22.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.12}

An account of proceedings, as specified under Banking Law, subsection 100-c(6), shall be filed within six months of the close of the period covered by the account.

3 CRR-NY 22.13 Superintendent to be notified {#sec-3-crr-ny-22.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.13}

Whenever an account of proceedings is to cover a period of less than 10 years, the superintendent shall be notified at least one month prior to the close of the accounting period.

3 CRR-NY 22.14 Duplicate of accounts to be submitted {#sec-3-crr-ny-22.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.14}

Within five days of the filing in court of an account of proceedings, two copies of the account certified by a principal officer of the trust company shall be submitted to the superintendent.

3 CRR-NY 22.15 Examination of common trust fund {#sec-3-crr-ny-22.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.15}

The superintendent shall cause an examination to be made of the investments held by a trust company for a common trust fund as of the close of the period covered by an account of proceedings, and on or before the return date of the citation or notice, shall certify in writing to the court in which the accounting proceeding is pending whether the investments reported in such account as of the closing date of such account were in the custody of the trust company at such date. Where securities of a common trust fund have been deposited: (a) with a clearing corporation pursuant to EPTL 11-1.9; (b) with a Federal reserve bank pursuant to EPTL 11-1.8; or (c) with a securities depository, clearing agency, or bank, whether or not subject to the laws of a jurisdiction other than the United States of America, or any state or subdivision thereof, the superintendent may rely on such an examination upon the written certification of such clearing corporation, Federal reserve bank, securities depository, clearing agency or bank that such securities were so deposited by such trust company with such clearing corporation, Federal reserve bank, securities depository, clearing agency or bank for the account of such trust company. Where securities of a common trust fund have been deposited through a subcustodian with a clearing corporation pursuant to EPTL 11-1.9 or with a Federal reserve bank pursuant to EPTL 11-1.8, the superintendent may rely in such examination upon the written certification of such subcustodian that such securities were deposited by such trust company with such subcustodian and were in turn deposited by such trust company with such subcustodian and were in turn deposited by such subcustodian with such clearing corporation or Federal reserve bank. The trust company shall pay to the superintendent his reasonable expenses incurred in making such examination and certification, and such payment shall be a charge against the principal of such common trust fund.

3 CRR-NY 22.16 Common trust funds restricted to true fiduciary purposes {#sec-3-crr-ny-22.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.16}

Common trust funds which are established pursuant to Banking Law, section 100-c, may be operated only for true fiduciary purposes. The trust investment committee shall not permit any funds of any trust to be invested in any such common trust fund if it has reason to believe that such trust was not created or is not being used for true fiduciary purposes. A trust company administering a common trust fund shall not, in soliciting business or otherwise, publish or make representations which are inconsistent with this section or the other provisions of this Part and, subject to the applicable requirements of law, shall not advertise or publicize the earnings realized on any common trust fund or the value of the assets thereof, provided that nothing herein shall be construed to prohibit a trust company from advertising in accordance with the rules and regulations of the Comptroller of the Currency regarding the maintenance of common trust funds.

3 CRR-NY 22.17 Common trust funds to be audited annually {#sec-3-crr-ny-22.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.17}

(a) A trust company administering a common trust fund shall, once during each 12-month period, or at such interval as the superintendent may determine, cause an audit to be made of the common trust fund by auditors responsible only to the board of directors of the trust company. The report of such audit shall include a list of the investment comprising the common trust fund at the time of the audit which shall show the valuation placed on each item on such list by the trust investment committee as of the date of the audit, a statement of purchases, sales and any other investment changes and of income and disbursements since the last audit, and appropriate comments as to any investments in default as to payment of principal or interest. The reasonable expenses of any such audit made by independent public accountants may be charged to the common trust fund.

(b) The trust company shall, without charge, send a copy of such audit annually to each person to whom a regular periodic accounting of the estates, trust or funds participating in the common trust fund ordinarily would be rendered or shall send advice to each such person annually that the report is available and that a copy will be furnished without charge upon request. Except as may be required by law, the trust company shall not publish or authorize the publication of any such report or the information contained therein and each copy furnished to any person as herein provided must bear a statement to the effect that the publication of such copy or the information contained therein is unauthorized, except that such publication in accordance with the rules and regulations of the Comptroller of the Currency regarding the maintenance of common trust funds is permitted.

3 CRR-NY 22.18 Inspection of records by persons interested {#sec-3-crr-ny-22.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.18}

All accounting records, registers of participations, periodic statements, audits under the plan, and liquidating accounting records, pertaining to a common trust fund for the period subsequent to that covered by the last judicial account therefor shall be subject to inspection, during bank business hours for a period of one month following each valuation date by any adult and competent person, by the guardian of an infant and by the committee of an incompetent when it appears that the adult competent person, the infant or the incompetent is a person interested in a participating estate, trust or fund.

3 CRR-NY 22.19 Restrictions on ownership of participations by trustee {#sec-3-crr-ny-22.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.19}

A trust company administering a common trust fund shall not:

(a) have any interest in such fund other than in its fiduciary capacity; or

(b) make any loans on the security of a participation in such fund.

If because of a creditor relationship or otherwise the trust company acquires an interest in a participation in such fund the participation shall be withdrawn on the first date on which such withdrawal can be effected. However, in no case shall an unsecured advance to an account holding a participation until the time of the next withdrawal be deemed to constitute the acquisition of an interest by the trust company.

3 CRR-NY 22.20 Management of common trust fund and fees {#sec-3-crr-ny-22.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.20}

A trust company administering a common trust fund shall have the exclusive management thereof and shall not charge a fee for the management of the common trust fund, or receive, either from the common trust fund or from any estates, trusts or funds, the funds of which are invested in participations therein, any additional fees, commissions, or compensations of any kind by reason of such participation. The trust company shall not pay a fee, commission, or compensation out of the common trust fund for management. Nothing in this section shall be construed as prohibiting a trust company from reimbursing itself out of a common trust fund for such reasonable expenses incurred by it in the administration thereof as would have been chargeable to the respective participating estates, trusts, or funds if incurred in the separate administration of such participating estates, trusts or funds. The cost of printing, publication and distribution of the annual audit report referred to in section 22.17 of this Part shall be borne by the trust company.

3 CRR-NY 22.21 Effect of mistakes {#sec-3-crr-ny-22.21 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.21}

No mistake made in good faith and despite the exercise of due care in connection with the administration of a common trust fund shall be deemed to be a violation of this Part if after the discovery of the mistake the trust company takes promptly whatever action may be practicable in the circumstances to remedy the mistake.

3 CRR-NY 22.22 Compliance with regulations of the Comptroller of the Currency {#sec-3-crr-ny-22.22 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.22}

Nothing in this Part shall be construed to prohibit trust companies from taking action or refraining from action as required by the rules and regulations, prevailing from time to time of the Comptroller of the Currency pertaining to the collective investment of trust funds by national banks.

3 CRR-NY 22.23 Short-term investment common trust funds {#sec-3-crr-ny-22.23 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.23}

(a) Notwithstanding anything contained in section 22.5 of this Part to the contrary, all investments of a short-term investment common trust fund may be valued:

(1) by reference to appropriate valuations applied by a generally accepted pricing service; or

(2) at cost, if the plan of operation of such fund requires that:

(i) the type or category of investments of the fund shall comply with the rules and regulations of the Comptroller of the Currency pertaining to short-term investment funds, as in effect from time to time; and

(ii) in computing income, the difference between cost of investments and anticipated receipt on maturity of investments shall be accrued on a straight line basis.

(b) A participation may be admitted to, or withdrawn from, a short-term investment common trust fund at any time in the discretion of the trust company without regard to the notice requirements of section 22.6 of this Part for admissions and withdrawals.

(c) Notwithstanding any provision of section 22.6 of this Part to the contrary, the plan of operation of a short-term investment common trust fund may provide for purposes of admission and withdrawal of participations that the principal of the fund shall be determined by adding to value of the investments, as determined in accordance with the provisions of subdivision (a) of this section, the uninvested cash principal and other items of principal, and by deducting from the total thereof any liabilities, due or accrued, chargeable principal. For the purpose of computing the value per unit, the principal thus determined shall be divided by the number of existing units and such unit value together with a sum equal to the proportionate share of any income held or accrued and remaining undistributed at the time of valuation less the amount of income payable to unit holders accrued from the last income payment date may be the basis for admissions to and withdrawals from the short-term investment common trust fund. In determining the value of a unit, fractions less than.01 percent of the original unit value may be omitted, and any proportionate share of income attributable to a unit of the short-term investment common trust fund may be determined in accordance with the provisions of paragraph (d)(1) or (2) of this section.

(d) Notwithstanding any provision of section 22.7 of this Part to the contrary, the plan of operation of a short-term investment common trust fund may provide that for purposes of distributing income:

(1) the net income of each unit of a short-term investment common trust fund shall be determined daily on, or within a reasonable period after, each bank business day by dividing the net income of the short-term investment common trust fund by the number of units into which it is then divided, and as soon as practicable after the last calendar day of each month the net income of each unit during that month shall be distributed to the participating trust, estate or fund to which that unit is or was allocated on the day the net income was determined. If income has been accrued and distributed to a participating trust, estate or fund but has not actually been collected by the trust company at the time fixed for its payment, the trust company in its discretion may charge back to and collect from the participating trust, estate or fund the amount of the income so distributed or credited; or

(2) the net income of each unit of a short-term investment common trust fund shall be determined as of the last calendar day of each month, and within a reasonable period thereafter, by employing the dollar-day method, the total units of participation in the fund, as of the beginning of each day of the month, shall be aggregated for the entire monthly period, and the total number of month-units so calculated shall be divided into the total amount of net income of the fund for the month, which shall be the income earned and collected in the fund, or accrued on the investments held in the fund, as of the last day of the month, for the entire month, as reduced by all liabilities, expenses or other charges, due to accrued, chargeable to income. The net income per month-unit so calculated shall be termed the dollar-day value for each unit held on each day of the month involved. Each participant shall be entitled to a monthly income payment based on the aggregate number of month-units that participant held in the fund (computed by aggregating the units held in the fund by the participant as of the beginning of each day of the month, for all of the days that the participant held units of the fund during the month) multiplied by the unit dollar-day value so determined, and such payment shall be distributed to each participant as soon as practicable after the last calendar day of each month. If income has been accrued and distributed to a participating trust, estate or fund but has not actually been collected by the trust company at the time fixed for its payment, the trust company in its discretion may charge back to and collect from the participating trust, estate or fund the amount of income so distributed or credited.

3 CRR-NY 22.30 to 22.32 to 22.32 [Expired] {#sec-3-crr-ny-22.30-to-22.32 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.30 to 22.32}

3 CRR-NY 22.40 to 22.41 to 22.41 [Expired] {#sec-3-crr-ny-22.40-to-22.41 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.40 to 22.41}

3 CRR-NY 22.42 [Expired] {#sec-3-crr-ny-22.42 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.42}

3 CRR-NY 22.43 [Expired] {#sec-3-crr-ny-22.43 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.43}

3 CRR-NY 22.50 [Expired] {#sec-3-crr-ny-22.50 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.50}

3 CRR-NY 22.51 to 22.52 to 22.52 [Expired] {#sec-3-crr-ny-22.51-to-22.52 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.51 to 22.52}

3 CRR-NY 22.60 [Expired] {#sec-3-crr-ny-22.60 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.60}

3 CRR-NY 22.61 [Expired] {#sec-3-crr-ny-22.61 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.61}

3 CRR-NY 22.62 [Expired] {#sec-3-crr-ny-22.62 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.62}

3 CRR-NY 22.70 to 22.72 to 22.72 [Expired] {#sec-3-crr-ny-22.70-to-22.72 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.70 to 22.72}

3 CRR-NY 22.80 to 22.82 to 22.82 [Expired] {#sec-3-crr-ny-22.80-to-22.82 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.80 to 22.82}

3 CRR-NY 22.90 to 22.100 to 22.100 [Expired] {#sec-3-crr-ny-22.90-to-22.100 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.90 to 22.100}

3 CRR-NY 22.200 [Expired] {#sec-3-crr-ny-22.200 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 22.200}

Part 23 CALL REPORTS

3 CRR-NY 23.1 Calls reports {#sec-3-crr-ny-23.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 23.1}

Section 14(1)(l) of the Banking Law empowers the superintendent to prescribe the form and contents of periodical reports of condition to be rendered to the superintendent by banks, trust companies and private bankers. A periodical report of condition shall be deemed rendered to the superintendent if the superintendent shall have such access as he or she deems appropriate at either the principal office of the bank or trust company or through the facilities of the Federal Deposit Insurance Corporation or Federal Reserve Board, as the case may be, to such reports of condition as have been rendered to the Federal Deposit Insurance Corporation or the Federal Reserve Board, as the case may be, in compliance with their rules and regulations. With respect to reports of banks and trust companies not otherwise reporting to the Federal Reserve or FDIC, such reports shall be rendered to the superintendent.

3 CRR-NY 23.2 [Repealed] {#sec-3-crr-ny-23.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 23.2}

3 CRR-NY 23.3 [Repealed] {#sec-3-crr-ny-23.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 23.3}

3 CRR-NY 23.4 [Repealed] {#sec-3-crr-ny-23.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 23.4}

Part 24 ANNUAL FINANCIAL STATEMENTS OF COMMERCIAL BANKS, TRUST COMPANIES, STOCK FORM SAVINGS BANKS AND STOCK FORM SAVINGS AND LOANS

3 CRR-NY 24.1 Annual reports {#sec-3-crr-ny-24.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.1}

For each fiscal year beginning on or after January 1, 1968, every commercial bank, trust company, stock form savings bank and stock form savings and loan association shall mail an annual report prepared in conformity with generally accepted accounting principles to each of its stockholders at least five days before the bank's annual meeting. Four copies of such report shall be filed at the same time with the superintendent at his New York City office.

3 CRR-NY 24.2 Exemptions {#sec-3-crr-ny-24.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.2}

A commercial bank shall not be subject to the requirements of this Part if:

(a) it has 500 or more stockholders and files with the superintendent at his New York City office four copies of the annual financial statements required to be filed by such bank with the Board of Governors of the Federal Reserve System or four copies of the annual financial statements required to be filed by such bank with the Federal Deposit Insurance Corporation in accordance with part 335 of title 12 of the regulations of such corporation; or

(b) all of its voting securities, excepting only directors' qualifying shares, are owned, controlled or held with power to vote by a bank holding company as defined in Banking Law, section 141, or by a single corporation; or

(c) all of its voting securities, excepting only directors' qualifying shares, are owned, controlled or held with power to vote by one or more banks, one or more corporations, or a combination of one or more banks and one or more corporations, organized under the laws of a foreign country; or

(d) it is a trust company all of the capital stock of which is owned by 20 or more savings banks.

3 CRR-NY 24.3 Comparative statements {#sec-3-crr-ny-24.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.3}

The annual report to stockholders required by section 24.1 of this Part shall be completed on a comparative year basis with figures shown both for the fiscal year covered by the report and for the preceding year, provided that in the first report mailed to stockholders and filed with the superintendent pursuant to this Part, only figures for the fiscal year covered by the report need be included.

3 CRR-NY 24.4 Inspection {#sec-3-crr-ny-24.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.4}

The information filed pursuant to the requirements of this Part will be available for public inspection during business hours (a) in the case of all commercial banks at the New York City office of the department, and (b), in addition, in the case of commercial banks headquartered outside New York City and Nassau, Suffolk, Westchester and Rockland Counties, at the appropriate upstate examination district office of the department, i.e., Albany, Syracuse, Rochester and Buffalo.

3 CRR-NY 24.5 to 24.10 to 24.10 [Repealed] {#sec-3-crr-ny-24.5-to-24.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.5 to 24.10}

3 CRR-NY 24.11 [Repealed] {#sec-3-crr-ny-24.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.11}

3 CRR-NY 24.12 [Repealed] {#sec-3-crr-ny-24.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.12}

3 CRR-NY 24.13 [Repealed] {#sec-3-crr-ny-24.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 24.13}

Part 25 MEETINGS OF STOCKHOLDERS OF CERTAIN COMMERCIAL BANKS

3 CRR-NY 25.1 Findings of superintendent {#sec-3-crr-ny-25.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 25.1}

The superintendent hereby finds:

(a) that the policy of this State to protect the public interest and the interests of stockholders of a corporate banking organization requires that there be full disclosure to its stockholders of the material and significant facts relating to the management and condition of the banking organization necessary to enable an intelligent and responsible vote in the election of directors;

(b) that the policy of this State to protect the public interest and the interests of depositors, creditors and stockholders of a corporate banking organization may, on the other hand, require that there not be full disclosure that the superintendent has issued an order to such banking organization pursuant to Banking Law, section 39, or full disclosure of the results of any examination or investigation upon which it is based because full disclosure in either case might tend to undermine public confidence in such banking organization;

(c) that compliance with the requirement of Banking Law, section 6002, that each corporate banking organization hold a stockholders' meeting for the election of directors within the first four months of its calendar year may precipitate an irreconcilable conflict between the policies described in findings (a) and (b) above; and

(d) that such a conflict would constitute an unusual and extraordinary circumstance necessitating a variation from the requirements of Banking Law, section 6002.

3 CRR-NY 25.2 Prior approval of notice to stockholders {#sec-3-crr-ny-25.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 25.2}

For the reasons stated in section 25.1 of this Part, the superintendent hereby authorizes the superintendent, whenever an order has been issued to any bank or trust company pursuant to Banking Law, section 39, in his or her discretion, to require such corporate banking organization to submit to him or her, for his or her prior approval, any proposed notice to stockholders of any meeting of stockholders to be held within two years after the date of issuance of such order, any solicitation of proxies for such meeting and any other communication to stockholders concerning such meeting (all hereinafter included in the term “notice to stockholders”).

3 CRR-NY 25.3 Criteria for approval {#sec-3-crr-ny-25.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 25.3}

In determining whether or not to approve any proposed notice to stockholders, the superintendent shall take into consideration the nature of the order issued pursuant to Banking Law, section 39, the condition of such corporate banking organization, and the results of any examination or investigation of such corporate banking organization which he or she has caused to be made. In no event shall the superintendent approve any proposed notice to stockholders unless it shall be found that full disclosure can be made to stockholders while, at the same time, protecting the public interest and the interests of depositors, creditors and stockholders.

3 CRR-NY 25.4 Time limitations {#sec-3-crr-ny-25.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 25.4}

No notice to stockholders which requires the approval of the superintendent under this Part shall be communicated to stockholders until it has been approved, in writing, by the superintendent. If any such proposed notice to stockholders is approved by the superintendent prior to August 1 of any calendar year, the corporate banking organization affected shall proceed forthwith to hold a meeting for the election of directors and the transaction of other business within two months following the date of such approval, and such meeting of stockholders shall be deemed to have been held in compliance with the requirements of Banking Law, section 6002(2). If no proposed notice to stockholders is approved prior to August 1 of any calendar year, the requirements of such section 6002(2) shall not apply for that calendar year.

Part 26 STOCK OPTIONS

GENERAL PROVISIONS GENERAL PROVISIONS

3 CRR-NY 26.1 Definitions {#sec-3-crr-ny-26.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.1}

As used in this Part the term:

(a) bank means a bank or trust company;

(b) option means the right of an individual (optionee) to purchase from a bank shares of the bank's authorized and unissued capital stock by virtue of an offer by the bank continuing for a stated period of time to sell such shares at a stipulated price, such individual being under no obligation to purchase; and

(c) plan means the document setting forth the terms and conditions under which a bank may grant stock options to its directors, officers and employees.

3 CRR-NY 26.2 Requirement of superintendent's approval {#sec-3-crr-ny-26.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.2}

No option granted by any bank shall become effective and no shares shall be issued or purchased pursuant to any plan until the superintendent has given final approval to such plan upon application therefor.

3 CRR-NY 26.3 Preliminary approval {#sec-3-crr-ny-26.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.3}

(a) Following adoption of a plan by its board of directors, a bank may submit to the superintendent an application for preliminary approval of such plan. The application, to be submitted in triplicate, shall consist of:

(1) a copy of the plan;

(2) a certified copy of the resolution of the board of directors adopting the plan;

(3) drafts or printer's proofs of resolutions to be submitted to a stockholder's meeting:

(i) authorizing adoption of the plan; and

(ii) authorizing any appropriate amendments to the bank's organization certificate with regard to any increase in capital stock or other matters;

(4) drafts or printer's proofs of the proposed certificate of amendment;

(5) an opinion of the bank's counsel that the provisions of the plan will permit compliance with the provisions of this Part;

(6) proposed proxy materials; and

(7) such other documents or information as the superintendent may require.

(b) The superintendent shall approve or disapprove in writing such application for preliminary approval.

(c) In the event the superintendent approves such application, the plan may be submitted to the stockholders of the bank.

3 CRR-NY 26.4 Final approval {#sec-3-crr-ny-26.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.4}

(a) Following approval by the holders of a majority of the outstanding shares of capital stock of the bank and following the expiration of a 20-day period from the date notice of the stockholder's meeting was mailed to stockholders, the bank may submit to the superintendent an application for final approval of the plan. The application, to be submitted in triplicate, shall consist of:

(1) a certified copy of the resolution of the stockholders adopting the plan and approving any appropriate amendments to the bank's organization certificate;

(2) a sworn statement of the bank's president, secretary or cashier setting forth the votes cast for and against the plan, and stating whether any stockholders have demanded payment for their shares and if so, the number of shares for which payment has been demanded; and

(3) such other documents or information as the superintendent may require.

(b) The superintendent shall approve or disapprove in writing such application.

3 CRR-NY 26.5 Notice to stockholders {#sec-3-crr-ny-26.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.5}

The following information shall accompany the notice given to stockholders of the stockholders' meeting to be held for the purpose of approving a plan:

(a) a copy of the plan;

(b) comparative earnings statements of the bank, in tabular form, for each of the last five calendar years and for the current year, inclusive of the quarterly period preceding such notice;

(c) comparative balance sheets of the bank, in tabular form, for each of the last five calendar years and for the current year, inclusive of the quarterly period preceding such notice;

(d) the current annual compensation of each of the bank's two highest paid officers and the current annual aggregate compensation of all the bank's officers;

(e) any options previously granted by the bank to its officers or employees;

(f) a statement to the effect that the superintendent's preliminary review of the plan implies neither approval nor disapproval of the plan's contents;

(g) such other information as may be required by the superintendent; and

(h) such other information as may be required by applicable law or regulation.

3 CRR-NY 26.6 Amendments to plan or options {#sec-3-crr-ny-26.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.6}

(a) Except as provided in subdivision (b) of this section, no amendment to a plan shall become effective until such amendment has been adopted by the bank' s board of directors, and approved by the holders of a majority of the outstanding shares of the capital stock of the bank and by the superintendent in accordance with the procedures set forth in sections 26.3 and 26.4 of this Part.

(b) Stockholder approval of the proposed amendment shall not be required if the plan contains a provision similar to that permitted under section 26.13(a)(8) of this Part, the proposed amendment is not one of those specified in subparagraphs (i) through (v) thereof and the proposed amendment does not require an amendment of the bank's organization certificate. In such event, following adoption of the amendment by its board of directors, a bank shall submit to the superintendent an application for approval of the amendment, and no such amendment shall become effective until the superintendent's approval is granted. The application, to be submitted in triplicate, shall consist of:

(1) a copy of the amendment;

(2) a certified copy of the resolution of the board of directors adopting the amendment;

(3) an opinion of the bank's counsel that the provisions of the plan, as amended, will permit compliance with the provisions of this Part; and

(4) such other documents or information as the superintendent may require. The superintendent shall approve or disapprove in writing such application.

PROVISIONS OF PLAN PROVISIONS OF PLAN

3 CRR-NY 26.10 Granting committee {#sec-3-crr-ny-26.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.10}

The plan shall provide that options shall be granted only by (or upon recommendation of) a committee elected by the bank's board of directors. However, with respect to participation by directors, the plan shall provide that options shall be granted by (or only in accordance with the recommendation of) a committee elected by the bank's board of directors, none of the members of which committee shall be under consideration for a grant of options at the time such committee acts, or in accordance with the plan if the plan specifies the number of options which will be granted to directors.

3 CRR-NY 26.11 Option pricing {#sec-3-crr-ny-26.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.11}

The plan shall provide that options may be granted at not less than 100 percent of the fair market value of the shares covered by such option on the date the option is granted. If a realistic and fair market value of such shares is not readily determinable, an estimate of the fair market value shall be made and options may be granted at not less than this figure and in such case the plan shall set forth in detail the method to be employed in estimating fair market value. Among the factors which should be considered in such estimates are:

(a) the market value of the shares of comparable banks; and

(b) the trend of the bank's earnings.

3 CRR-NY 26.12 Additional mandatory provisions {#sec-3-crr-ny-26.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.12}

The plan shall provide:

(a) a general statement of the purposes of the plan;

(b) that the plan is subject to the provisions of the Banking Law, section 140-a, the regulations of the superintendent and any other applicable law or regulation;

(c) the total number of shares as to which options may be granted, which number may, however, be subject to adjustment as provided in section 26.13(a)(7) of this Part;

(d) the period of time for which the plan shall be in effect;

(e) that options granted thereunder shall not extend beyond a period of 10 years or such shorter period as the plan may provide;

(f) that an optionee may not sell within a specified period shares which he has purchased pursuant to option (unless the superintendent shall waive, in writing, the requirement for such a provision);

(g) that no options shall be assignable or transferable except by will or by the laws of descent and distribution; and

(h) that the terms and conditions of options shall be set forth or incorporated by reference in the instruments evidencing such options.

3 CRR-NY 26.13 Permissive provisions {#sec-3-crr-ny-26.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.13}

(a) The plan may include:

(1) a limitation upon the number of shares which may be optioned to any single individual;

(2) a limitation to the effect that an optionee may exercise an option only while in the employ of the bank or within three months after leaving such employment;

(3) a limitation to the effect that an option may not be exercised more than two years after the death of the optionee;

(4) a limitation upon the times during a year when options may be exercised;

(5) a limitation upon the portion of an optionee's options which may be exercised in any one year;

(6) an age limitation upon the persons who may be granted options;

(7) a provision which would permit a bank's board of directors, subject only to the superintendent's approval, to make appropriate adjustments in the total number of shares as to which options may be granted, the number of shares which may be optioned to any single individual, the number of shares optioned under any option, and the option price under any option, to reflect any stock dividend, stock split or share combination duly effectuated by the bank; and

(8) a provision which would permit a bank's board of directors to amend the plan, subject only to the superintendent's approval; provided, however, that the approval of the holders of a majority of the bank's outstanding capital stock shall be required for any amendment (other than an adjustment made pursuant to paragraph [7] of this subdivision) which would:

(i) increase the number of shares as to which options may be granted;

(ii) change the number of shares which may be optioned to any single individual;

(iii) decrease an option price;

(iv) extend the term of the plan or of an option; or

(v) change the persons or category of persons eligible to be granted options.

(b) The foregoing provisions are not intended to be inclusive of all provisions which may be appropriate or desirable for inclusion in a plan.

3 CRR-NY 26.14 Voidability of plans and options {#sec-3-crr-ny-26.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 26.14}

If the superintendent shall find at any time that there has been, with respect to any plan approved by him, any violation of any of the provisions of the Banking Law, section 140-a, of this Part, or of the plan, he may declare such plan or any option granted thereunder null and void, and in such event shall so advise the bank and, if appropriate, the optionee, by official communications stating the grounds for such declaration, and specifying the action, if any, to be taken by such bank or optionee to effectuate or carry out such declaration. The superintendent may advise the bank and, if appropriate, the optionee, of the action, if any, to be taken by such bank or optionee to cure the defect.

Part 27 CAPITAL NOTES AND DEBENTURES AS CAPITAL STOCK

3 CRR-NY 27.1 Capital notes and debentures as capital stock {#sec-3-crr-ny-27.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 27.1}

Every capital note or debenture issued by a bank or trust company and authorized by the superintendent in accordance with section 96(4) of the Banking Law and Supervisory Procedure CB 111, shall be in all respects considered and treated as a share of capital stock having a par value equal to the face amount of such note or debenture, for purposes of Banking Law, sections 97, 98(1)(a) and (1)(e), 103(1), 106, 121, 7001 and 7002.

3 CRR-NY 27.2 [Repealed] {#sec-3-crr-ny-27.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 27.2}

3 CRR-NY 27.3 [Renumbered] {#sec-3-crr-ny-27.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 27.3}

3 CRR-NY 27.4 [Repealed] {#sec-3-crr-ny-27.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 27.4}

Part 28 IMPLEMENTATION OF BANKING LAW, SECTION 103

3 CRR-NY 28.1 Designation of departments, agencies and instrumentalities of the United States and the State of New York {#sec-3-crr-ny-28.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.1}

Pursuant to Banking Law, section 103.1(a), the superintendent hereby designates:

(a) Departments, agencies and instrumentalities of the United States.

(1) Export-Import Bank of Washington.

(2) Economic Development Administration, but only to the extent that such administration has agreed to pay the principal and interest of a loan or extension of credit, or has guaranteed payment (by guaranty or commitment to purchase or otherwise) of such principal and interest.

(3) Commodity Credit Corporation, but only to the extent that a loan or extension of credit is secured or covered by a guaranty, or by a commitment or agreement to take over or to purchase, made by such corporation, and such guaranty, agreement or commitment is unconditional and must be performed by payment of cash or its equivalent within 60 days after demand.

(4) Any guaranteeing agency designated or authorized by the President under section 301 or 302 of the Defense Production Act of 1950, as amended (50 App. U.S.C.A. §§ 2091, 2092), and any Federal Reserve Bank acting on behalf of any such agency, but only to the extent such agency or bank has guaranteed a loan or extension of credit (by commitment to purchase, agreement to share losses, or otherwise) against loss of principal and interest, or has made a commitment to make such guaranty.

(b) Departments, agencies and instrumentalities of the State of New York.

The Municipal Assistance Corporation for the City of New York, provided that such corporation has agreed to pay the principal and interest on a loan or extension of credit, or has guaranteed payment (by guaranty or commitment to purchase or otherwise) of such principal and interest, or is committed to supply, by loan, subsidy or otherwise, funds sufficient to pay such principal and interest, or has otherwise pledged its faith and credit for the payment of such principal and interest.

3 CRR-NY 28.2 Designation of public benefit corporations {#sec-3-crr-ny-28.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.2}

Pursuant to Banking Law, section 103(1)(c), the superintendent hereby designates the New York State Housing Finance Agency and the Metropolitan Transportation Authority, as public benefit corporations to which any bank or trust company may make loans equal but not exceeding 25 percent of the capital stock, surplus fund and undivided profits of such bank or trust company.

3 CRR-NY 28.3 Designation of rated investment securities {#sec-3-crr-ny-28.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.3}

The superintendent hereby designates as independent rating services for the purposes of Banking Law, section 103(1)(i), Moody's Investors Service, Inc., Standard & Poor's Corporation, and Fitch Investors Service Inc.

3 CRR-NY 28.4 Designation of international lending facilities {#sec-3-crr-ny-28.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.4}

Pursuant to Banking Law, section 103(1)(c), the superintendent hereby designates Asian Development Bank, African Development Bank, the International Bank for Reconstruction and Development, and the International American Development Bank as international lending facilities.

3 CRR-NY 28.5 The New York City Community Preservation Corporation {#sec-3-crr-ny-28.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.5}

The limitations and restrictions of Banking Law, section 103(4), shall not apply to collateral trust notes issued by the The New York City Community Preservation Corporation which notes have been issued pursuant to, and have terms substantially similar to those set forth in an indenture that shall have received the prior specific approval of the superintendent or to the mortgages or other liens securing said notes.

3 CRR-NY 28.6 [Renumbered] {#sec-3-crr-ny-28.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 28.6}

Part 29 DECLARATION OF DIVIDENDS

3 CRR-NY 29.1 Background {#sec-3-crr-ny-29.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.1}

Banking Law, section 112 authorizes banks and trust companies to declare dividends in a calendar year without having obtained the prior approval of the superintendent out of net profits for that calendar year together with retained net profits for the immediately preceding two calendar years. The department formerly has computed “net profits” by adding back to net income any provision made for loan losses and deducting any net losses charged to the loan loss reserve. This procedure is inconsistent with the recognition of losses under generally accepted accounting principles (“GAAP”).

3 CRR-NY 29.2 Computation of net profits {#sec-3-crr-ny-29.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.2}

A bank or trust company must reduce net profits at the time a provision for loan losses is made rather than when any net losses are charged to the loan loss reserve. Accordingly, net profits of a bank or trust company will equal its net income for purposes of Banking Law, section 112.

3 CRR-NY 29.3 Transition {#sec-3-crr-ny-29.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.3}

A bank or trust company must use section 29.2 of this Part to compute net profits for all calendar years beginning on and after January 1, 1991 and may use section 29.2 of this Part for all calendar years beginning on and after January 1, 1990. Whether using section 29.2 of this Part for the computation of net profits on or after January 1, 1990 or January 1, 1991, a bank or trust company may recompute retained net profits for one or both of the two calendar years immediately preceding 1990 or 1991, as the case may be, using section 29.2 of this Part. Once a bank or trust company has elected to compute net profits or retained net profits for a particular calendar year using section 29.2 of this Part, net profits or retained net profits for all subsequent calendar years must also be computed using section 29.2 of this Part. If a bank or trust company has elected to use section 29.2 of this Part to compute net profits or retained net profits for a particular calendar year, it must thereafter use section 29.2 of this Part to compute retained net profits for that calendar year.

3 CRR-NY 29.4 [Repealed] {#sec-3-crr-ny-29.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.4}

3 CRR-NY 29.5 [Repealed] {#sec-3-crr-ny-29.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.5}

3 CRR-NY 29.6 [Repealed] {#sec-3-crr-ny-29.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 29.6}

Part 30 INSIDERS' REPORTS

3 CRR-NY 30.1 General requirement {#sec-3-crr-ny-30.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 30.1}

Initial statements of, and statements of changes in, the beneficial ownership of equity securities of a bank or trust company required to be filed with the superintendent pursuant to Banking Law, section 130(7), should be prepared and filed in accordance with the instructions contained on department Forms BO-1 and BO-2, respectively.

3 CRR-NY 30.2 Definitions {#sec-3-crr-ny-30.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 30.2}

For the purposes of this Part, the term officer means a chairman of the board of directors, vice chairman of the board, chairman of the executive committee, president, vice president (except as indicated in the next sentence), cashier, treasurer, secretary, comptroller, and any other person who participates in major policymaking functions. In some institutions (particularly banks or trust companies with officers bearing titles such as executive vice president, senior vice president, or first vice president as well as a number of “vice presidents” ), some or all “vice presidents” do not participate in major policymaking functions, and such persons are not officers for the purpose of this Part.

3 CRR-NY 30.3 Exemption {#sec-3-crr-ny-30.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 30.3}

An officer who owns no equity securities of the bank or trust company of which he is an officer shall be exempt from the requirements of this Part.

3 CRR-NY 30.4 Inspection {#sec-3-crr-ny-30.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 30.4}

The information filed pursuant to the requirements of this Part will be available for public inspection and copying during business hours at the address of the department set forth in section 1.1 of Supervisory Policy G1 of this Title.

Part 31 INVESTMENTS OF BANKS OR TRUST COMPANIES IN CERTAIN CORPORATIONS

3 CRR-NY 31.1 Federal National Mortgage Association; Government National Mortgage Association {#sec-3-crr-ny-31.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.1}

The superintendent hereby authorizes any bank or trust company which sells or assigns mortgages which it owns to the Federal National Mortgage Association (FNMA), or the Government National Mortgage Association (GNMA) to invest in and hold the stock of FNMA and GNMA which it acquires in connection with making such sale or assignment effective and to do any and all other acts which under the laws and regulations applicable to such sales may be required to effect such sales.

3 CRR-NY 31.2 The Depository Trust Company {#sec-3-crr-ny-31.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.2}

Any bank or trust company is permitted to invest in or hold shares of common stock of Depository Trust & Clearing Corporation, the principal function of which is to serve as the holding company for The Depository Trust Company and the National Securities Clearing Corporation.

3 CRR-NY 31.3 Distributions by Small Business Investment Company of New York, Inc. of stock held in its portfolio {#sec-3-crr-ny-31.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.3}

Banks and trust companies holding stock in Small Business Investment Company of New York, Inc. are authorized to hold stock, received from Small Business Investment Company of New York, Inc. as a distribution from its portfolio, for a period not exceeding two years from the date of receipt of any such portfolio stock.

3 CRR-NY 31.4 Student Loan Marketing Association {#sec-3-crr-ny-31.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.4}

Any bank or trust company is permitted to invest in and hold shares of stock of the Student Loan Marketing Association. Any bank or trust company is further permitted to act as underwriter for such stock, unless the Board of Governors of the Federal Reserve System determines that such stock is not eligible for underwriting by banks under title 12 of the United States Code. Such investment, holding, or underwriting by any bank or trust company shall not exceed in total amount two percent of the capital stock and surplus of such bank or trust company.

3 CRR-NY 31.5 Capital Housing Rehabilitation Corp {#sec-3-crr-ny-31.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.5}

Any bank or trust company is permitted to invest in shares of common stock of Capital Housing Rehabilitation Corp. in a total amount not to exceed two percent of the investing bank's or trust company's capital stock and surplus.

3 CRR-NY 31.6 Battery Park City Authority {#sec-3-crr-ny-31.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.6}

Any bank or trust company is permitted to invest in a partnership, limited partnership, or joint venture formed pursuant to section 3937(a) or 3937(c) of title 42, U.S.C.A., for the purpose of undertaking, assisting in or otherwise concerned with projects designated by the Battery Park City Authority, a New York public benefit corporation, in connection with the development of Battery Park City; provided, however, that the total cost of investments made under this section shall not exceed two percent of the investing bank's or trust company's capital stock and surplus.

3 CRR-NY 31.7 Minbanc Capital Corp {#sec-3-crr-ny-31.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.7}

Any bank or trust company is permitted to invest in shares of common stock, par value $1 per share, of Minbanc Capital Corp., a closed-end investment company, incorporated in Delaware, in a total amount not to exceed two percent of the investing bank's or trust company's capital stock and surplus.

3 CRR-NY 31.8 Federal Agricultural Mortgage Corporation {#sec-3-crr-ny-31.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.8}

Any bank or trust company is permitted to invest in shares of common stock, of Federal Agricultural Mortgage Corporation, a corporation established under title VII of the Agricultural Credit Act of 1987, in a total amount not to exceed two percent of the investing bank's or trust company's capital stock and surplus.

3 CRR-NY 31.9 Government Securities Clearing Corporation {#sec-3-crr-ny-31.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.9}

Any bank or trust company is permitted to invest in the capital stock of Government Securities Clearing Corporation in a total amount not to exceed the lesser of $250,000 or two percent of the investing bank's or trust company's capital stock and surplus.

3 CRR-NY 31.10 Participants Trust Company {#sec-3-crr-ny-31.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.10}

Any bank or trust company is permitted to invest in or hold shares of Participants Trust Company.

3 CRR-NY 31.11 Euro-clear Clearance System S.C {#sec-3-crr-ny-31.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.11}

Any bank or trust company is permitted to invest in or hold one membership share in Euro-clear Clearance System S.C.

3 CRR-NY 31.12 Federal Home Loan Bank of New York {#sec-3-crr-ny-31.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.12}

Any bank or trust company is permitted to invest in shares of common stock of the Federal Home Loan Bank of New York.

3 CRR-NY 31.13 Atlantic Central Bankers Bank {#sec-3-crr-ny-31.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 31.13}

Any bank or trust company is permitted to make an investment in the common stock of the Atlantic Central Bankers Bank not to exceed the minimum number of shares of such stock required to become a member of such bankers' bank and thereafter may increase such investment upon the written approval of the superintendent, provided that such approval shall be given only upon a finding that such investment is consistent with the declaration of policy set forth in section 10 of the Banking Law. In no instance shall the aggregate investment by any bank or trust company in the Atlantic Central Bankers Bank exceed 10 percent of the bank or trust company's capital stock, surplus fund and undivided profits, or exceed five percent of any class of voting securities of such bankers' bank.

Part 32 MAXIMUM CHARGES FOR PAYMENTS MADE AGAINST INSUFFICIENT FUNDS, UNCOLLECTED BALANCES AND RETURN ITEMS; CERTAIN DISCLOSURES

3 CRR-NY 32.1 Maximum charges {#sec-3-crr-ny-32.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 32.1}

(a) Insufficient funds.

The establishment of charges that are imposed by a bank, trust company, savings bank, savings and loan association or licensed branch of a foreign banking corporation (collectively for purposes of this Part a “banking institution”) in connection with a check drawn or other written order upon, or electronic transfer sought to be effectuated against, insufficient funds or on uncollected balances, irrespective of whether the check, order or electronic transaction (collectively for purposes of this Part “item”) is paid, accepted or returned by the banking institution is a business decision to be made by each bank institution in its discretion, according to sound banking judgment and safe and sound banking principles. A banking institution shall be deemed to have reasonably established such charges if it considered the following factors, among others:

(1) the cost incurred by the banking institution plus a profit margin, in providing the service;

(2) the deterrence of misuse by customers of banking services;

(3) the enhancement of the competitive position of the banking institution in accordance with its marketing strategy; and

(4) the maintenance of the safety and soundness of the banking institution.

In establishing charges under this subdivision, a banking institution may consider the nature of the account and may determine to establish different charges for an account that is opened and maintained primarily for personal, household or family purposes than for an account that is not, and, in determining such charges, may also consider whether the item is to be paid, accepted or returned.

(b) Return items.

The maximum charge which may be imposed by a bank, trust company, savings bank, savings and loan association or licensed branch of a foreign banking corporation in connection with a check or other written order received by it for deposit or collection and subsequently dishonored and returned for any reason by the drawee is $10.

3 CRR-NY 32.2 Charges imposed in connection with overdraft items {#sec-3-crr-ny-32.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 32.2}

No bank, trust company, savings bank, savings and loan association or licensed branch of a foreign banking corporation shall, in connection with the payment, acceptance or return of such check or order, impose any fee, fine, commission or other charge, however designated, in addition to the maximum charge established by section 32.1 of this Part, except that nothing in this Part expressed shall prevent a bank, trust company, savings bank, savings and loan association or licensed branch of a foreign banking corporation from taking, receiving, reserving or charging interest, as authorized by law in connection with credit extended in connection with the payment of such check or order, or from imposing any charge in accordance with a written agreement established as provided by sections 108(5), 235(8-b), 235-c, 380-g, 380-i and 202(8) of the Banking Law.

3 CRR-NY 32.3 Lesser charges {#sec-3-crr-ny-32.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 32.3}

A bank, trust company, savings bank, savings and loan association or licensed branch of a foreign banking corporation may, as an accommodation to its customers, pay, accept, or return a check or order without charge or at a lesser charge than the maximum charge established by the superintendent.

3 CRR-NY 32.4 Required disclosures {#sec-3-crr-ny-32.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 32.4}

In addition to any disclosure required by Part 13 of the General Regulations of the superintendent, with regard to consumer deposit accounts, a banking institution shall disclose in writing to its depositors the order in which it pays items drawn against a depositor's account. By way of illustration, and without limitation, such disclosure may inform the depositor that the banking institution pays the largest items first, the smallest item first, or by the number of the item or in the order received. Such disclosure shall be given to the depositor at the time the account is opened and 30 days prior to the time the payment policy is changed. For existing accounts, such disclosure shall be provided within 120 days of the effective date of this section.

Part 33 VARIABLE RATE CLOSED-END PERSONAL LOANS

3 CRR-NY 33.1 Scope {#sec-3-crr-ny-33.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.1}

This Part governs personal loans made at a variable rate of interest by banks, trust companies, branches of foreign banking corporations which are authorized to maintain a personal loan department, savings banks, savings and loan associations, credit unions and licensed lenders (“lending institutions”) pursuant to the statutory authority cited above. Loans subject to this Part are to be treated as separate and apart from loans made pursuant to the provisions of Part 80 of this Title. The use of indices for loans subject to this Part must comply with the provisions of Part 333 of this Title.

3 CRR-NY 33.2 Disclosures {#sec-3-crr-ny-33.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.2}

All disclosures required under this Part are to be made in a single, separate document, in plain language and with captioned subdivisions for the information to be disclosed. Such disclosures shall be provided by the lending institution to the person who is to be primarily liable on the loan, prior to the consummation of the loan. Disclosure shall be made, in any reasonable order, of the following information:

(a) the identification of the index to be used by the lending institution in connection with varying the rate for the loan and where the index figures are available;

(b) the circumstances under which the rate for the loan may vary, including disclosures of the intervals at which the lending institution may change the rate on the loan, the time(s) or date(s) at which the lending institution calculates the rate with respect to the index, and any conditions or events on which the changes in rate are contingent;

(c) the effect or the combination of effects that an increase in the rate on the loan may have on the amount of the monthly payment, or the number of monthly payments or the amount of the final payment;

(d) a hypothetical example, illustrative of the type of credit being offered, of the effect or the combination of effects of a rate increase on the amount of the monthly payment, or the number of monthly payments or the amount of the final payment;

(e) the history of the movements in the index selected for the loan, as further provided under section 33.3 of this Part;

(f) the fact that the borrower will receive prior notification from the lending institution of increases in the rate or changes in the terms of payment, and the time periods within which such notifications will be sent;

(g) any limitations provided by contract with respect to the amount of any increase in the rate or the extent of all increases in the rate over the life of the loan and if the lending institution establishes ceilings or floors (i.e., “caps”) beyond which rate changes will not be made, a statement of such limits and the manner in which they will function; and

(h) the option which will be available to the borrower in the event that the requirements of section 33.7 of this Part apply with respect to the final payment on the loan.

3 CRR-NY 33.3 The index {#sec-3-crr-ny-33.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.3}

(a) General provisions.

Lending institutions may use any single index from among the indices approved by the superintendent pursuant to Part 333 of this Title on the terms stated therein. The loan rates may be based directly on the index values, may be based upon the index values plus or minus additional percentage points, or may be separately established and stated; provided, however, that variations in the rates shall correspond directly to the movements of the index. While only a single index shall be used for the life of a loan, the lending institution may provide for the use of a substitute index similar to the initial index in the event that the initial index should become unavailable during the term of the loan. This Part imposes no requirement on lending institutions to place limitations on the adjustment in the loan rate, as such adjustment would otherwise be allowed by movements in the index. Interest rate adjustments may be rounded, as determined by the lending institution, to the nearest percentage point or fraction thereof, provided that rounding applies equally to decreases and increases in rates. Subject to the rounding provisions, increases in the index need not be reflected on each adjustment date but may be accumulated to the next adjustment date, but decreases in the index must be reflected on each adjustment date.

(b) Information and disclosures with respect to the history of the index.

The disclosure shall identify the index and shall contain a statement that past changes in the index are not necessarily predictive of future changes in the index. The lending institution shall provide the high and low figures for the index and the dates at which these levels were reached, for each of the three calendar years preceding the calendar year in which the loan is made. In addition, if a loan is made after August 31st of any calendar year, the disclosure shall include the high and low figures for the index's performance through June 30th of that year, and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding the calendar year in which the loan is made, for any loan made prior to March 1st of a calendar year.

3 CRR-NY 33.4 Generally accepted actuarial methods {#sec-3-crr-ny-33.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.4}

The term generally accepted actuarial method, as such term is used in section 1 and following of chapter 296 of the Laws of 1983, means any generally accepted actuarial method (e.g., the United States Rule method), but does not include any method which results or may result in the addition of unpaid interest amounts to the outstanding principal balance of the loan.

3 CRR-NY 33.5 Notifications {#sec-3-crr-ny-33.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.5}

The notification referred to in section 33.2(f) of this Part shall be delivered or mailed by the lending institution to the person who is primarily liable on the loan, no less than 25 days nor more than 60 days prior to the effective date of a rate increase or change in payment terms. The notice should indicate the new rate and, if applicable, the new payment amount.

3 CRR-NY 33.6 Grouping of loans {#sec-3-crr-ny-33.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.6}

If a lending institution adjusts the rate of interest charged on loans on common adjustment dates (such as the first day of January, April, July and October, or less frequently) rather than adjusting the rate of interest on an individual quarterly (or less frequent) interval measured from the date of the loan, the lending institution may on any common adjustment date increase the rate of interest charged on a loan made within 25 days before that common adjustment date only if prior to the consummation of the loan the lending institution provides notice of the increase and the new rate of interest to the person who is to be primarily liable on the loan. In no case may the rate be adjusted more than once within any three-month period.

3 CRR-NY 33.7 Balloon payments; refinancing {#sec-3-crr-ny-33.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.7}

In the case of any loan made pursuant to this Part which is repaid according to equal monthly payments and which will result in a balloon payment as the final payment, the lending institution shall give prior notice to the person primarily liable on the loan, within the time periods provided for notifications under section 33.5 of this Part, of the borrower's option either to pay the entire amount of the balloon payment or to request in writing, and upon request to receive a refinancing, of any amount remaining unpaid after the final regular payment. For purposes of this section, a balloon payment means any payment which is two times or more the amount of an equal monthly payment. For purposes of this Part, the amount refinanced shall be deemed a new loan. The same index, the terms, conditions and requirements applicable to the initial loan pursuant to contract and the requirements of this Part shall continue to apply to the new loan, except for the term of the loan, the provisions of this section and section 33.2 of this Part, and provided that the monthly payment amount may be varied.

3 CRR-NY 33.8 Compliance with Federal regulation {#sec-3-crr-ny-33.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 33.8}

Lenders which comply with sections 226.19(b) and 226.20(c) of Regulation Z (12 CFR part 226) or the provisions of 12 CFR 563.9-9 will be deemed to be in compliance with sections 33.2, 33.3(b) and 33.5 of this Part to the extent that sections 33.2, 33.3(b) and 33.5 pertain to variable rate closed-end personal loan transactions subject to section 226.19(b) or 12 CFR 563.9-9(b).

Part 34 AVAILABILITY OF FUNDS FOR ITEMS DEPOSITED FOR COLLECTION

3 CRR-NY 34.1 Scope {#sec-3-crr-ny-34.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.1}

The provisions of this Part apply to any office maintained in this State for acceptance of deposits by State and federally chartered or licensed banks, trust companies, savings banks, savings and loan associations, credit unions and branches of foreign banking corporations.

3 CRR-NY 34.2 Relationship to Federal law {#sec-3-crr-ny-34.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.2}

(a) The availability and disclosure provisions of this Part are inapplicable to transaction accounts except as provided in section 34.4(c) of this Part.

(b) Any bank or savings institution may elect to comply with the availability and disclosure provisions of regulation CC of the Board of Governors of the Federal Reserve System with respect to any type or category of non-transaction account (i.e., account as defined in section 34.3[a] of this Part). Compliance with the provisions of regulation CC shall be deemed to be in compliance with the availability and disclosure provisions of this Part. (References to regulation CC are to 12 CFR* part 229 entitled “Availability of Funds and Collection of Checks”.)

3 CRR-NY 34.3 Definitions {#sec-3-crr-ny-34.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.3}

For purposes of the provisions of this Part, the following definitions apply:

(a) Account means a savings account or a time deposit account which has been opened by any person or entity with a bank or savings institution.

(b) Bank means a commercial bank, trust company or branch of a foreign banking corporation.

(c) Business day means any day excluding Saturdays, Sundays and legal holidays. For purposes of calculating the number of business days by which the depositary bank is obliged to make funds available for withdrawal by the customer, the term business day will exclude the day of deposit and the first business day after the day of deposit if the deposit is made on a Saturday, Sunday, legal holiday or after the close of business as determined by the office of the depositary bank. For electronic branches, opening and closing times shall be the hours of the closest manned office of the depositary bank.

(d) Depositary bank, depending on the context, means either the bank or the savings institution which maintains the account into which the item is first deposited.

(e) Item means a check, negotiable order of withdrawal or money order deposited into an account.

(f) Local bank or savings institution means an office of a bank or savings institution which is located in the same city, town or village, and which uses the same clearing facility, as the office of the depositary bank.

(g) Savings institution means a savings bank, a savings and loan association or a credit union.

(h) Transaction account means an account as defined in 12 CFR 229.3(a).

3 CRR-NY 34.4 Availability of funds for items deposited {#sec-3-crr-ny-34.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.4}

With respect to items deposited in an account, all depositary banks shall make the funds for such items available for withdrawal from such account, in accordance with the periods of time as set forth in this section (except as otherwise provided under section 34.5 of this Part), the provisions of individual account agreements notwithstanding. Nothing contained in this section shall prevent a depositary bank from making funds available for withdrawal within a shorter period of time than that required by this section, pursuant to a depositary bank's policy. Nothing contained in this section or elsewhere in this Part shall affect a depositary bank's existing right to accept or reject an item for deposit or, if the item is accepted for deposit and the depositary bank has made provisional settlement with its customer, to revoke the settlement given by it, charge back the customer's account or claim a refund therefor in accordance with New York Uniform Commercial Code.

(a) Banks shall make funds available at the start of the business day subsequent to the periods detailed below:

(1) for items drawn on a local bank or savings institution (other than the depositary bank), and except as provided under paragraphs (4), (5), (6) and (7) of this subdivision, two business days;

(2) for items drawn on a nonlocal bank or savings institution (other than the depositary bank) which is located in this State, and except as provided under paragraphs (4), (5), (6) and (7) of this subdivision, three business days;

(3) for items drawn on any other bank or savings institution located in the United States, and except as provided under paragraphs (4), (5), (6) and (7) of this subdivision, six business days;

(4) for any item drawn in a face amount of $100 or less, one business day;

(5) for any item drawn on a New York branch of the depositary bank, one business day;

(6) for first-endorsed items drawn on the U.S. Treasury, one business day;

(7) for any first-endorsed items drawn by the State of New York or any counties, cities, towns or villages thereof, one business day, if such items are deposited at a manned teller station together with a separate deposit slip which indicates that the item being deposited is a government check; and

(8) with respect to any item which is deposited at a shared or nonproprietary electronic facility of the depositary institution, it may, at its option, add an additional business day to the relevant availability time stipulated herein.

(b) Savings institutions shall make funds available at the start of the business day subsequent to the periods detailed below:

(1) for items drawn on a local bank or savings institution (other than the depositary bank) and except as provided under paragraphs (4), (5), (6) and (7) of this subdivision, three business days;

(3) for items drawn on any other bank or savings institution located in the United States, and except as provided under paragraphs (4), (5), (6) and (7) of this subdivision, eight business days;

(4) for any item drawn in a face amount of $100 or less, one business day;

(5) for any item drawn on a New York branch of the depositary bank, one business day;

(6) for first-endorsed items drawn on the U.S. Treasury, one business day;

(7) for any first-endorsed items drawn on the State of New York or any counties, cities, towns or villages thereof, one business day, if such items are deposited at a manned teller station together with a separate deposit slip which indicates that the item being deposited is a government check; and

(c) The provisions of paragraphs (a)(2) and (b)(2) of this section shall also be applicable to all transaction accounts at banks and savings institutions respectively.

3 CRR-NY 34.5 Exceptions {#sec-3-crr-ny-34.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.5}

The exceptions to the requirements imposed under section 34.3 of this Part are as follows:

(a) For any deposited item drawn in an amount of more than $5,000, the availability of funds shall be determined according to the depositary bank's policy or, if the customer elects to have the item so cleared on a collection basis (i.e., noncash item basis). Where more than one item, each drawn in an amount no greater than $5,000, totalling an amount in excess of $5,000, is deposited in one business day, the availability of funds for the item or items that bring the amount deposited to an amount in excess of $5,000, shall be determined according to the depositary bank's policy or, if the customer elects to have the item(s) so cleared, on a collection basis (i.e., noncash item basis).

(b) With respect to items deposited by a new customer at a depositary bank, the availability of funds for any item deposited within 30 calendar days of the opening of an account by such customer shall be subject to the depositary bank's policy.

(c) If any account or combination of accounts of a customer has been overdrawn on three separate and distinct occasions within a six-month period all accounts of that customer will be subject to the depositary bank's policy regarding the availability of funds, for a period of six months commencing with the last return for insufficient funds. This exception does not include accounts with overdraft privileges established pursuant to contractual agreement unless the customer's credit line has been exceeded.

(d) In an instance where the depositary bank in good faith doubts the collectibility of funds for an item (e.g., suspicion of bankruptcy of the drawer of a check, suspicion of fraud), the depositary bank may make funds available for such item on a collection basis, or according to the depositary bank's policy. The customer of the account must be notified by the depositary bank of this action as soon as possible.

(e) The availability of funds shall be governed by the depositary bank's policy in the case of any items drawn on an office, including an office of the depositary bank, located outside any of the United States and the District of Columbia.

(f) Nothing contained in this Part shall prohibit a depositary bank and a retail customer from agreeing in writing to a greater period of time than that prescribed by this Part for making funds available for withdrawal because of special circumstances, provided that such agreement is not contained in a preprinted form and is not a usual, regular business practice of the depositary bank.

(g) Delay by a depositary bank beyond time limits prescribed or permitted by this Part is excused if caused by interruption of communication facilities, suspension of payments by another bank, war, emergency conditions or other circumstances beyond the control of the depositary bank provided it exercises such diligence as the circumstances require.

3 CRR-NY 34.6 Notifications and disclosures {#sec-3-crr-ny-34.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 34.6}

(a) Each depositary bank shall notify its account holders, in writing and in plain language, of the time periods for the availability of funds as required by this Part and of the exceptions thereto, together with a statement of the depositary bank's policy with respect to the exceptions. Such notifications shall include a disclosure of the hour, or hours if the close of business differs at certain offices, at which the depositary bank closes business with respect to items received for deposit, which disclosure shall be set out in a conspicuous manner.

(b) Each depositary bank shall post in a conspicuous place in each manned branch a notice which substantially sets forth the time periods applicable to the availability of funds for items received for deposit.

(c) In light of the imminent adoption of comprehensive Federal regulations governing expedited funds availability which will largely preempt this Part, subdivision (a) of this section notwithstanding, no depositary bank shall be required to provide the notice required by that subdivision to any persons or entities whose accounts are made subject to this part by this amendment; nor shall any depositary bank be required to provide notice pursuant to that subdivision to any other person of the change to subdivision (a) of section 34.4 of this Part adopted by this amendment.

Part 36 INVESTMENTS BY BANKS OR TRUST COMPANIES IN INVESTMENT COMPANIES

3 CRR-NY 36.1 Authorization {#sec-3-crr-ny-36.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 36.1}

Subject to the requirements of section 36.2 of this Part, a bank or trust company may invest in the shares of investment companies (henceforth referred to as a “fund” or “funds”), provided that the portfolio of the fund consists solely of investments in stocks and obligations in which banks or trust companies are permitted to invest directly. Investment companies include open-end and closed-end investment companies and unit investment trusts as those terms are used in the Investment Company Act of 1940 (title 15 United States Code,* section 80a-1 et seq.).

3 CRR-NY 36.2 Requirements {#sec-3-crr-ny-36.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 36.2}

(a) A bank or trust company may invest in the shares of any single fund without express limit, subject to the limitations contained in subdivision(b) of this section.

(b) Banks or trust companies which invest in funds which contain assets subject to investment limits must review the fund portfolios on a periodic basis in order to ascertain whether the combined investment of the bank or trust company in the obligations of a single issuer (taking into account the bank or trust company's proportionate holding of fund shares together with any other investment) would comply with the limitations contained in sections 97(4-b), 103 and 106 of the Banking Law, if said sections were to be applied to such investments, and must reduce excessive holdings within a reasonable period of time to conform to such limitations.

(c) It is also expected that a bank or trust company investing in funds shall periodically monitor the portfolios of such funds to determine the appropriateness of the funds' investments for the portfolio of the bank or trust company.

Part 37 REAL ESTATE EQUITY INVESTMENTS IN COMMUNITY DEVELOPMENT PROJECTS

3 CRR-NY 37.1 Authorization {#sec-3-crr-ny-37.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 37.1}

Subject to the limitations contained in section 37.2 of this Part, and the prior review by the Department, a bank or trust company may make real estate equity investments in community development projects provided that any such project primarily serves a public purpose. A project will be deemed to serve a public purpose if it promotes housing and economic revitalization or development in low and moderate income areas and directly benefits low and moderate income residents or small businesses. In determining whether the project primarily serves a public purpose, consideration shall also be given as to whether the project primarily benefits the particular bank's local service area, and whether there is significant community involvement, including the extent to which community groups are involved in project implementation, and the extent of community and public support for the project.

3 CRR-NY 37.2 Limitations {#sec-3-crr-ny-37.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 37.2}

A bank or trust company's investment in any one community development project pursuant to this Part may not exceed two percent of its capital stock, surplus and undivided profits and its aggregate investment in all such projects may not exceed ten percent of its capital stock, surplus and undivided profits.

Part 38 DEFINITIONS OF TERMS; ADVERTISING; APPLICATION AND COMMITMENT DISCLOSURES AND PROCEDURES; IMPROPER CONDUCT UNDER ARTICLE 12-D

3 CRR-NY 38.1 Definitions {#sec-3-crr-ny-38.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.1}

For purposes of this Part:

(a) The term advertisement shall mean material used or intended to be used to induce the public to apply for a mortgage loan. Such term shall include any printed or published material, electronic media, audio or visual material, or descriptive literature concerning a mortgage loan to be solicited, processed, negotiated or funded by a mortgage broker, mortgage banker or exempt organization whether disseminated by direct mail, newspaper, magazine, radio or television broadcast, billboard, electronic media or similar display. The term advertisement shall not include promotional material containing 15 words or fewer relating to the mortgage business of the entity which material does not contain references to a specific rate or product, such as balloons, hats, pencils or pens, calendars or rulers displaying the name of the registrant, licensee or exempt organization. The term advertisement also shall not include any disclosures, program descriptions or other published materials prepared or authorized by any State or Federal government agency, nor shall such term include any material or communication which has been excluded from any definition of advertisement for purposes of any regulation of the Board of Governors of the Federal Reserve System regulating consumer credit disclosures.

(b) The term application shall have the same meaning as that term has in section 202.2(f) of Regulation B of the Federal Reserve System (12 CFR 202). The regulation, including the interpretations thereof contained in Supplement 1 to Part 202-Official Staff Interpretations, is incorporated by reference and is authored by the Board of Governors of the Federal Reserve System and published by the United States Government Printing Office, Washington, DC 20402. A copy is available for public inspection and copying at the New York City office of the New York State Banking Department located at the address stated in Supervisory Policy G 1 of this Title.

(c) The term application fee shall mean any fee taken by a mortgage broker, mortgage banker or exempt organization in connection with an application for a mortgage loan including any charge for soliciting, processing, placing or negotiating a mortgage loan. The term application fee does not include a commitment fee taken pursuant to section 38.4 or a lock-in fee taken pursuant to section 38.6 of this Part, nor does such term include payments to be remitted to third-party service providers, such as appraisal fees or fees for credit reports, nor payments or remittances to the mortgage broker, mortgage banker or exempt organization by the lender. In addition, the term application fee does not include a processing fee so long as the application fee does not include the cost of processing the application.

(d) The terms bonus and premium shall mean money or an equivalent given in addition to usual compensation.

(e) The term branch shall mean any location, separate from the head office, at which loan solicitation and/or loan processing takes place irrespective of whether the only contact with an applicant from that location is by internet, telephone, facsimile or other electronic process. The term shall not include the residences of any director, officer, partner, employee, independent contractor or consultant provided that the primary purpose of such residence is for personal, household or family use.

(f) The term branch manager shall mean the individual who is in charge of the operations of one or more branch locations irrespective of the title given to that individual.

(g) The term commitment shall mean a written or electronically transmitted offer to make a mortgage loan signed by a licensee or exempt organization.

(h) The term commitment agreement shall mean a commitment accepted by an applicant for a mortgage loan. Such acceptance shall be evidenced by either a hand-written or digital signature to the extent that such signatures are recognized as binding under New York State law.

(i) The term commitment fee shall mean a fee, exclusive of third-party charges, imposed by the licensee or exempt organization as consideration for binding the licensee or exempt organization to make a mortgage loan or as a lender’s requirement for acceptance by the consumer of a commitment.

(j) The term digital signature shall mean any electronic authentication method that provides the same assurance as a signature in a paper-based system.

(k) The term electronically transmitted or electronic media shall mean any transmission via diskette, wire or tape including but not limited to the Intranet (interactive or otherwise), the Internet, any other computer network, electronic mail, or any other similar method of transmission.

(l) The term employee shall mean:

(1) any individual performing a service for any one of either a mortgage broker, mortgage banker or exempt organization for whom such entity would be liable for withholding taxes pursuant to title 26 of the United States Code; or

(2) any individual engaged in regulated activities as an independent contractor pursuant to title 26 of the United States Code of any one of either a mortgage broker, mortgage banker or exempt organization.

(m) The term exempt organization shall mean any person or entity engaged in the business of making mortgage loans which entity is exempt from licensing under article 12-D of the Banking Law and Part 39 of this Title.

(n) The term lender shall mean a mortgage banker or an exempt organization pursuant to article 12-D of the New York Banking Law.

(o) The term lock-in agreement shall mean a written or electronically transmitted agreement between a mortgage banker or exempt organization and an applicant for a mortgage loan which, subject to the terms set forth therein, obligates the mortgage banker or exempt organization to make a mortgage loan at a specified rate and a specific number of points, if any.

(p) The term lock-in fee shall mean points or other fees, or discounts taken by a mortgage broker for transmittal to a mortgage banker or exempt organization or taken directly by a mortgage banker or exempt organization as consideration for the making of a lock-in agreement.

(q) The term make a loan or making a loan, shall mean for compensation or gain, either directly or indirectly, advancing funds, offering to advance funds, or making a commitment to advance funds to a mortgagor as a mortgage loan. As used in this Part, the term mortgagor shall refer only to a retail consumer/borrower.

(r) The term mortgage banker or licensee shall mean any person or entity licensed pursuant to article 12-D of the Banking Law and Regulation Part 410 of this Title to make mortgage loans.

(s) The term mortgage broker or registrant shall mean any person or entity registered pursuant to article 12-D of the Banking Law and Regulation Part 410 of this Title.

(t) The term mortgage loan shall mean a loan made to one or more individuals primarily for personal, family or household use primarily secured by a first of junior mortgage on residential real property located in this State or by certificates of stock or other evidence of ownership interests in, and proprietary leases from, corporations or partnerships formed for the purpose of cooperative ownership of real estate in this State. Such term shall not include residential loan products exempt pursuant to section 39.5 of this Title.

(u) The term net branch shall mean any location for which the branch manager does either or both of the following:

(1) incur or assume liability to a third party other than in the licensee or registrant’s name except for credit reports, appraisals and/or de minimus office supplies or makes payment on behalf of the licensee or registrant to the third party; or

(2) incur or assume liability to a third party other than in the licensee or registrant’s name by executing the lease for the branch premises or makes payment on behalf of the licensee or registrant to the third party. In addition, the term net branch shall mean any location for which the branch manager assumes a combination but not necessarily all, of the following indicia of ownership:

(i) sharing in profits and/or losses of such location;

(ii) controlling a corporate checkbook; or

(iii) exercising control of personnel through the power to hire or fire individuals.

(v) The term point shall mean any fee or discount calculated as one percent of the principal amount of the loan or one percent of the amount financed, irrespective of how such point may be denominated by the mortgage broker, mortgage banker or exempt organization. The term point shall include, but not be limited to, percentage-based fees denominated as brokerage fees (excluding fees taken for real estate brokerage services), origination fees, or warehousing fees.

(w) The term premium pricing shall mean any pricing arrangement under which a loan application is submitted to a lender at an interest rate (including points) that will:

(1) meet the lender’s minimum yield requirements; and

(2) enable the mortgage broker, mortgage banker or exempt organization when acting in a mortgage brokerage capacity to receive as all or part of the difference between the interest rate (including points) received by the lender and the minimum interest rate (including points) at which the lender would have been willing to make the loan to the consumer/borrower.

(x) The term prevailing rate shall mean a mortgage loan rate that is set by the mortgage banker or exempt organization after the time a commitment is issued but prior to or on the closing date. Such rate may be fixed or variable.

(y) The term residential real property shall mean real property located in the State improved by a one-to-four-family owner-occupied dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more owners, but shall not refer to unimproved real property upon which such dwelling is to be constructed.

(z) The term settlement cost shall mean the total cost to the consumer for each service required to be listed as a settlement service in the “Good Faith Estimate of Settlement Services” required in certain mortgage loan transactions by regulation X of the Department of Housing and Urban Development (24 CFR part 3500). The term settlement cost shall have the meaning described herein irrespective of whether the mortgage loan is subject to regulation X.

(aa) The terms soliciting, processing, placing and negotiating a mortgage loan shall mean performing or offering to perform such activities for compensation or gain, either directly or indirectly, with a lender on behalf of a third party.

3 CRR-NY 38.2 Solicitation and advertising {#sec-3-crr-ny-38.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.2}

(a) No mortgage broker shall advertise its business in New York in print or electronic media without including the legend “Registered Mortgage Broker-NYS Department of Financial Services” or words to like effect therein. No mortgage banker shall advertise its business in New York without including the legend “Licensed Mortgage Banker-NYS Department of Financial Services” or words to like effect therein. Business cards, letterhead and general electronic media communications, to the extent that they are not used for general advertising purposes, need not include the legend.

(b) Any advertisement by a mortgage broker, mortgage banker or exempt organization in print or electronic media must indicate the name of the entity and a street address of any one of its offices in New York State or, if the entity is not located in New York State, the street address of any one office outside New York. This requirement will not apply to advertisements made by a mortgage broker, mortgage banker or exempt organization having more than 10 offices in New York State.

(c) No mortgage loan products may be advertised by a mortgage broker, mortgage banker or exempt organization unless the entity has the advertised product available to a reasonable number of qualified applicants responding to the advertisement on the date the advertisement appears, or the entity's next business day. Nothing in this section shall require a lender to make a loan to an unqualified applicant. This requirement shall not be deemed to be violated if the aggregate principal amount of the advertised product available to all applicants is limited to the amount specified in an agreement between the entity and a third person (e.g., State mortgage agency) to sell such product to the third person, and the entity discloses in the advertisement for such product that the availability of such product is limited.

(d) No advertisement by a mortgage broker shall contain language which indicates or suggests that the mortgage broker will fund a mortgage loan. Any advertisement by a mortgage broker must contain a statement to the effect that the mortgage broker arranges mortgage loans with third-party providers.

(e) No mortgage broker, mortgage banker or exempt organization shall fraudulently or deceitfully advertise a mortgage loan, or misrepresent the terms, conditions or charges incident to a mortgage loan in any advertisement therefor. Without limiting the foregoing, the following conduct shall be deemed fraudulent, deceitful or misleading:

(1) the advertisement of “immediate approval” of a loan application or “immediate closing” of a loan;

(2) the advertisement of a “no-point” mortgage loan when points, as defined herein, are accepted as a condition for commitment or closing, or the advertisement of an intentionally incorrect specific number of points;

(3) the advertisement that an applicant will have unqualified access to credit without disclosing what material limitations on the availability of credit may exist, such as the percentage down payment required, that a higher rate or points may be required, or that restrictions as to the maximum principal amount of the loan offered may apply;

(4) the advertisement of a specific time period within which a commitment will be issued unless a commitment will be issued to a qualified applicant within the time period specified, if at all; and

(5) the advertisement of a mortgage loan where a prevailing rate is indicated in the advertisement, unless the advertisement specifically states that the expressed rate may change or not be available at commitment or closing.

(f) Every mortgage broker, mortgage banker and exempt organization shall maintain a record of samples of its advertisements (including commercial scripts of all radio broadcasts, television broadcasts and electronic media) for examination by the superintendent for a period of two years from the date of publication.

(g) Any advertisement by a mortgage broker, mortgage banker or exempt organization for a mortgage loan product containing a prepayment penalty which advertisement sets forth the interest rate and/or points of such product shall include a statement indicating that the product has a pre-payment penalty.

3 CRR-NY 38.3 Application disclosures and procedures {#sec-3-crr-ny-38.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.3}

Article 12-D requires and authorizes the superintendent to promulgate regulations governing the disclosures which must be given and the procedures which must be followed at the time an application is taken. No mortgage broker, mortgage banker or exempt organization may take an application, application fee, credit report fee or property appraisal fee prior to making the disclosures set forth in this section. Each entity shall also comply with the procedures set forth in this section regarding the processing of applications. An application may be taken in writing, over the telephone or electronically transmitted. A written application, irrespective of how it is transmitted, should contain the following statement: “It is a crime to intentionally falsify information on this application.” For oral applications, the mortgage broker, mortgage banker or exempt organization must make this statement to the borrower(s).

(a) Mortgage broker application disclosures and procedures.

(1) Disclosures. Prior to taking an application or collecting an application fee, credit report fee or property appraisal fee, every mortgage broker shall disclose to the applicant in writing or via electronic media:

(i) that such mortgage broker may not make mortgage loans or commitments;

(ii) that such mortgage broker cannot guarantee acceptance into any particular loan program, nor can that mortgage broker promise any specific loan terms or conditions;

(iii) whether the mortgage broker places loans primarily with any three or fewer lenders, and if so, the name(s) of such lender(s);

(iv) a statement to the effect that the rate, points, fees, and other terms quoted at commitment by or on behalf of the lender encompass the consideration to be received by the mortgage broker from a lender for its services. In addition, the statement shall disclose the specific maximum amount of such consideration to be received;

(v) the amount of the application fee, and the registrant's good faith estimate of the credit report fee, property appraisal fee, processing fee, if any, and the terms and conditions for obtaining a refund of such fees if any;

(vi) the specific services which will be provided or performed for the application fee and/or the processing fee;

(vii) (a) the maximum consideration, including premium pricing, fees and points, payable by the lender to the mortgage broker;

(b) the maximum of any fees or points to be paid by the applicant directly to the mortgage broker; and

(viii) if applicable, any premiums or bonuses to be paid to the mortgage broker by the lender and/or the basis of its eligibility to receive premiums or bonuses;

(ix) if applicable, a description of the consumer protections and lender disclosures which are lost when the loan is placed with a private investor that is neither an exempt organization nor licensed pursuant to article 12-D of the Banking Law. This disclosure shall include a notice that the requirement that the term of a balloon mortgage be at least three years does not necessarily apply to a loan placed with a private investor. This disclosure shall be no less conspicuous than any other disclosures made pursuant to this section;

(x) if applicable, the fact that fees are being divided between more than one mortgage broker and/or mortgage banker and/or exempt organization acting as a mortgage broker and the dollar amount or the percentage, of if not known, a good faith estimate thereof, of the fee to be received by each mortgage broker, mortgage banker or exempt organization;

(xi) the fact that certain mortgage loan products impose a pre-payment penalty on the borrower and the amount of, or the formula for calculating, the pre-payment penalty, if any, and the terms of the pre-payment penalty, if any, will be disclosed to the borrower as soon as they are known, but no later than the issuance of the commitment (if any), for the loan product chosen by the borrower;

(xii) with regard to written applications, a toll free telephone number of a person in a management position with the mortgage broker who may be contacted about problems with the application or if there is no toll free telephone number, then the circumstances under which a collect call will be accepted. With respect to electronic applications, the disclosure shall include the electronic mail address of the mortgage broker.

(2) Required procedures for mortgage brokers.

(i) The application fee and/or processing fee, if any, shall be denominated as such and shall be reasonably related to the services to be performed on behalf of the applicant. Neither fee may be based upon a percentage of the principal amount of the loan or the amount financed. The separation of application and processing fees is intended to benefit consumers by allowing them to obtain a more complete and accurate itemization of fees charged in the transaction and to thereby more effectively comparison shop when seeking to obtain a residential mortgage.

(ii) Every written application taken by a mortgage broker shall be signed by the employee taking such application, and shall include the name and/or title of such employee.

(iii) Every electronic application form used by a mortgage broker shall include the e-mail address of the mortgage broker.

(iv) No mortgage broker shall take any fee in connection with a mortgage loan other than an application fee, credit report fee and property appraisal fee prior to the acceptance by an applicant of a commitment from a qualified lender nor shall any mortgage broker take any fee, prior to closing, other than an application fee, credit report fee and property appraisal fee when the commitment from the lender is subject to any of the following:

(a) adequate appraisal value;

(b) satisfactory credit history and obligations; and

Nothing in this section shall prohibit a mortgage broker from taking a lock-in fee for transmittal to a mortgage banker or exempt organization subject to the restrictions imposed by section 38.6(c) of this Part.

(v) Any amount collected in excess of the actual cost of the credit report fee and property appraisal fee must be returned at or prior to closing.

(vi) Some or all of the disclosures required by this section may appear on forms used to comply with otherwise applicable State or Federal laws or, at the option of the entity making the disclosure, as separate disclosures.

(vii) All disclosures concerning refundability must be no less conspicuous than any other disclosure made pursuant to this section.

(viii) It shall be the duty of every registrant to familiarize itself and its employees with the qualifications necessary to fulfill lenders' requirements for the loan products and programs available through that mortgage broker.

(ix) For written application, each mortgage broker shall provide each applicant with a duplicate of the signed application within seven business days from the time of receipt of such application by the mortgage broker. Both the applicant's signature and the signature of the employee may be hand-written or digital to the extent such signatures are recognized as binding under New York State law. For electronic applications, each mortgage broker shall provide each applicant with a duplicate copy of the application within seven business days from the time of receipt of such application by the mortgage broker unless the applicant indicates that he or she has the computer capacity to down-load and print such application. The applicant's signature may be hand-written or digital to the extent such signatures are recognized as binding under New York State law.

(x) Each mortgage broker shall submit a copy to the lender of any separate written or electronic fee agreement made with the applicant or a written or electronic statement that there is no separate fee agreement. If applicable, the disclosures in subparagraph (1)(x) of this subdivision shall be included in the fee agreement.

(xi) With regard to written pre-application disclosures, each mortgage broker shall maintain a duplicate copy of the pre-application disclosures signed by the applicant.

(xii) With regard to electronic pre-application disclosures, no mortgage broker shall take an application unless the applicant either digitally signs, to the extent such signatures are recognized as binding under New York State law, the pre-application disclosures he or she has received electronically or acknowledges electronic receipt of the pre-application disclosures through the use of a “required confirm button” without which the transaction may not proceed further. In addition, within three business days of the electronic transmission of the pre-application disclosures, a hard-copy of such pre-application disclosures shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such disclosures. The mortgage brokers shall either keep a copy of the pre-application disclosures digitally signed by the applicant or be able to demonstrate that the transaction could not proceed further than the display of the pre-application disclosures without the applicant's use of the “required confirm button”. Furthermore, in those instances in which a hard copy of the pre-application disclosures is not mailed to the applicant, the mortgage broker must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such disclosures.

(xiii) All mail application packages must include the pre-application disclosures and a stamped self-addressed envelope with a request that a signed copy of these disclosures be returned to the mortgage broker. The mortgage broker shall keep a copy of this request.

(xiv) If a mortgage loan involves more than one mortgage broker, mortgage banker or exempt organization, or any combination thereof, the persons or entities involved shall agree among themselves as to who must comply with the disclosure and other requirements imposed under this section. In the absence of a written or electronic co-broker agreement, all such persons or entities shall be liable therefor.

(xv) If there is no toll-free telephone number, then collect calls must be accepted from those applicants who live more than fifty miles from a processing center.

(b) Mortgage banker and exempt organization application disclosures and procedures.

(1) Disclosures. In those instances in which the proceeds of the mortgage loan will be used to finance the acquisition of the dwelling and in all other residential mortgage loan transactions in which a commitment fee or points are paid or will be paid to the lender prior to closing, then prior to the taking of an application, application fee, credit report fee or property appraisal fee, every mortgage banker or exempt organization shall disclose in writing or via electronic media to each applicant for a mortgage loan:

(i) the amount of the application fee, and the mortgage banker or exempt organization's good faith estimate of the credit report fee, property appraisal fee, the processing fee, if any, and the terms and conditions, if any, under which such fees may be refundable. In addition, no fee other than an application fee, credit report fee, property appraisal fee and lock-in fee shall be taken prior to the acceptance by an applicant of a commitment;

(ii) in those instances in which the lender routinely assigns the commitments it has issued in its own name to a third party or parties, the amount of any fee the lender will pay to and/or receive from, the name and address of and the service(s) to be performed by such third party or parties;

(iii) the fact that certain mortgage loan products impose a pre-payment penalty on the borrower and the amount of, or formula for calculating, the pre-payment penalty, if any, and the terms of the pre-payment penalty, if any, will be disclosed to the borrower as soon as they are known, but no later than the issuance of the commitment (if any), for the loan product chosen by the borrower;

(iv) with regard to written applications, a toll free telephone number of a person in a management position with the mortgage banker or exempt organization who may be contacted about problems with the application or if there is no toll free telephone number, then the circumstances under which a collect call will be accepted. With respect to electronic applications, the disclosure shall include the electronic mail address of the mortgage banker or exempt organization;

(v) in those instances in which the lender charges discount points, the following statement: Discount points should lower the interest rate paid on the loan but may not lower the overall cost of the loan. If you refinance or pay off your loan quickly, you will lose the benefit of any lower interest rate provided by the discount points. Furthermore, if you finance the discount points, this will increase the amount of money that you must repay to the lender and you will have to pay interest on the discount points as part of the amount you have borrowed;

(2) Required procedures for mortgage bankers and exempt organizations.

(ii) Any amount collected in excess of the actual cost of the credit report fee and the property appraisal fee must be returned at or prior to closing.

(iii) A mortgage banker or exempt organization may satisfy the disclosure requirements of this section by making such disclosures in one or more documents, including but not limited to any form or document used to comply with otherwise applicable State or Federal laws or regulations.

(iv) Every written application taken by a mortgage banker or exempt organization shall be signed by the employee taking such application, and shall include the name and/or title of such employee.

(v) Every electronic application form used by a mortgage banker or exempt organization shall include the e-mail address of the mortgage banker or exempt organization.

(vi) For written applications, each mortgage banker or exempt organization shall provide each applicant with a duplicate of the signed application within seven business days from the time of receipt of such application by the mortgage banker or exempt organization. Both the applicant's signature and the signature of the employee may be hand-written or digital to the extent such signatures are recognized as binding under New York State law. For electronic applications, each mortgage banker or exempt organization shall provide each applicant with a duplicate copy of the application within seven business days from the time of receipt of such application by the mortgage banker or exempt organization unless the applicant indicates that he or she has the computer capacity to down-load and print such application. The applicant's signature may be hand-written or digital to the extent such signatures are recognized as binding under New York State law.

(vii) All disclosures concerning refundability must be no less conspicuous than any other disclosure made pursuant to this section.

(viii) With regard to written pre-application disclosures, every applicant shall sign a duplicate copy of the pre-application disclosures he or she has received which shall be kept by the mortgage banker or exempt organization.

(ix) With regard to electronic pre-application disclosures, no mortgage banker or exempt organization shall take an application unless the applicant either digitally signs, to the extent such signatures are recognized as binding under New York State law, the pre-application disclosures he or she has received electronically or acknowledges electronic receipt of the pre-application disclosures through the use of a “required confirm button” without which the transaction may not proceed further. In addition, within three business days, a hard-copy of such pre-application disclosures shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such disclosures. The mortgage banker or exempt organization shall either keep a copy of the pre-application disclosures digitally signed by the applicant or be able to demonstrate that the transaction could not proceed further than the display of the pre-application disclosures without the applicant's use of the “required confirm button”. Furthermore, in those instances in which a hard copy of the pre-application disclosures is not mailed to the applicant, then the mortgage banker or exempt organization must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such disclosures.

(x) All mail application packages must include the pre-application disclosures and a stamped self-addressed envelope with a request that a signed copy of these disclosures be returned to the mortgage banker or exempt organization. The mortgage banker or exempt organization shall keep a copy of this request.

(xi) If a mortgage loan involves more than one mortgage broker, mortgage banker or exempt organization, or any combination thereof, the persons or entities involved shall agree among themselves as to who must comply with the disclosure and other requirements imposed under this section. In the absence of a written or electronic co-broker agreement, all such persons or entities shall be liable therefor.

(xii) If there is no toll-free telephone number, then collect calls must be accepted from those applicants who live more than fifty miles from a processing center.

(1) Disclosures. Prior to taking an application or collecting an application fee, credit report fee or appraisal fee, every mortgage banker or exempt organization acting as a mortgage broker shall disclose to the applicant in writing or via electronic media:

(i) that such mortgage banker or exempt organization will not be making the mortgage loan;

(ii) that such mortgage banker or exempt organization can neither guarantee acceptance into any particular loan program nor promise any specific loan terms or conditions;

(iii) whether the mortgage banker or exempt organization places loans primarily with any three or fewer lenders, and if so, the name(s) of such lender(s);

(iv) a statement to the effect that the rate, points, fees, and other terms quoted at commitment by or on behalf of the lender encompass the consideration to be received by the mortgage banker or exempt organization from a lender for its services. In addition, this statement shall disclose the specific maximum amount of such consideration to be received;

(v) the amount of the application fee, and the good faith estimate of the credit report, property appraisal fee, processing fee, if any, and the terms and conditions, if any, under which such fees may be refundable. In addition, no fee other than an application fee, credit report fee and property appraisal fee shall be taken prior to the acceptance by an applicant of a commitment.

(vi) the specific services which will be provided or performed for the application fee and/or the processing fee;

(vii) if applicable, a description of the consumer protections and lender disclosures which are lost when the loan is placed with a private investor that is neither an exempt organization nor licensed pursuant to article 12-D of the Banking Law. A statement must be included to the effect that if a loan is placed with a private lender, certain consumer protections and lender disclosures required by New York law and regulations do not apply to the loan. The statement shall include a notice the requirement that the term of a balloon mortgage be at least three years does not necessarily apply to a loan placed with a private investor. This statement shall be no less conspicuous than any other disclosures made pursuant to this section;

(viii) if applicable, the fact that fees are being divided between more than one mortgage broker and/or mortgage banker and/or exempt organization and the dollar amount or the percentage, or if not known, a good faith estimate thereof, of the fee to be received by each mortgage broker, mortgage banker and/or exempt organization;

(ix) no mortgage banker or exempt organization shall take any fee in connection with a mortgage loan other than an application fee, credit report fee and property appraisal fee prior to the acceptance by an applicant of a commitment from a qualified lender nor shall any mortgage banker or exempt organization take any fee, prior to closing, other than an application fee, credit report fee and property appraisal fee when the commitment from the lender is subject to any of the following:

(a) adequate appraisal value;

(b) satisfactory credit history and obligations;

(x) the fact that certain mortgage loan products impose a pre-payment penalty on the borrower in the amount of, or formula for calculating, the pre-payment penalty, if any, and the terms of the pre-payment penalty, if any, will be disclosed to the borrower as soon as they are known, but no later than the issuance of the commitment (if any), for the loan product chosen by the borrower;

(xi) with regard to written application, a toll free telephone number of a person in a management position with the mortgage banker or exempt organization who may be contacted about problems with the application. If there is no toll free telephone number, then collect calls must be accepted from those applicants who live more than fifty miles from a processing center. The circumstances under which a collect call will be accepted must be disclosed to the applicant. With respect to electronic applications, the disclosure shall include the electronic mail address of the mortgage banker or exempt organization.

(2) Required procedures for mortgage bankers and exempt organizations acting in a mortgage brokerage capacity. Mortgage bankers or exempt organizations which act in a mortgage brokerage capacity shall comply with the procedures set forth in paragraph (a)(2) of this section. Nothing in this section shall prohibit a mortgage banker or exempt organization from taking a lock-in fee for transmittal to a mortgage banker or exempt organization subject to the restrictions imposed by section 38.6(c) of this Part.

(d) Separate application disclosure and procedures.

In addition to the disclosures required by this section, each mortgage banker and exempt organization shall disclose in writing or via electronic media to each applicant for a mortgage loan when the interest rate for the loan will be set. If it is the policy of the mortgage banker or exempt organization to allow the applicant to choose when the rate will be set, then the disclosure shall contain a statement to this effect. The disclosure required by this subdivision must be no less conspicuous than the other disclosures made pursuant to this section.

(e) Telephone applications.

Nothing in this section shall be construed to prohibit the taking of telephone applications. However, within 10 days of the taking of such application or filling out a borrower's worksheet, and in any event prior to the taking of any fee, the applicant must be given two copies of the application or the worksheet and of the appropriate disclosures for review by the applicant. The applicant must also be provided with a stamped self-addressed return envelope and a written request that the applicant sign and return one copy of the application and the disclosures to the mortgage broker, mortgage banker or exempt organization. In those instances in which a worksheet and pre-application disclosures are provided to the applicant, the applicant need only sign and return the disclosures.

3 CRR-NY 38.4 Commitment disclosures and procedures {#sec-3-crr-ny-38.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.4}

(a) Disclosure requirements for mortgage loans for acquisition of a dwelling and for all other mortgage loans for which a commitment fee or points are paid to the lender.

At time of commitment, and in any case prior to the acceptance of a commitment fee or any points, each mortgage banker and exempt organization making a mortgage loan shall disclose in writing or by electronic transmission to each applicant for a mortgage loan the fees to be paid in connection with the commitment and the terms and conditions under which such fees may be refundable. Each mortgage banker and exempt organization shall also disclose the items listed below in the written or electronically transmitted commitment:

(1) Terms and conditions of the mortgage loan.

(i) identification of entity making commitment;

(ii) identification of borrower(s);

(iii) identification of property securing loan;

(iv) principal amount of the loan;

(v) term of the loan;

(vi) initial interest rate;

(vii) initial monthly payment of principal and interest;

(viii) a statement that a balloon payment will be required (if applicable);

(ix) if the loan is an adjustable rate loan, in addition to the foregoing, the lender shall disclose the frequency of change, the index, the margin, and any relevant caps;

(x) a statement that private mortgage insurance will be required (if applicable) and the conditions under which such insurance would no longer be required;

(xi) a statement that flood insurance may be required if the property is in a flood zone;

(xii) a statement that negative amortization may apply (if applicable);

(xiii) whether and under what conditions the mortgage is assumable;

(xiv) a statement that funds are to be escrowed (if applicable);

(xv) total points to be accepted directly or indirectly by or on behalf of the mortgage banker or exempt organization at or prior to closing;

(xvi) the mortgage banker or exempt organization shall separately identify the points, including premium pricing, payable by the lender to a mortgage broker or a mortgage banker or exempt organization when acting in a mortgage brokerage capacity and briefly explain the basis for the premium pricing payment. Upon receipt of a copy of the separate fee agreement between the broker and the applicant, which fee agreement may be in writing or electronically transmitted, the lender is required to disclose any fees or points to be paid by the applicant directly to the mortgage broker;

(xvii) if applicable, the mortgage banker or exempt organization shall separately identify any premiums or bonuses to be paid to the mortgage broker by the lender and the basis of the mortgage broker's eligibility to receive premiums or bonuses; and

(xviii) if applicable, the amount of, or formula for calculating, the pre-payment penalty and terms of the pre-payment penalty.

(2) Terms and conditions of the commitment.

(i) time during which the commitment is irrevocable and may be accepted by the borrower, which time shall not be less than seven calendar days from the date of commitment or date of mailing, whichever is later;

(ii) amount of fees and charges payable at time of commitment including points or other discounts, origination fees or add-ons, however denominated by the mortgage banker or exempt organization; and

(iii) expiration date of the commitment, which must be a reasonable time for a consumer to arrange for a closing date.

(3) Mandatory disclaimer.

The following disclosure which shall be no less conspicuous than any other disclosure, made pursuant to this section, shall be included:

“IF YOU SIGN THIS COMMITMENT, AND YOU DO NOT CLOSE THIS LOAN IN ACCORDANCE WITH THE DESCRIBED TERMS, YOU MAY LOSE SOME OR ALL OF THE FEES OR CHARGES YOU HAVE PAID.”

(4) Conditions precedent to closing.

Either as part of the commitment or on a separate form given in conjunction with the commitment.

(i) a list of those items relating to the real property which must be produced prior to closing, including but not limited to the following items (if applicable):

(a) title report and insurance;

(b) property survey;

(d) satisfactory final inspection (if new construction);

(e) evidence of appropriate hazard insurance;

(f) evidence of flood insurance as appropriate;

(g) master policy insurance certificate (if applicable in the case of condominiums);

(h) termite inspection report;

(i) radon test report;

(j) well water test report; and

(k) septic inspection report.

(ii) a list of those items relating to the cooperative housing unit which must be produced prior to closing, including but not limited to the following items (if applicable):

(a) proprietary lease;

(b) recognition agreement;

(d) warranty and representation that no outstanding claims against the proprietary lease or stock will exist at closing; and

(e) copy of certificate of occupancy and title policy for the entire building if conversion has occurred within the last six months.

(iii) a list of foreseeable conditions and documents that will be required for closing of a mortgage loan. This list shall include, but need not be limited to, those property related items listed in this paragraph, as applicable, and any other specific property related documents and conditions and underwriting documents and conditions which the lender knows or reasonably should know, based upon the information contained in the applicant's file maintained by the lender at the time the commitment is issued, will be required. Underwriting documents refers only to those documents which the borrower must submit to the lender. The lender does not have to include specific title exceptions in the list. Documents that only require a borrower's signature need not be included in the list of foreseeable documents and conditions.

(b) Disclosure requirements for all residential mortgage loan transactions in which the proceeds of the mortgage loan will not be used to finance the acquisition of the dwelling and no commitment fee or points are paid to the lender prior to closing. A mortgage banker or exempt organization making a mortgage loan, the proceeds of which are not used to finance the acquisition of the dwelling securing the mortgage loan shall not be required to make such loan in accordance with section 38.3 of this Part and this section with the exception of the disclosure requirements contained in sections 38.3(b)(2)(vi), and 38.3(d) at application and subparagraphs (a)(1)(xvi) and (xviii) of this section upon loan approval provided the mortgage banker or exempt organization does not accept any fees prior to closing other than an application fee, property appraisal fee and credit report fee.

(c) Procedures for mortgage loans for the acquisition of a dwelling and for all other mortgage loans for which a commitment fee or points are paid to the lender.

(1) Every mortgage banker and exempt organization shall provide each applicant with a written or electronically transmitted commitment which incorporates the items listed in paragraphs (a)(1), (2), (3) and (4) of this section. All commitments must be signed by the mortgage banker or exempt organization. All commitment agreements must be signed by the mortgage banker or exempt organization and the applicant. Such signatures may be hand-written or digital to the extent such digital signatures are recognized as binding under New York State law.

(2) With regard to written commitments, every mortgage banker and exempt organization shall provide each applicant with a duplicate hard-copy original of the signed commitment agreement.

(3) With regard to electronic commitments, within three business days of receipt of a commitment agreement, a hard-copy of such commitment agreement shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such commitment agreement. The mortgage banker or exempt organization shall keep a copy of the digitally signed commitment agreement. Furthermore, in those instances in which a hard-copy of the commitment agreement is not mailed to the applicant, the mortgage banker or exempt organization must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such commitment agreement.

(4) No commitment given by a mortgage banker or exempt organization may contain any clause which conditions the commitment on the mortgage banker or exempt organization obtaining necessary funding or financing. This requirement shall not be deemed to be violated if the commitment discloses that the commitment is only for a particular loan product with a particular denominated third-party purchaser or investor, and discloses that the commitment is subject to the review and prior approval of that third-party purchaser or investor. No mortgage banker or exempt organization shall make a commitment for such a loan product unless the third-party purchaser or investor has committed to purchase such mortgage loan products from the mortgage banker or exempt organization. If such approval is not obtained the mortgage banker or exempt organization shall refund any points or commitment fees previously collected from the consumer.

(5) No points, however denominated by the mortgage banker or exempt organization, may be required by the mortgage banker or exempt organization as a condition for closing a mortgage loan if they have not previously been disclosed pursuant to this Part.

(6) Any additional settlement costs, documents or other items required to close the loan which are found to be necessary after the commitment has been issued must be disclosed in writing or electronically transmitted to the applicant in a reasonable and timely manner.

(7) All commitment fees accepted pursuant to this Part must be refundable in full if the property appraisal report is not favorable for the product for which the commitment was issued.

(8) A commitment fee and any points taken by a mortgage banker or exempt organization prior to closing must be refunded in full if an applicant who has provided complete and correct credit information as required by the application form is rejected as not creditworthy.

(d) Notice of expiration.

The notice of expiration of the commitment period required by section 595-a(3)(c) of the Banking Law must be a separate document and must be mailed or electronically transmitted to each individual applicant and, in any joint application, either to a notice recipient, if one has been designated as such by the applicants or, if none, then to all the applicants not less than 12 business days nor more than 20 business days prior to the expiration of the commitment period. This notice need not be given if the expiration of the commitment period is less than 12 days from the date the commitment is accepted, provided that the lender complies with the requirements of subparagraphs (a)(2)(i) and (iii) of this section. This notice may refer to both the expiration of the commitment period and the lock-in period provided that the notice is timely with regard to the expiration of each.

3 CRR-NY 38.5 Prevailing rate {#sec-3-crr-ny-38.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.5}

(a) Disclosures. A licensee or exempt organization may issue a “prevailing rate” commitment only in compliance with this section. Prior to acceptance of a commitment fee, points or other discounts, the licensee or exempt organization must issue a commitment which discloses the following:

(1) All disclosures required by section 38.4(a) of this Part excluding information concerning the initial interest rate, and the initial monthly payment of principal and interest.

(2) (i) Index and margin. The index and margin, if any, upon which the rate for that mortgage loan will be based. The index must be independently verifiable by the borrower and identification of a source for such verification shall be provided. The commitment must also disclose any points or other discounts; or

(ii) Base rate and deviation. A base rate and the maximum interest rate at which the loan may close. The interest rate at closing may never exceed one percentage point above the base rate. The interest rate may be adjusted downward at any time. For example, if the commitment sets a base rate of 9.5 percent, the rate may float no higher than 10.5 percent. A mortgage banker or exempt organization which offers prevailing rate commitments in accordance with this paragraph shall make available for inspection a list which identifies specific products and the rate at which such products are available on any day (“rate sheet”). Such rate sheet shall be maintained for two years.

(b) Procedures.

(1) In connection with a prevailing rate commitment for which a commitment fee is accepted prior to closing, a lender may offer a lower initial or introductory rate to a borrower as long as the index and any margin or the description for the adjusted rate is provided in accordance with this section.

(2) A licensee or exempt organization may issue a commitment which specifies that a rate will be determined at or prior to the closing date without disclosing the index and margin or base rate and deviation as provided above, only if no commitment fee, origination fee, points or other discounts are accepted prior to the fixing of the rate. A prevailing rate offered pursuant to this section must be reasonably related to market conditions at the time of the fixing of the rate.

(3) Nothing contained herein shall relieve the licensee or exempt organization from disclosing in the commitment any other item required by section 38.4(a) of this Part, including fees, points or other discounts or settlement costs.

3 CRR-NY 38.6 Lock-in agreements (guaranteed rate) {#sec-3-crr-ny-38.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.6}

A mortgage banker or exempt organization may take points or lock-in fee prior to the issuance of a commitment only in compliance with this section.

(a) Required disclosures and notices.

Prior to taking of any points or a lock-in fee, a mortgage banker or exempt organization must provide the applicant with a lock-in agreement signed and dated by the entity and the applicant which incorporates the following information:

(1) Each of the following:

(i) identification of property, principal amount and term of loan, initial interest rate and points, commitment fees and lock-in fees;

(ii) the lock-in agreement shall become binding on both the applicant and the mortgage banker or exempt organization when signed by both;

(iii) the time by which the lock-in fee must be paid to the mortgage banker or exempt organization, provided that such fee may not be taken prior to the time that the lock-in agreement becomes binding on both the applicant and the mortgage banker or exempt organization;

(iv) whether fixed or variable, and if a variable rate, the index and margin, or the method, by which an interest rate change for the mortgage loan will be calculated;

(v) balloon payment (if applicable);

(vi) initial monthly payment of principal and interest;

(vii) whether funds are to be escrowed (if applicable); and

(viii) whether private mortgage insurance is required (if applicable) and the conditions under which such insurance would no longer be required.

(2) The length of the lock-in period, which must be a time period within which the lender can reasonably expect to close the loan given the prevailing market conditions at time of lock-in; and the consequence of failing to close the loan within the lock-in period. The lock-in period shall commence at the time that the lock-in agreement is binding on the applicant and the mortgage banker or exempt organization as set forth in this section. This shall not prevent the parties from locking-in a rate that was in effect before the lock-in agreement became binding on both parties, provided that such rate shall not be higher than the rate that would otherwise be locked-in in the lock-in agreement.

(3) A notice printed indicating that if the applicant provides incomplete or incorrect credit information, he may forfeit some or all of his lock-in fee. If the lock-in agreement is typewritten, this notice shall be entirely in upper case letters and underlined. This notice shall be no less conspicuous than any other disclosure made pursuant to this section.

(4) Whether the lock-in fee is refundable, and the terms and conditions necessary to obtain the refund.

(5) The amount of the application fee, and provide a good faith estimate of the credit report fee and property appraisal fee, provided such fees have not been previously disclosed to the applicant.

(6) A list of all property-related documents typically required to be produced by the applicant and property-related conditions typically required to be satisfied by the applicant for closing of a mortgage loan based on the information provided by the applicant as well as any other information the lender knows or reasonably should know at the time a lock-in agreement is issued and a lock-in fee is paid to the lender, provided a commitment has not yet been issued. This list shall include, but need not be limited to, the items set forth in section 38.4(a)(4) of this Part, but need not include underwriting documents and conditions or specific title exceptions. The disclosures required by this paragraph need not be contained in the lock-in agreement, but may be provided in a separate form referenced in the lock-in agreement and clearly labelled as “Conditions To Be Satisfied for Closing”.

(b) Lock-in procedures.

(1) A lock-in fee including any points taken by the lender prior to commitment must be refundable in full if the property appraisal report is not favorable for the product locked in.

(2) A lock-in fee including any points taken by the lender prior to closing must be refunded in full if an applicant who provided complete and correct credit information as required by an application form is rejected as not creditworthy.

(3) The lock-in agreement shall be binding on both the applicant and the lender when such agreement is signed by the applicant and the lender. This requirement shall be disclosed to the applicant as set forth in this section.

(4) The notice of expiration of the lock-in period required by section 595-a(3)(c) of the Banking Law must be a separate document and must be mailed or electronically transmitted to each individual applicant and, in any joint application, either to a notice recipient, if one has been designated as such by the applicants or, if none, then to all the applicants not less than 12 business days nor more than 20 business days prior to the expiration of the lock-in period provided such expiration is more than 12 business days from the date the rate is locked irrespective of whether a lock-in fee is paid to the lender. This notice may refer to both the expiration of the commitment period and the lock-in period provided that the notice is timely with regard to the expiration of each.

(5) Both the applicant's signature and the signature of the lender may be hand-written or digital to the extent such digital signatures are recognized as binding under New York State law.

(6) With regard to written lock-in agreements, a duplicate or facsimile copy of the lock-in agreement signed by both the applicant and the lender shall be promptly provided to the applicant.

(7) With regard to electronic lock-in agreements, within three business days of the electronic transmission of a lock-in agreement signed by the lender, a hard-copy of such lock-in agreement shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such agreement. Furthermore, in those instances in which a hard copy of the lock-in agreement is not mailed to the applicant, then the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such agreement.

(8) With regard to electronic notices of expiration, within three business days of the electronic transmission of a notice of expiration, a hard-copy of such notice shall be mailed to the applicant who indicates that he or she does not have the computer capacity to down-load and print such notice. Furthermore, in those instances in which a hard copy of the notice is not mailed to the applicant, then the mortgage banker or exempt organization must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such notice.

Nothing herein shall be construed to prohibit a mortgage broker, mortgage bankers or exempt organizations acting in a mortgage brokerage capacity from taking a lock-in fee for transmittal to a mortgage banker or exempt organization prior to the issuance by the mortgage banker or exempt organization of a commitment, provided that prior to the taking of a lock-in fee:

(1) the mortgage broker, mortgage bankers or exempt organizations acting in a mortgage brokerage capacity provides the consumer with a lock-in agreement, signed by mortgage banker or exempt organization which intends to make the loan, which conforms with the requirements of this section; and

(2) the lock-in fee is made payable by the applicant to the mortgage banker or an exempt organization which intends to make the loan. A mortgage broker may only take a lock-in fee for transmittal to the mortgage banker or exempt organization which intends to make the loan.

3 CRR-NY 38.7 Prohibited conduct {#sec-3-crr-ny-38.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.7}

(a) No mortgage broker, mortgage banker or exempt organization, as is applicable to each entity, shall:

(1) misrepresent or conceal material loan terms, or make false promises to induce an applicant to apply for a mortgage loan. For purposes of this Part, a material term shall mean any item required to be disclosed pursuant to this Part which is likely to influence, persuade or induce an applicant for a mortgage loan to take particular action;

(2) conduct business with an entity which it knows or should know is an unregistered mortgage broker or an unlicensed mortgage banker;

(3) fail to display a copy of a license or a certificate of registration. Licenses and certificates shall be prominently displayed in every public business office frequented by mortgage loan applicants;

(4) fail to provide any of the disclosures in the manner and at the times required by this Part;

(5) fail to make good faith efforts to issue commitments and effect closing in a timely manner;

(6) fail to disclose additional settlement costs or items necessary to close a loan in a reasonable and timely manner;

(7) disburse the mortgage loan proceeds in any form other than, as applicable, direct deposit to customer's account, wire, bank or certified check, or attorney's check drawn on a trust account. Any entity may apply to the superintendent for a waiver of the requirements of this provision by demonstrating, in a letter application, that it has or shall adopt any other method of disbursement of loan proceeds which shall satisfy the purposes of this paragraph;

(8) fail to disburse funds in accordance with a commitment to make a mortgage loan which is accepted by the applicant;

(9) accept any fees at closing which were not disclosed in accordance with this Part;

(10) accept attorney's fees at closing in excess of the fees that have been or will be remitted to its attorneys;

(11) refuse to permit the borrower to be represented by the attorney of his choice;

(12) unreasonably refuse to issue or unreasonably delay the issuance of a satisfaction of mortgage after the mortgage has been fully satisfied;

(13) impose a charge on a mortgagor for establishing or maintaining an escrow account or for waiving the establishment or maintenance of an escrow account, provided however, that nothing herein shall prohibit a mortgage banker or exempt organization from imposing a one-time charge to pay the actual cost of an independent tax reporting service, provided such cost is disclosed prior to or at commitment;

(14) include any provision in the mortgage brokerage agreement that is intended to limit or prevent a consumer from submitting an application(s) to obtain a mortgage loan through another mortgage broker(s) or mortgage banker(s) or exempt organization(s) or impose a fee on the applicant should he/she do so;

(15) accept a good faith deposit or any other deposit to induce the lender to process the loan, whether or not the deposit is refundable; or

(16) enter into an employment agreement or otherwise engage any employee or independent contractor who has an employment or independent contractor relationship with any other mortgage banker, mortgage broker or exempt organization, except with the written approval of the superintendent.

(b) In addition, non-compliance with the following shall also constitute prohibited conduct:

(1) only one application fee and only one processing fee, if any, can be taken in any residential mortgage loan transaction irrespective of whether one or more than one mortgage broker, mortgage banker or exempt organization is involved in the transaction; and

(2) an undertaking of accountability for each independent contractor must be filed with the superintendent by the employer in such form as may be prescribed within ten days of commencement of employment. In addition, notification of the termination of any independent contractor shall be made to the superintendent within 10 days of such termination.

3 CRR-NY 38.8 Administrative actions and penalties {#sec-3-crr-ny-38.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.8}

(a) Disciplinary action. Banking Law, sections 595 and 595-a provide that a mortgage broker, mortgage banker or exempt organization may be subject to disciplinary action by the Banking Department for violations of article 12-D, the regulations promulgated thereunder, or violations of State or Federal law indicating that the entity is unfit to engage in the business of brokering or making mortgage loans in this State. Disciplinary action may include:

(1) temporary or permanent deletion from the mortgage broker roll;

(2) suspension or revocation of a license to engage in the business of mortgage banking; and

(3) fines assessed by the Banking Department, which shall be limited to $5,000 per violation, $100,000 per proceeding.

(b) Grounds for disciplinary action.

A registrant, licensee or exempt organization may be subject to such disciplinary action as may be determined appropriate by the superintendent after notice and hearing on the following grounds:

(1) fraud or bribery in securing a registration or license;

(2) the making of any false statement in an application for registration, licensing or exemption, which false statement would have been grounds for rejection of the application;

(3) the making of any false statement on any form or document requested by the superintendent for examination or review pursuant to Banking Law, article 12-D, Superintendent's Regulations Part 410, Supervisory Policy and Procedure G111 or Part 39 of this Title;

(4) a pattern of conduct indicating incompetence or untrustworthiness;

(5) violation of the disclosure requirements or prohibitions contained in sections 38.2-38.7 of this Part;

(6) conviction of any crime which would have a bearing on the fitness or ability of a registrant or licensee to conduct its business; and

(7) failure to perform its duties and responsibilities in an honest, fair and reasonable manner.

3 CRR-NY 38.9 Limitation on excess insurance and required disclosures {#sec-3-crr-ny-38.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.9}

(a) Limitation on excess insurance.

No mortgage banker or exempt organization shall require any mortgagor, in connection with the granting of a mortgage loan, to obtain a hazard insurance policy in excess of the replacement cost of the improvements on the property as a condition for the granting of such mortgage loan.

(b) Required disclosures.

Each mortgage banker and exempt organization that requires mortgagors to obtain and/or maintain hazard insurance as a condition to granting any mortgage loan shall at the time of commitment, or if no written commitment will be issued, then at the time of application, furnish in writing or by electronic transmission to each mortgagor:

(1) a statement that hazard insurance will be required; and

(2) a statement that the mortgage banker or exempt organization cannot require the mortgagor to obtain or maintain a policy in excess of the replacement cost of the improvements on the property securing the loan.

The disclosures required by this section may be incorporated into the application or commitment or into one or more forms required by State or Federal law or in a separate form. Furthermore, the disclosures required by this section are in addition to any other disclosures required by this Part. Within three business days of any electronic transmission of this disclosure, a hard copy of such disclosure shall be mailed to each mortgagor who indicates that he or she does not have the computer capacity to down-load and print such disclosure. Furthermore, in those instances in which a hard copy of the disclosure is not mailed to the mortgagor, the mortgage banker or exempt organization must be able to demonstrate that information was obtained as to the mortgagor's computer capacity to down-load and print such disclosure.

3 CRR-NY 38.10 Notification requirement {#sec-3-crr-ny-38.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.10}

Every mortgage banker, mortgage broker and exempt organization shall notify the Mortgage Banking Division of the department in writing of any administrative, civil or criminal proceeding initiated by any domestic governmental department or agency, the Federal Home Loan Mortgage Corporation, or the Federal National Mortgage Agency, within 20 days of its commencement, provided such proceeding pertains to residential mortgage lending.

3 CRR-NY 38.11 Requirements for branches {#sec-3-crr-ny-38.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.11}

(a) In addition to such applications and investigation fees as may be required under Banking Law article 12-D to establish any branches, with respect to any branch, as defined in section 38.1 of this Part, a particular person shall be designated as being responsible for the operation thereof. In addition, such branch stationery, if any, shall include the address and telephone number of the branch or the main office at the licensee's or registrant's option and must use the name of the licensee or registrant. The foregoing requirements shall not apply to mortgage brokers or mortgage bankers having more than 10 branches in New York State.

(b) A licensee or registrant shall not permit the establishment of or the maintenance of a net branch.

(c) Any employee, independent contractor or consultant who works from a place other than a branch as defined in section 38.1 of this Part shall be assigned to a specific branch location for purposes of managerial and regulatory oversight. All applicants and borrowers who interact with such employee, independent contractor or consultant must be provided with complete contact information for the branch location to which the employee, independent contractor or consultant is assigned. All documents pertaining to an application and the correspondent loan, if any, which involve such employee, independent contractor or consultant must go through the branch location to which the employee, independent contractor or consultant is assigned.

3 CRR-NY 38.12 Dual agency transaction disclosures {#sec-3-crr-ny-38.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.12}

The dual role performed by the mortgage broker, or a mortgage banker or an exempt entity acting as a mortgage broker, in those instances when the mortgage broker is also the real estate broker in the same residential real estate transaction, must be disclosed at the first substantive contact between the mortgage broker and the buyer/borrower. In addition, any regular business relationship that the mortgage broker maintains with any lender to which he/she presents loan applications, if he/she intends to utilize three or fewer lenders, must also be disclosed at the first substantive contact between the mortgage broker and the buyer/borrower. The appropriate disclosure form and acknowledgment set forth hereunder must be provided to and signed by the buyer/borrower and the seller before services as a mortgage broker may be rendered. The disclosures required by this section may be in writing or via electronic transmission and the required signatures may be hand-written or digital to the extent such signatures are recognized as binding under New York State law. A hard or electronic copy of the disclosure form and signed acknowledgment must be maintained by the mortgage broker for at least three years.

THE FOLLOWING DISCLOSURE AND ACKNOWLEDGMENT APPLY TO THOSE TRANSACTIONS IN WHICH THE REAL ESTATE BROKER REPRESENTING THE SELLER AND THE MORTGAGE BROKER REPRESENTING THE BUYER/BORROWER ARE THE SAME PERSON OR ENTITY.

DISCLOSURE REGARDING DUAL AGENCY ROLE IN RESIDENTIAL REAL ESTATE TRANSACTIONS

I must explain what dual agency means to you.

DUAL AGENCY

As a real estate licensee in the pending transaction (Name of Real Estate Broker) represents the seller in the sale of the residential real property and as such the primary responsibility is to the seller.
As a mortgage broker (Name of Mortgage Broker) represents the buyer/borrower in the acquisition of the mortgage loan and as such the primary responsibility is to the buyer/borrower.

YOUR RIGHTS UNDER DUAL AGENCY

I may represent you only with the knowledge and informed consent of each of you.
By consenting to Dual Agency you are giving up your right to undivided loyalty. You should carefully consider the possible consequences of a Dual Agency relationship before agreeing to such representation.
Since I am not a legal expert or an attorney you may wish to consult one before signing this form.
You the buyer may retain the services of a real estate broker or mortgage broker who will represent only you in the transaction.
You the seller may, subject to any existing contract of sale and/or any real estate agreement which you have already signed, retain the services of a real estate broker who will represent only you in the transaction.

□ I place mortgage loan applications with three or fewer mortgage lenders.

□ I place mortgage loan applications with more than three mortgage lenders.

ACKNOWLEDGMENT OF PROSPECTIVE BUYER AND SELLER TO DUAL AGENCY

(1) I have received and read this disclosure notice.

(2) I understand that as a real estate/mortgage broker you may be representing the interests of the seller in the sale of the residential real property and the buyer in the acquisition of the mortgage loan and that you will be unable to offer the full range of fiduciary duties to each of us.

(3) I understand that subject to the terms of any existing contract of sale and/or any real estate agreement which I may have already signed I the seller may engage my own broker as a real estate broker who will not act as a mortgage broker for any potential buyer/borrower in this transaction; or that I as a buyer/borrower may engage my own broker as a mortgage broker and/or my own broker as a real estate broker who will not act as a real estate broker for the seller in this transaction.

□ I understand that you as a mortgage broker will ordinarily place mortgage loan applications with three or fewer mortgage lenders.

□ I understand that you as a mortgage broker will ordinarily place mortgage loan applications with more than three mortgage lenders.

DATED: DATED:

SELLER: BUYER:

3 CRR-NY 38.13 FHA mortgage loan correspondents {#sec-3-crr-ny-38.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 38.13}

(a) For purposes of implementing section 590(5-a) of the New York Banking Law, all of the applicable requirements of this Part which pertain to mortgage bankers and exempt organizations shall also apply to any registered mortgage broker when acting as an FHA mortgage loan correspondent as approved by the superintendent. In all other instances, the mortgage broker shall remain subject to the requirements of this Part applicable to mortgage brokers.

(b) Notwithstanding any provision of this Part to the contrary, any registered mortgage broker, approved by the superintendent to act as an FHA mortgage loan correspondent, shall be permitted to advertise that it is an approved FHA mortgage loan correspondent authorized to make FHA insured mortgage loans. Such registered mortgage broker may display a notice that it is approved to make FHA insured mortgage loans.

(c) To the extent not prohibited by Federal law, where the requirement promulgated by the Secretary of Housing and Urban Development with regard to acting as an FHA mortgage loan correspondent differ from those of this Part, the FHA mortgage loan correspondent must comply with the requirement which provides greater consumer protection.

(d) No FHA mortgage loan correspondent may accept an application, application fee, credit report fee or property appraisal fee prior to making the following disclosure or one to like effect:

I am an approved FHA Mortgage Loan Correspondent. Your loan will be underwritten by my FHA approved sponsor. You will be notified of the name of the sponsor simultaneously with the issuance of an interest rate lock-in agreement or commitment to fund, whichever comes first. If the sponsor approves the FHA insured mortgage loan, I will make the mortgage loan to you.

Part 39 EXEMPT ORGANIZATIONS; SUBSIDIARIES OF EXEMPT ORGANIZATIONS; EXEMPT MORTGAGE PRODUCTS

3 CRR-NY 39.1 Purpose {#sec-3-crr-ny-39.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 39.1}

The purpose of this Part is to define the entities engaged in the business of soliciting, negotiating, placing, processing or making mortgage loans secured by a first or junior lien that will be exempt from the registration or licensing requirements of article 12-D of the Banking Law, and to define mortgage loan products, the brokering or funding of which do not require registration or licensing as a mortgage banker or mortgage broker under article 12-D.

3 CRR-NY 39.2 Definitions {#sec-3-crr-ny-39.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 39.2}

As used in this Part:

(a) The term exempt organization shall mean any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the Comptroller of the Currency to transact business in this State, national bank, Federal savings bank, Federal savings and loan association, Federal credit union, any bank, trust company, savings bank, savings and loan association, and credit union organized under the laws of any other state; any instrumentality created by the United States or any state with the power to make mortgage loans and any entities exempt pursuant to section 39.4 of this Part.

(b) The term exempt products shall mean any mortgage loan products meeting the requirements of section 39.5 of this Part. The brokering or funding of such products shall not be a business activity requiring registration or licensing pursuant to article 12-D, nor shall such products be subject to the advertising, solicitation, application and commitment procedures, disclosure requirements or penalty provisions set forth in article 12-D of the Banking Law and Part 38 of this Title.

(c) As used in this Part, terms defined in General Regulation section 38.1 of this Title shall have the same meaning as prescribed therein.

3 CRR-NY 39.3 General provisions {#sec-3-crr-ny-39.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 39.3}

(a) An entity not exempt by New York law which shall otherwise not establish its exempt status in accordance with this Part shall become licensed or registered in accordance with the procedures described in Part 410 of this Title prior to April 1, 1988. Entities exempt under a prior version of this Part that are no longer exempt shall file an application to become licensed or registered prior to April 3, 2012 and shall become licensed or registered by July 2, 2012, or such later date as the superintendent may approve for good cause.

(b) An exempt organization shall not be relieved of the advertising, solicitation, application and commitment procedures and disclosure requirements set forth in article 12-D of the Banking Law and Part 38 of this Title or the penalties for violations of such requirements set forth in the Banking Law. An entity exempt from licensing or registration as a mortgage banker or mortgage broker shall not be subject to periodic examination by the department but may at any time become subject to special investigation. Accordingly, consistent with section 597 of the Banking Law, each such entity shall keep its books and records in a manner which will allow the superintendent to determine whether such entity is complying with the advertising, solicitation, application and commitment procedures and disclosure requirements prescribed in Part 38 of this Title, except for books and records relating to exempt products. Information and forms regarding recordkeeping can be obtained at: Department of Financial Services, Mortgage Banking Division at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. Books and records shall be available for inspection by the superintendent in accordance with superintendent's regulation Part 410 of this Title.

3 CRR-NY 39.4 Organizations exempt from licensing or registration; conditions precedent to exemptions from registration or licensing requirements of article 12-D {#sec-3-crr-ny-39.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 39.4}

In addition to the entities defined as exempt organizations in section 39.2 of this Part, the following are exempt from licensing or registration as a mortgage banker or mortgage broker under article 12-D of the Banking Law or the rules and regulations promulgated thereunder:

(a) Loan investors.

Persons who acquire mortgage loans from lenders for investment but who do not make mortgage loans shall not be subject to the registration or licensing requirement of article 12-D of the Banking Law or the rules and regulations promulgated thereunder.

(b) Licensed real estate brokers.

Licensed real estate brokers who or which do not accept a separate fee (in addition to any earned real estate brokerage fee), directly or indirectly, for services performed in connection with the brokering of a mortgage loan shall not be required to be registered as a mortgage broker.

Section 590 of the Banking Law provides that a license to engage in the business of making mortgage loans shall be deemed to include the authority to engage in the business of soliciting, processing, placing and negotiating mortgage loans. No additional registration with the department shall be required to engage in the mortgage brokerage business, nor shall additional registration fees be required of any mortgage banker.

(d) Entities offering mortgage loan products exempt under section 39.5 of this Part.

Entities offering only mortgage loan products that are exempt products pursuant to section 39.5 of this Part are exempt from the registration and licensing requirements of article 12-D of the Banking Law and Part 410 of this Title.

(e) Not-for-profit organizations.

Not-for-profit organizations may be eligible for exemption from the registration and licensing requirements of article 12-D of the Banking Law. Such organizations which seek exemption may submit a letter application to the Mortgage Banking Division, together with such information as may be prescribed by the superintendent.

3 CRR-NY 39.5 Exempt products {#sec-3-crr-ny-39.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 39.5}

The following loan products are exempt from all of the requirement of article 12-D of the Banking Law and Part 38 of this Title for the licensing or registration of mortgage bankers and mortgage brokers:

(a) purchase money mortgages extended by a seller to buyers thereof, where the seller is an individual, estate or trust that sells not more than three properties in any 12-month period, provided that the seller has not constructed or acted as a contractor for the construction of a residence being sold;

(b) construction loan mortgages;

(c) relocation mortgage loans. A mortgage loan made by an applicant's employer if the purpose of the loan is to assist the employee to relocate;

(d) any product offered as a mortgage loan by an instrumentality created by the United States or any state; and

(e) such other loan products as may be specifically exempted upon application to the superintendent.

Part 41 RESTRICTIONS AND LIMITATIONS ON HIGH COST HOME LOANS

3 CRR-NY 41.1 Definitions {#sec-3-crr-ny-41.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.1}

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 ¼ 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.

3 CRR-NY 41.2 Limitations {#sec-3-crr-ny-41.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.2}

A high cost home loan shall be subject to the following limitations.

(a) No call provision.

No high cost home loan may contain a call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This prohibition does not apply when repayment of the loan has been accelerated in good faith, due either to a bona fide default or other failure of the borrower to abide by the material terms of the loan, or pursuant to a due-on-sale provision, or pursuant to some other provision of the loan agreement unrelated to the payment schedule such as bankruptcy or receivership.

(b) No balloon payment.

No high cost home loan may contain a scheduled final payment that is more than twice as large as the average of earlier scheduled monthly payments unless such balloon payment becomes due and payable at least 15 years after the loan's origination. This prohibition does not apply when the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the purpose of the loan is a bridge loan connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling. This subdivision shall not apply to open-end high cost home loans.

Notwithstanding any statute or regulation to the contrary, no high cost home loan may contain a payment schedule with regular periodic payments that cause the principal balance to increase. This shall not prohibit negative amortization as a consequence of a temporary forbearance sought by the borrower. This subdivision shall not apply to open-end high cost home loans.

(d) No increased interest rate.

No high cost home loan may contain a provision that increases the interest rate after default. This provision does not apply to periodic interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan agreement, provided the change in the interest rate is not occasioned by the event of default or the acceleration of the indebtedness.

(e) No oppressive mandatory arbitration clause.

No high cost home loan may be subject to a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers. Arbitration clauses that comply with the standards set forth in the Statement of Principles of the National Consumer Dispute Advisory Committee, as such statement is on file at the New York State Department of Financial Services, shall be presumed not to violate this subdivision. The Statement of Principles may be viewed at the New York State Department of Financial Services located 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 or through internet access at http://www.banking.state.ny.us/41.htm.

(f) No advance payments.

No high cost home loan may include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower.

3 CRR-NY 41.3 Prohibited acts and practices {#sec-3-crr-ny-41.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.3}

The following acts and practices are prohibited in the making of a high cost home loan.

(a) No lending without counseling disclosure and list of counselors and consumer and home ownership counseling notice.

(1) A lender or mortgage broker must deliver, place in the mail, fax or electronically transmit the following notice in at least 12-point type to the borrower at the time of application: "You should consider financial counseling prior to executing loan documents. The enclosed list of counselors is provided by the New York State Department of Financial Services.” In the event that the lender or broker does not know whether the borrower's application is a high cost home loan application, such disclosure must be made as soon as the lender determines that it is a high cost home loan application. In the event of a telephone application, the disclosures must be made immediately after receipt of the application by telephone. Such disclosure shall be on a separate form. In order to utilize an electronic transmission, the lender or broker must first obtain either written or electronically transmitted permission from the borrower. A list of approved counselors, available from the New York State Department of Financial Services, shall be provided to the borrower by the lender or the mortgage broker at the time that this disclosure is given. The lender or mortgage broker may provide to the borrower the entire list of counselors or those portions of the list which pertain to both the geographic area in which the borrower resides and any adjacent area or areas.

(2) Within three days after determining that the loan is a high cost home loan, but no less than 10 days before closing, a lender or mortgage broker shall not make or arrange a high cost home loan unless either the lender or the mortgage broker has delivered to the borrower in writing, either placed in the mail, faxed or electronically transmitted, the following notice in at least 12-point type:

“CONSUMER CAUTION AND HOME OWNERSHIP COUNSELING NOTICE

If you obtain this loan, which pursuant to New York State Law is a High-Cost Home Loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.

You should shop around and compare loan rates and fees. Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your earnings history, the loan-to-value requested, and the type of property that will secure your loan. The loan rate and fees could vary based on which lender or mortgage broker you select. Higher rates and fees may be related to the individual circumstances of a particular consumer's application.

You should consider consulting a qualified independent credit counselor or other experienced financial adviser regarding the rate, fees, and provisions of this mortgage loan before you proceed. The enclosed list of counselors is provided by the New York State Department of Financial Services.

You are not required to complete any loan agreement merely because you have received these disclosures or have signed a loan application. If you proceed with this mortgage loan, you should also remember that you may face serious financial risks if you use this loan to pay off credit card debts and other debts in connection with this transaction and then subsequently incur significant new credit card charges or other debts. If you continue to accumulate debt after this loan is closed and then experience financial difficulties, you could lose your home and any equity you have in it if you do not meet your mortgage loan obligations.

Property taxes and homeowner's insurance are your responsibility. Not all lenders provide escrow services for these payments. You should ask your lender about these services.

Your payments on existing debts contribute to your credit ratings. You should not accept any advice to ignore your regular payments to your existing creditors. Accordingly, it is important that you make regular payments to your existing creditors.”

If the notice required by this paragraph is given to the borrower separately from counseling notice required by paragraph (1) of this subdivision, then the list of counselors so enclosed in the counseling notice disclosure shall be enclosed also with this disclosure notice. Such disclosure shall be on a separate form. In order to utilize an electronic transmission, the lender or broker must first obtain either written or electronically transmitted permission from the borrower.

(b) No lending without due regard to repayment ability.

A lender or mortgage broker may not make or arrange a high cost home loan unless the lender reasonably believes at the time the loan is consummated that the borrower or the borrowers (when considered collectively in the case of multiple borrowers) will be able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status, and other financial resources (other than the borrower's equity in the dwelling which secures repayment of the loan) as verified by detailed documentation of all sources of income and corroborated by independent verification. A lender shall benefit from a rebuttable presumption that a borrower is able to make the scheduled payments to repay the obligation, if, at the time the high cost home loan is consummated, or at the time of the first rate adjustment in the case of a lower introductory interest rate, the borrower's scheduled monthly payments do not exceed 50 percent of the borrower's monthly gross income as verified by the credit application, the borrower's financial statement, a credit report, financial information provided to the lender by or on behalf of the borrower, or any other reasonable means, and the lender, in making such high cost home loan, follows the residual income guidelines pursuant to section 36.4337(e) of title 38 of the Code of Federal Regulations and U.S. Veterans' Administration VA Form 26-6393. VA Form 26-6393 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 or by internet access at http://www.vba.va.gov/pubs/homeloanforms.htm. The U.S. Veterans Administration residual incomes for the northeast region 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 or by internet access at http://www.banking.state.ny.us/41.htm. A borrower's repayment ability shall be presumed “corroborated by independent verification” for purposes of this Part and section 6-l(2)(k) of the Banking Law if the borrower's income, employment status, obligations, and other financial resources are verified by documents prepared by persons or entities having no direct relationship with the lender or mortgage broker or a relationship with the borrower, other than an employment, debtor-obligor, or fiduciary relationship, or by governmental documents, such as an income tax return. For purposes of determining monthly income, only the income of the borrower(s) shall be considered.

In making a high cost home loan, a lender may not require a borrower to directly or indirectly finance any portion of the points and/or fees, in an amount that exceeds three percent of the principal amount of a closed end high cost home loan, or of the maximum line of credit amount for open end high cost home loans, for loans other than refinancings. For refinancings, a lender may not finance such points or fees in an amount that exceeds three percent of the additional proceeds received by the borrower in connection with the refinancing. In making a high cost home loan, a lender may not finance voluntary credit, disability, unemployment and/or life insurance as part of the principal amount of the loan, whether interest is charged or not. In making a high cost home loan, a lender may not directly or indirectly finance any prepayment fees or penalties payable by the borrower in a refinancing transaction if the lender or an affiliate of the lender is the originator of the loan being refinanced. For purposes of this subdivision, additional proceeds for a closed end loan is the amount over and above the current principal balance of the existing home loan. For an open end loan, additional proceeds is the amount by which the line of credit on the new loan exceeds current principal balance of the existing home loan.

(d) Refinancing and modification of existing high cost home loan.

(1) (i) A lender shall not charge a borrower points and fees in connection with a high cost home loan if the proceeds of the high cost home loan are used to refinance an existing high cost home loan held by the lender or an affiliate of the lender.

(ii) In all other instances, a lender may not charge a borrower points and fees in connection with a high cost home loan if the proceeds of the high cost home loan are used to refinance an existing high cost home loan and the last financing was within two years of the current refinancing. This provision shall not prohibit a lender from charging points and fees in connection with any additional proceeds received by the borrower in connection with the refinancing, provided that the points and fees charged on the additional sum must reflect the lender's typical point and fee structure for high cost refinance loans. For purposes of this subdivision, additional proceeds for a closed end loan is the amount over and above the current principal balance of the existing high cost home loan. For an open end loan, additional proceeds is the amount by which the line of credit on the new loan exceeds current principal balance of the existing high cost home loan.

(2) A lender may not charge a borrower any fees to modify, renew, extend, or amend a high cost home loan or defer any payment due under a high cost home loan if, after the modification, renewal, extension or amendment, the loan is still a high cost loan or, if no longer a high cost home loan, the annual percentage rate has not been decreased by at least two percentage points. For purposes of this paragraph, fees do not include interest that is otherwise payable and consistent with the provisions of the loan documents. This provision shall not prohibit a lender from charging points and fees in connection with any additional proceeds received by the borrower in connection with the modification, renewal, extension or amendment (over and above the current principal balance of the existing high cost home loan) provided that the points and fees charged on the additional sum must reflect the lender's typical point and fee structure for high cost home loans. This provision shall not apply if the existing high cost home loan is in default or is 60 or more days delinquent and the modification, renewal, extension, amendment or deferral is part of a work-out process.

(e) Restrictions on home improvement contracts.

A lender may not pay a contractor under a home-improvement contract from the proceeds of a high cost home loan other than by an instrument payable to the borrower or jointly to the borrower and the contractor or, at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor prior to the disbursement of funds to the contractor.

(f) No refinancing of special mortgages.

No lender making a high cost home loan may refinance an existing mortgage loan that is a special mortgage originated, subsidized or guaranteed by or through a state, tribal or local government, or nonprofit organization, which either bears a below-market interest rate at the time of origination, or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or where no payments are required under specified conditions, and where, as a result of the refinancing, the borrower will lose one or more of the benefits of the special mortgage, unless the lender is provided prior to loan closing documentation by a U.S. Department of Housing and Urban Development certified housing counselor or the lender who originally made the special mortgage that a borrower has received home loan counseling in which the advantages and disadvantages of the refinancing has been received.

(g) List of counselors, residual income guidelines and yield on United States Treasury securities.

The list of counselors in subdivision (a) of this section, the residual income guidelines in subdivision (b) of this section, and the yield on the United States Treasury securities in section 41.1(e) of this Part shall be published by the department on its website. Lenders may rely upon and use such information until 90 days after the department publishes new information on its website.

3 CRR-NY 41.4 Additional requirements {#sec-3-crr-ny-41.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.4}

The following are required in order to make a high cost home loan.

(a) Mortgage brokers and lenders must give the disclosures required pursuant to Part 38 of this Title, as applicable, to the borrower and any other obligor in writing at the time of application which shall be at least 10 days prior to the closing whether or not funds are then disbursed. In addition, at or prior to taking an application, mortgage brokers and lenders must also deliver, place in the mail, fax or electronically transmit to the borrower a statement in substantially the following form: “Although your aggregate monthly debt payment may decrease, the high cost home loan may increase both (i) your aggregate number of monthly debt payments and (ii) the aggregate amount paid by you over the term of the high cost home loan” if such are likely the case. This disclosure need not be a separate document. A lender may agree with a broker that the broker shall make the disclosures required by this Part and Part 38 of this Title on behalf of the lender. However, it remains the responsibility of the lender to ensure that such disclosures are made. In the event that the lender or broker does not know whether the borrower's application is a high cost home loan application, such disclosure must be made within three days after the lender determines that it is a high cost home loan application, but in any event, at least 10 days prior to the closing. In the event of a telephone application, the disclosure must be made within three days after receipt of the application by telephone, but in any event, at least 10 days prior to the closing. In order to utilize electronic transmission, the lender or broker must first obtain either written or electronically transmitted permission from the borrower.

(b) The lender must report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit bureau at least annually during such period as the lender holds or services the high cost home loan.

(c) Mortgage brokers and lenders that broker or make 10 or more high cost home loans per year must report to the department annually, on or before March 31st in each year, the names and addresses of the three home improvement contractors, the three consultants and the three attorneys who obtain the largest number of payments directly from the proceeds of high cost home loans made or brokered by the lender or mortgage banker. They must also provide the names and addresses of any home improvement company that is an affiliate. This provision shall not apply to attorneys in their capacity as closing attorneys for lenders.

(d) The following statement in a minimum of 12-point type must appear directly above the borrower's signature line on the application: “The loan which may be offered to you is not necessarily the least expensive loan available to you and you are advised to shop around to determine comparative interest rates, points and other fees and charges.” In the event of telephone applications, this disclosure shall be made to the borrower within three days of receipt of an application, but in any event at least 10 days prior to the closing whether or not funds are then disbursed. In the event that the lender or broker does not know whether the borrower's application is a high cost home loan application, such disclosure must be made within three days after the lender determines that it is a high cost home loan application, but in any event, at least 10 days prior to closing whether or not funds are then disbursed. If the mortgage application form is prescribed by a government-sponsored entity, such statement shall be placed on a separate document and attached to the front of the mortgage application.

3 CRR-NY 41.5 Unfair and deceptive acts or practices {#sec-3-crr-ny-41.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.5}

The following acts shall be prima facie evidence that the lender does not possess the requisite character and fitness required to be licensed or registered by the New York State Department of Financial Services:

(a) the making of high cost home loans that demonstrate a pattern and practice of violating any provision of this Part. The provisions of this section shall apply to any lender that seeks to avoid its application by any device, subterfuge or pretense whatsoever, which shall include but not be limited to splitting or dividing any loan transaction into separate parts for the purpose of evading the provisions of this Part and section 6-l of the Banking Law;

(b) engaging in unfair, deceptive or unconscionable practices in the course of advertising, brokering or making high cost home loans to residents of this State. Such practices include, but are not limited to, the following:

(1) brokering or making a high cost home loan which includes points, fees or other finance charges that, considering the loan transaction as a whole (including the creditworthiness of the borrower, the terms of the loan, the value of the collateral, and the owner's equity in the collateral), so significantly exceed the usual and customary charges incurred by mortgage consumers generally in this State for such points, fees or other finance charges as to be unconscionable;

(2) brokering or making high cost home loans in which the broker or lender charges and retains fees in any manner or form:

(i) for services that are not actually performed;

(ii) for which the fees bear no reasonable relationship to the value of the services actually performed; or

(iii) which are otherwise unconscionable;

(3) brokering or making high cost home loans with repayment terms that so exceed the borrower's financial capacity to repay as to be unconscionable. A loan that complies with section 41.3(b) of this Part shall be presumed not to violate this paragraph. Evidence that the repayment terms exceed the borrower's reasonable capacity to repay may be rebutted by:

(i) a showing that the lender reasonably believed at the time the loan was consummated that the borrower and any obligor had the capacity to repay the loan based upon consideration of their current and expected income, current obligations, employment status, and other financial resources, excluding the owner's equity in the dwelling that secures repayment of the loan and including any other collateral securing repayment of the loan; or

(ii) a showing that other compelling circumstances existed that justified the making of the loan notwithstanding the borrower's apparent lack of capacity to repay the loan based upon the factors stated in subparagraph (i) of this paragraph;

(4) “flipping” high cost home loans; that is, brokering or making a high cost home loan to a borrower that refinances an existing mortgage loan when, considering all the circumstances of the refinancing, such refinancing does not have a tangible net benefit to the borrower. A lender shall be considered by the superintendent to have provided a tangible net benefit to the borrower if a high cost home loan meets the following criteria: the borrower receives a monetary benefit, such as receipt of additional proceeds, a reduction of the outstanding mortgage debt, a lowering of the annual percentage rate, and/or a lowering of the monthly payments of principal and interest, taking into consideration the totality of the circumstances, including, but not limited to, the amount of the monetary benefit, the loan product and the borrower's repayment ability, current and expected income and current obligations; provided, however, that if the monthly payment of principal and interest and/or the mortgage debt increases, a commensurate monetary benefit shall ensue to the borrower;

(5) “packing” high cost home loans; that is, the practice of selling credit life, accident and health, disability, property, or unemployment insurance products, any other life or health insurance product, debt cancellation or suspension agreement products, or unrelated goods or services in conjunction with a high cost home loan without the informed consent of the borrower under circumstances where:

(i) the broker or lender solicits the sale of such products, goods or services; and

(ii) the broker or lender receives direct or indirect compensation for the sale of such products, goods or services; provided, however, it shall not constitute the practice of “packing” if the broker or lender, at least 10 business days before the loan is closed whether or not funds are then disbursed, makes a separate oral and a separate clear and conspicuous written disclosure in at least 12-point type to the borrower containing the following information: (a) the cost of such products or other goods and services; (b) the fact that such products, goods, or services, as offered to the borrower by the broker or lender, will be either prepaid or calculated, earned, and paid on a monthly or other regular, periodic basis; and (c) that the purchase of such products, goods or services is not required to obtain the mortgage loan. In addition, the written disclosure shall contain a signed and dated acknowledgment by the borrower(s) that the oral disclosure was made and a signed and dated acknowledgment by the broker or lender that the oral disclosure was made;

(6) recommending or encouraging default or further default by a borrower on an existing loan or other debt, prior to and in connection with the closing or planned closing of a high cost home loan that refinances all or any portion of such existing loan or debt; or

(7) advertising that refinancing pre-existing debt with a high cost home loan will reduce a borrower's aggregate monthly debt payment without also disclosing, if such are likely the case, that the high cost home loan will increase both:

(i) a borrower's aggregate number of monthly debt payments; and

(ii) the aggregate amount paid by a borrower over the term of the high cost mortgage loan.

3 CRR-NY 41.6 Multiple borrowers {#sec-3-crr-ny-41.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.6}

Where there is more than one borrower on a high cost home loan, and this Part requires a notice to be given or a signature obtained, such requirement shall be deemed satisfied by the delivery or placing in the mail to, or obtaining the signature of, any borrower who is primarily liable on the high cost home loan.

3 CRR-NY 41.7 Legend {#sec-3-crr-ny-41.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.7}

High cost home loan mortgages shall include a legend on top of the mortgage in 12-point type stating that the mortgage is a high cost home loan subject to this Part and section 6-l of the Banking Law. If the mortgage document form is prescribed by a government-sponsored entity, such legend shall be placed on a separate document and attached to the front of the mortgage document.

3 CRR-NY 41.8 Exempt products {#sec-3-crr-ny-41.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.8}

Certain products offered as a mortgage loan by an instrumentality of the United States or of any state shall be exempt from this Part such as loan products offered by the SONYMA.

3 CRR-NY 41.9 Correction of errors {#sec-3-crr-ny-41.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.9}

A lender of a high cost home loan that, when acting in good faith, fails to comply with the provisions of this section, will not be deemed to have violated this Part and section 6-l of the Banking Law if the lender establishes that either:

(a) within 30 days of the loan closing and prior to the institution of any action under section 6-l of the Banking Law, the borrower is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the borrower:

(1) make the high cost home loan satisfy the requirements of this Part; or

(2) change the terms of the loan in a manner beneficial to the borrower so that the loan is no longer a high cost home loan subject to the provisions of this Part; or

(b) the compliance failure resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors and, within 60 days after the discovery of the compliance failure and prior to the institution of any action under section 6-1 of the Banking Law or the receipt of written notice of the compliance failure, the borrower is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the borrower:

(1) make the high cost home loan satisfy the requirements of this Part; or

(2) change the terms of the loan in a manner beneficial to the borrower so that the loan is no longer a high cost home loan subject to the provisions of this Part. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person's obligations under this Part is not a bona fide error.

3 CRR-NY 41.10 Good faith reliance {#sec-3-crr-ny-41.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.10}

A lender or assignee may not be held liable under this Part for any act done or omitted in good faith in conformity with any rule, regulation, release, bulletin, or interpretation thereof by:

(a) the department; or

(b) with respect to provision of this Part that follow provision of the Federal Truth-in- Lending Act, the Federal Reserve Board or any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the board to issue such interpretations or approvals under such procedures as the board may prescribe therefor, notwithstanding that after such act or omission has occurred, such rule, regulation, interpretation, or approval is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

3 CRR-NY 41.11 Single premium insurance; debt cancellation and suspension agreement payments {#sec-3-crr-ny-41.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 41.11}

No lender or affiliate shall finance single premium credit life, accident, health, disability, or loss of income insurance, or any other life or health insurance premiums, in connection with a high cost home loan subject to this Part, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that such insurance premiums or payments calculated and paid on a monthly basis shall not be considered so financed.

Part 42 SUBPRIME HOME LOANS—THRESHOLDS

3 CRR-NY 42.1 Background {#sec-3-crr-ny-42.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 42.1}

(a) Section 6-m of the Banking Law provides for the regulation of subprime home loans as defined in the statute. In doing so, the statute incorporates the Federal concept of Annual Percentage Rate (“APR”), as defined in the Federal Truth-in-Lending Act, for determining whether a home loan is deemed subprime. Loans with a fully-indexed rate (a calculation correlated with APR) above a specified threshold are defined as subprime loans.

(b) The term fully-indexed rate is defined in section 6-m(1)(b) to mean:

“(1) for an adjustable rate loan based on an index, the annual percentage rate calculated using the index rate on the loan on the date the lender provides the ‘good faith estimate’ required under 12 USC section 2601 et seq. plus the margin to be added to it after the expiration of any introductory period or periods; or

(2) for a fixed rate loan, the annual percentage rate on the loan disregarding any introductory rate or rates and any interest rate caps that limit how quickly the contractual interest rate may be reached calculated at the time the lender issues its commitment.”

(c) Section 6-m defines a subprime home loan as a loan in which the initial interest rate or the fully-indexed rate, whichever is higher, exceeds by more than one and three-quarters percentage points for a first-lien loan, or by more than three and three-quarters percentage points for a subordinate-lien loan, the average commitment rate for loans with a comparable duration of such home loan as set forth in an index provided by the Federal Home Loan Mortgage Corporation for the date as specified in the statute (the first-lien threshold and subordinate-lien threshold, collectively, the “subprime threshold”).

(d) In Mortgagee Letter 2013-04, the Federal Housing Administration (the “FHA”) revised the period for assessing the annual Mortgage Insurance Premium (“MIP”) for FHA-insured loans such that, in certain cases, MIP is required to be paid over the life of the loan, effective June 3, 2013. Because MIP is part of the APR calculation, the FHA’s revised policy has caused the APR on many FHA-insured loans to increase, resulting in significantly more FHA-insured loans exceeding the subprime threshold. Because of the reluctance of secondary market participants to purchase subprime loans, lenders are less willing to originate such loans, which has significantly restricted the availability of mortgage financing in New York State.

(e) Section 6-m anticipated the need to adjust the statute’s established subprime threshold under certain circumstances. Section 6-m(1)(c)(ii) empowers the Superintendent to adjust the threshold, stating, “(n)otwithstanding the comparable rates set forth in this paragraph, and notwithstanding any other law, if . . . the provisions of this section have had an unduly negative effect upon the availability or price of mortgage financing in this state, the superintendent may from time to time designate such other threshold rates as may be necessary . . . to alleviate such unduly negative effects.”

(f) Based on a financial analysis and an assessment of market conditions, the superintendent has determined that FHA Mortgagee Letter 2013-04 has effectively decreased the threshold on certain loans; as a result, the existing subprime threshold in section 6-m is having an unduly negative effect on the availability of mortgage financing in New York State. The superintendent has further determined to use the authority provided by section 6-m to promulgate this regulation to restore the availability of mortgage financing to New York State residents.

(g) Accordingly, as set forth in section 42.2 of this Part, the superintendent is adjusting the subprime threshold by 75 basis points, or 0.75 percent, to restore the availability of mortgage financing to approximately the levels predating the effective date of FHA Mortgagee Letter 2013-04, subject to the specifications set forth in section 42.2 of this Part.

3 CRR-NY 42.2 Adjustment of subprime threshold {#sec-3-crr-ny-42.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 42.2}

(a) Threshold adjustment.

Notwithstanding the subprime threshold currently set forth in Banking Law section 6-m, and subject to the exclusions set forth in subdivision (b) of this section, a subprime home loan, if insured by the FHA, means a home loan in which the initial interest rate or the fully-indexed rate, whichever is higher, on the loan exceeds by more than two-and-a-half percentage points for a first-lien loan, or by more than four-and-a-half percentage points for a subordinate-lien loan, the average commitment rate for such loans in the northeast region with a comparable duration to the duration of such home loan, as published by the Federal Home Loan Mortgage Corporation (herein “Freddie Mac”) in its weekly Primary Mortgage Market Survey (PMMS) posted in the week prior to the week in which the lender provides the “good faith estimate” required under 12 USC section 2601 et seq.”

(b) Exclusions.

(1) The following types of FHA-insured loans are excluded from the threshold adjustment in subdivision (a) of this section, and instead are examined in accordance with the threshold currently set forth in Banking Law section 6-m:

(i) Title I Home Improvement Loans;

(ii) Home Equity Conversion Mortgages; and

(iii) any loan in which the fully-indexed rate, calculated using the FHA MIP policies that were in effect immediately prior to the effectiveness of Mortgagee Letter 2013-04, exceeds the unadjusted subprime threshold.

(2) All home loans other than FHA-insured loans are excluded from the threshold adjustment in subdivision (a) of this section, and instead are examined in accordance with the threshold currently set forth in Banking Law section 6-m.

3 CRR-NY 42.3 Effective date {#sec-3-crr-ny-42.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 42.3}

This Part shall be effective immediately.

Part 43 SUBPRIME HOME LOANS–MEANING OF TERMS

3 CRR-NY 43.1 Background {#sec-3-crr-ny-43.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 43.1}

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.

3 CRR-NY 43.2 Meaning of certain terms {#sec-3-crr-ny-43.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 43.2}

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 a 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 14th through Thursday, June 20th, the relevant PMMS is the one published on Thursday, June 13th. For a good faith estimate issued on Friday, June 21st through Thursday, June 27th, the relevant PMMS is the one published on Thursday, June 20th.

(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.

Part 50 MUTUAL TRUST INVESTMENT COMPANIES

REGULATION AND SUPERVISION REGULATION AND SUPERVISION

3 CRR-NY 50.1 Examinations {#sec-3-crr-ny-50.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.1}

The superintendent shall have the power to examine every mutual trust investment company at any time prior to its dissolution whenever in his judgment such examination is necessary or advisable. He shall at least once in each calendar year, upon such date or dates within each such period as in his discretion he deems proper, cause every such mutual trust investment company to be examined. On every such examination of any mutual trust investment company, inquiry shall be made as to:

(a) its financial condition;

(b) the policies of its management;

(c) whether the requirements of law and these regulations have been complied with in the administration of its affairs; and

(d) such other matters as the superintendent may prescribe.

For the purpose of conducting such examination of a mutual trust investment company, the superintendent shall have the power to examine relevant books, records, accounts and documents held or maintained by any custodian for the account of the mutual trust investment company or any other person, firm or corporation which shall render managerial, investment, advisory, statistical or other services to the mutual trust investment company. All reports of examinations and investigations, including any duly authenticated copy or copies thereof in the possession of the mutual trust investment company, shall be confidential communications, shall not be subject to subpoena, and shall not be made public unless in the judgment of the superintendent the ends of justice and the public advantage will be subserved by the publication thereof, in which event he may publish a copy of any such report or any part thereof in such manner as he may deem proper.

3 CRR-NY 50.2 Reports {#sec-3-crr-ny-50.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.2}

The superintendent may require any mutual trust investment company to make such regular and special reports to him at such times as he may prescribe. The superintendent may prescribe the form and contents of all such periodical and special reports.

3 CRR-NY 50.3 Subpoena {#sec-3-crr-ny-50.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.3}

The power of subpoena, set forth in Banking Law, section 38, shall extend to all matters relating to the affairs of any mutual trust investment company.

3 CRR-NY 50.4 Orders of the superintendent {#sec-3-crr-ny-50.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.4}

The power of the superintendent to issue an order to appear and explain an apparent violation, to discontinue unauthorized or unsafe practices and to keep books and accounts as prescribed, as set forth in Banking Law, section 39(1), (2) and (5), shall apply to any mutual trust investment company with the same force and effect as if mutual trust investment companies were specifically mentioned in each such subdivision.

3 CRR-NY 50.5 Removal of directors and officers {#sec-3-crr-ny-50.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.5}

Directors and officers of any mutual trust investment company shall be subject to removal, under Banking Law, section 41, with the same force and effect as if mutual trust investment companies were specifically mentioned in such section.

ACCOUNTING RECORDS ACCOUNTING RECORDS

3 CRR-NY 50.10 Accounting records {#sec-3-crr-ny-50.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.10}

A complete set of accounting records shall be maintained by the mutual trust investment company. Such records shall clearly distinguish items of principal from items of income of such company.

3 CRR-NY 50.11 Register {#sec-3-crr-ny-50.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.11}

A register shall be maintained by the mutual trust investment company, showing with respect to each stockholder:

(a) the date of each investment, the number of shares purchased and the amount paid therefor;

(b) the date of each redemption, the number of shares redeemed, the amount paid on redemption and whether payment was made in cash, in kind, or partly in cash and partly in kind;

(d) the shares in any liquidating account.

VALUATION INVESTMENTS VALUATION INVESTMENTS

3 CRR-NY 50.20 Time of valuation {#sec-3-crr-ny-50.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.20}

Investments shall be valued by the mutual trust investment company as of the opening of business on the last business days of January, April, July and October of each year, and such other date or dates as the board of directors of the mutual trust investment company shall designate.

3 CRR-NY 50.21 Method of valuation {#sec-3-crr-ny-50.21 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.21}

The following method shall be used in the valuation of investments:

(a) Investments shall be valued by reference to appropriate valuations applied by a generally accepted pricing service, or by the methods set forth below. All estimates, quotation sheets and valuations used for valuations shall be retained in the records of the mutual trust investment company.

(b)

(1) In the case of an obligation of the United States, or of an obligation for which the faith of the United States is pledged for the payment of the interest and principal, the mutual trust investment company shall use for the valuation of such investment the mean of the most recent dealer bid and asked prices appearing within the five business days next preceding the valuation date in newspapers or general circulation published in the City of New York, in standard financial periodicals or in current dealer communications. Obligations of the United States which may be redeemable at less than par prior to maturity or which are not saleable without exchange shall be valued at par.

(2) In the case of a security listed on a national securities exchange registered under section 6 of the Federal Securities Exchange Act of 1934, or on the NASDAQ National Market, the mutual trust investment company shall use for the valuation thereof the last reported sale price, unless there have been no reported sales within the five business days preceding the valuation date in which event the most recent bid price shall be used. For the purpose of this paragraph, reported sales prices and bid prices shall be those appearing in newspapers of general circulation published in the city of New York, in standard financial periodicals, or on the records of a registered national exchange or the National Association of Securities Dealers. If the mutual trust investment company believes that the last reported sales price or bid price does not fairly represent the values of the security, then the company may, after expressing that view in writing for its records along with the reasons for it, use as an alternative the valuation method in paragraph (3) of this subdivision.

(3) If neither recorded sales nor bid and asked prices are available as provided above, and in the case of all investments other than those mentioned above, except investments in mortgages, the mutual trust investment company shall obtain from not less than two bankers, brokers, dealers or other persons qualified in the opinion of the mutual trust investment company to give an opinion as to the value of the investment in question a written estimate of the value of such investment as of the close of business on the last business day prior to the valuation date. The average of such estimates shall be used, and each such estimate shall be retained in the records of the mutual trust investment company.

(c) For the purposes of this Part, a business day shall mean a day when the New York Stock Exchange or the American Stock Exchange is open for business.

(d) In the case of investments in mortgages, the mutual trust investment company shall secure, prior to any valuation date, from not less than two persons qualified in the opinion of the mutual trust investment company to give an opinion as to the value of the mortgage in question, a written estimate of the value of such mortgage. At least one of the persons making such valuation shall not have participated in the making of the last preceding valuation. The average of such estimates shall be used and each such estimate shall be retained in the records of the mutual trust investment company. Notwithstanding the foregoing, in the event that the mutual trust investment company shall have in its files such a written estimate of value made within one year of the valuation date, such estimate may be used. The real estate securing each such mortgage investment shall be appraised at least once every three years by two persons, one of whom shall not have participated in the last preceding appraisal of such real estate. Such persons shall be appointed by the mutual trust investment company and shall, in the opinion of such mutual trust investment company, be familiar with real estate values in the vicinity in which such real estate is situated and qualified to make such appraisals. The persons so appointed shall actually inspect such real estate and shall so certify in a written certificate of appraisal, which shall be filed and preserved in the records of the mutual trust investment company. In preparing a written estimate of the value of any mortgage, due consideration shall be given, by the persons making such valuation, to the last written certificate of appraisal of the property covered by such mortgage.

(e) In the case of a stock where a dividend has been declared but has not been paid and the amount of such dividend has been considered as income under the bylaws of the mutual trust investment company, the amount of such dividend shall be deducted from the price of the stock in determining its value unless such price shall be an ex-dividend price.

(f) An investment purchased and awaiting payment against delivery shall be included for valuation purposes as a security held, and the cash amount shall be adjusted to reflect the purchase price, including brokers' commissions and other expenses incurred in the purchase thereof but not disbursed as of the valuation date.

(g) An investment sold but not delivered pending receipt of proceeds shall be valued at the net sales price.

(h) For the purpose of valuation of an investment, except an investment sold but not delivered, it shall not be necessary to deduct from the value ascertained, as provided above, brokers' commissions or other expenses which would be incurred upon a sale thereof.

(i) There shall be deducted from any gross asset value, computed as aforesaid, the amount of all expenses incurred and accrued and unpaid, such reserves as may be set up to cover taxes and any other liabilities, and such other deductions as in the opinion of the board of directors are in accordance with sound accounting practices.

3 CRR-NY 50.22 Valuation schedule {#sec-3-crr-ny-50.22 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.22}

(a) Within 10 business days after any valuation date, the mutual trust investment company shall cause to be prepared a schedule of investments, as of the valuation date, which shall contain:

(1) a description of each security issue or investment;

(2) its face value;

(3) its value as carried on the books of the mutual trust investment company; and

(4) its value as determined as of such valuation date.

(b) Each such schedule shall be certified by one or more of the members of the board of directors of the mutual trust investment company and filed as a permanent record of the mutual trust investment company.

INVESTMENTS AND REDEMPTIONS INVESTMENTS AND REDEMPTIONS

3 CRR-NY 50.30 Basis and time of investments and redemptions {#sec-3-crr-ny-50.30 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.30}

(a) For the purpose of investment and redemption of shares of the mutual trust investment company, the principal of the fund shall be determined by adding to the value of the investments, as determined in accordance with the provisions of sections 50.20-50.22 of this Part, the uninvested cash principal and other items of principal, and by deducting from the total thereof any liabilities, due or accrued, chargeable to principal. For the purpose of computing the value per share, the principal thus determined shall be divided by the number of existing shares and such share value, together with a sum equal to the proportionate share of any income held or accrued and remaining undistributed at the valuation date, shall be the basis for investment in and redemption of shares of the mutual trust investment company. In determining the value of a share, fractions less than one-hundredth percent of the original share value may be omitted. No investment in or redemption from the mutual trust investment company shall be permitted except on the basis of such valuation and as of such valuation date. A reasonable period, not to exceed seven calendar days, following each valuation date may be used to make the computations necessary to determine the value of the fund and of the shares therein. No investment in or redemption from the mutual trust investment company shall be permitted unless a written request for, or notice of intention of, taking such action as of a specified valuation date shall have been received by the transfer agent for the mutual trust investment company shares on or before the last business day prior to the specified valuation date.

(b) When redemptions of shares are made by the mutual trust investment company, distributions may be made in cash or rateably in kind, or partly in cash and partly rateably in kind, provided that all distributions as of any one valuation date shall be made on the same basis. Before any distribution in cash is made, the mutual trust investment company shall determine whether any investment remaining in the mutual trust investment company has ceased to be eligible as a new investment of such mutual trust investment company, and no distribution shall be made in cash until any such investment shall have been eliminated from the mutual trust investment company either through sale, distribution in kind, or segregation as provided in sections 50.50-50.52 of this Part.

3 CRR-NY 50.31 Distribution of income {#sec-3-crr-ny-50.31 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.31}

The income of the mutual trust investment company shall be computed on the accrual basis and the apportionment of income shall be determined at each valuation date. The income shall be distributed to shareholders not less frequently than quarter-annually, either on the basis of income accrued or on the basis of income actually received. To facilitate the distribution of accrued but uncollected income, the cash principal of the mutual trust investment company may be used to the extent necessary to purchase income accrued.

3 CRR-NY 50.32 Periodic statement {#sec-3-crr-ny-50.32 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.32}

(a) Within 10 business days after any valuation date, the mutual trust investment company shall cause to be prepared, as of the opening of business on such valuation date, a statement of condition of the mutual trust investment company on the basis of such valuation, showing separately the items of principal and income, and containing a memorandum of the following:

(1) the number of shares outstanding;

(2) the value per share; and

(3) the income per share since the preceding valuation date.

(b) Such periodic statements of condition shall be certified by one or more of the members of the board of directors of the mutual trust investment company and retained as permanent records of the mutual trust investment company.

LIMITATIONS LIMITATIONS

3 CRR-NY 50.40 Investments of mutual trust investment company {#sec-3-crr-ny-50.40 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.40}

(a) A mutual trust investment company may invest only in such investments as are legal investments for fiduciaries under the Estates, Powers and Trusts Law, section 11-2.2(a)(1).

(b) No investment for the mutual trust investment company shall be made in stocks or bonds or other obligations of any one person, firm or corporation which would cause the total amount of investment in stocks or bonds or other obligations issued or guaranteed by such person, firm or corporation to exceed 10 percent of the value of the mutual trust investment company as determined by the board of directors, provided that this limitation shall not apply to investments in obligations of the United States or obligations for which the faith of the United States is pledged for the payment of the principal and interest.

(c) No investment by the mutual trust investment company shall be made in the shares of stock of any one corporation which would cause the total number of such shares held by the mutual trust investment company to exceed five percent of the number of such shares outstanding.

3 CRR-NY 50.41 Investments in mutual trust investment company {#sec-3-crr-ny-50.41 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.41}

(a) No funds of any estate, trust or fund shall be invested in a mutual trust investment company if such investment would result in such estate, trust or fund having invested therein an aggregate amount in excess of 10 percent of the assets of the mutual trust investment company, provided that such limitation shall not apply to subscriptions made within a period of six months after the first public offering of stock by such company. In applying the limitation contained in this subdivision, if two or more trusts are created by the same settlor or settlors and as much as one half of the income or principal or both of each trust is, at the time such investment is to be made, payable to, or applicable to the use of, the same person or persons, such trusts shall be considered as one. For the purposes of this section, income or principal shall, at any given time, be deemed payable to, or applicable to the use of, a person or persons if, under the terms of the will or other trust instrument:

(1) the same is then so payable or applicable; or

(2) such person has, or such persons have, a then exercisable power to cause the same to become payable to, or applicable to the use of, himself or themselves. In determining, for the purposes of this section, whether a power is exercisable at a particular time, no account shall be taken of any period for the giving of notice, or for the completion of any other formality, before such power can be exercised or the exercise thereof can become effective. In determining whether the value of the interest of an estate, trust or fund is more than 10 percent of the value of the assets of the mutual trust investment company, the computation shall be made with respect to the mutual trust investment company as increased by the amount of the proposed investment.

(b) The mutual trust investment company shall be permitted to rely on the written statement of any bank or trust company purchasing the stock, that the purchase complies with the foregoing limitations.

3 CRR-NY 50.42 True fiduciary purposes {#sec-3-crr-ny-50.42 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.42}

(a) The operation of the mutual trust investment company for other than true fiduciary purposes is hereby prohibited. The mutual trust investment company shall not permit any funds of any trust to be invested if it has reason to believe that such trust was not created or is not being used for true fiduciary purposes.

(b) Shares of stock of a mutual trust investment company shall not be sold, transferable to or owned by any person other than a trust company or a bank having trust powers organized under the laws of the State of New York, or a national bank having trust powers and having its principal office in the State of New York, acting in a fiduciary capacity, or nominees of such corporate fiduciaries or of individual cofiduciaries and serving with such trust companies or banks, except that shares may be owned, to the extent required by law, by the incorporators of such mutual investment company.

LIQUIDATING ACCOUNT LIQUIDATING ACCOUNT

3 CRR-NY 50.50 Transfer of investment to liquidating account {#sec-3-crr-ny-50.50 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.50}

The mutual trust investment company shall cause to be transferred to a liquidating account each investment held by it which has ceased to be eligible and which remains ineligible at a valuation date as a new investment before issuance or redemption of shares of the mutual trust investment company. The mutual trust investment company in its discretion may cause to be so transferred any other investment which it deems advisable to distribute in kind or to liquidate for the benefit of the participants entitled thereto.

3 CRR-NY 50.51 Schedule of interests in liquidating account {#sec-3-crr-ny-50.51 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.51}

At the time of the creation of each liquidating account, the mutual trust investment company shall cause to be prepared a schedule showing the interest of every stockholder therein. When the assets of such liquidating account shall have been completely distributed, such schedule shall be thereafter held as part of the permanent records of the mutual trust investment company.

3 CRR-NY 50.52 Effect of transfer of investment to liquidating account {#sec-3-crr-ny-50.52 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.52}

For the purpose of subsequent investments in and redemptions of shares of the mutual trust investment company, the value of any investment transferred to a liquidating account shall be excluded.

TERMINATION TERMINATION

3 CRR-NY 50.60 Action of board of directors {#sec-3-crr-ny-50.60 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.60}

The board of directors of the mutual trust investment company, in its discretion, may direct by resolution the termination of the corporation. A copy of such resolution, certified by the secretary of the mutual trust investment company, shall be transmitted to the superintendent within two bank business days after it adoption.

3 CRR-NY 50.61 Direction of superintendent {#sec-3-crr-ny-50.61 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.61}

The superintendent may direct the termination of any mutual trust investment company.

3 CRR-NY 50.62 Effect of termination {#sec-3-crr-ny-50.62 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.62}

After the adoption of a resolution by the board of directors or the receipt of notice from the superintendent directing the termination of any mutual trust investment company, all shares shall be redeemed in the same manner as if it were a liquidating account.

MISCELLANEOUS MISCELLANEOUS

3 CRR-NY 50.70 Mutual trust investment company to be audited annually {#sec-3-crr-ny-50.70 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.70}

A mutual trust investment company shall, at least once during each 12-month period, cause an audit to be made by auditors responsible only to its board of directors. The report of such audit shall include a list of the investments owned by the mutual trust investment company at the time of the audit, which shall show the valuation placed on each item on such list by the mutual trust investment company as of the date of the audit, a statement of purchases, sales and any other investment changes and of income and disbursements since the last audit, and appropriate comments as to any investments in default as to payment of principal or interest.

3 CRR-NY 50.71 Inspection of records by persons interested {#sec-3-crr-ny-50.71 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.71}

All accounting records, registers of participation, valuation schedules, periodic statements, audits under the plan and liquidating account records pertaining to the mutual trust investment company shall be subject to inspection, during banking business hours on the three business days commencing with the 11th business day next succeeding any valuation date, by any record holder of stock or by any corporate or individual co-fiduciary for which the record holder is nominee.

3 CRR-NY 50.72 Effect of mistakes {#sec-3-crr-ny-50.72 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 50.72}

No mistakes made in good faith and despite the exercise of due care shall be deemed to be a violation of this Part if after the discovery of the mistake the mutual trust investment company takes promptly whatever action may be practicable in the circumstances to remedy the mistake.

Part 51 PLEDGE OF ASSETS BY FOREIGN BANKING CORPORATIONS IN NEW YORK

3 CRR-NY 51.1 Definitions {#sec-3-crr-ny-51.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 51.1}

For the purposes of this Part:

(a) the term foreign branch means a branch of a foreign banking corporation licensed pursuant to article II of the Banking Law;

(b) the term foreign agency means an agency of a foreign banking corporation licensed pursuant to article II of the Banking Law;

(c) the term depository means a bank or trust company or private banker or national bank in the State of New York or the Federal Reserve Bank of New York;

(d) the term deposit agreement means an agreement executed between a foreign branch or foreign agency and one or more depositories and approved by the superintendent;

(e) the term department means the New York State Department of Financial Services; and

(f) the term superintendent means the superintendent of the State of New York.

3 CRR-NY 51.2 General provisions and requirements of deposit agreements {#sec-3-crr-ny-51.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 51.2}

No deposit by a foreign branch or foreign agency with a depository pursuant to section 202-b(1) of the Banking Law shall be made until the foreign branch or foreign agency and the depository shall have executed a deposit agreement satisfactory to the superintendent. The deposit agreement, in addition to any other terms and considerations not inconsistent herewith, shall contain the following provisions:

(a) Securities and funds to be held as special deposit.

Securities and funds deposited by a foreign branch or foreign agency with a depository under the deposit agreement shall be held by the depository as a special deposit free of any lien, charge, right of set-off, credit or preference in connection with any claim of the depository against the foreign branch or foreign agency. The depository shall not accept, as a deposit by the foreign branch or foreign agency pursuant to the deposit agreement, any asset that is not accompanied by documentation necessary to facilitate transfer of title.

(b) Depository to furnish receipt.

The depository shall furnish to the foreign branch or foreign agency, upon the deposit of any securities or funds pursuant to the deposit agreement, a receipt or statement evidencing such deposit. Such receipt or statement shall identify the deposit as having been made by the foreign branch or foreign agency pursuant to section 202-b(1) of the Banking Law and under the deposit agreement, and it shall provide the amount of the deposit and, with respect to deposits of securities, a description of each security so deposited.

The depository shall release deposited securities, in connection with their substitution or otherwise, or funds to the foreign branch or foreign agency upon written request:

(1) when accompanied by a certificate, as described in subdivision (e) of this section, signed by a duly authorized officer of the foreign branch or foreign agency; or

(2) upon receipt of a written order of the superintendent, to release to the foreign branch or foreign agency such part of the securities or funds on deposit under such conditions and terms as the order may specify.

(d) Termination of right to substitute or withdraw securities or funds.

The right to substitute or withdraw securities or funds provided in this section may be terminated or suspended by the superintendent at any time.

(e) Model certificate.

The following or similar certificate shall be executed by a duly authorized officer of the foreign branch or foreign agency where withdrawals are made pursuant to paragraph (c)(1) of this section:

It is hereby certified that the aggregate of securities and/or funds remaining on deposit pursuant to the Deposit Agreement after this withdrawal or substitution amounts to $, valued at the lower of principal amount or market, and that such amount is at least equal to the amount required to be deposited pursuant to section 202-b(1) of the Banking Law and Superintendent's Regulations, Part 322, section 322.1. The amount required to be maintained on deposit, as calculated pursuant to section 322.1 of the Superintendent's Regulations, is $ as of this date.

(f) Depository to furnish monthly statement of all transactions.

The depository shall furnish to the foreign branch or foreign agency, at least once in each calendar month, a statement of all transactions in the special deposit account since the closing date of the previous such statement. The statement shall include a listing of the securities on deposit and/or the amount of funds on deposit as of the closing date of the statement. A copy of such statement shall be simultaneously forwarded by the depository to the superintendent.

(g) Depository may pay interest earned upon securities.

The depository may pay to the foreign branch or foreign agency interest earned on securities or funds deposited in accordance with such arrangements as may be made between the depository and the foreign branch or foreign agency. The superintendent is authorized to issue an order revoking this provision.

(h) Responsibility of depository with respect to deposited securities.

Except as provided below, a depository shall hold the securities deposited by a foreign branch or foreign agency under the deposit agreement separate and apart from all other securities and shall permit examination and comparison thereof by duly authorized representatives of the foreign branch or foreign agency or of the superintendent. A depository may utilize a central depository, clearing corporation or book entry system to hold securities deposited pursuant to a deposit agreement, provided that the records of the central depository, clearing corporation or book entry system show that the securities are held for the depository as principal or as agent or as custodian of its customers. The depository shall maintain adequate records to demonstrate the disposition of such book entry deposits.

(i) Depository shall safeguard securities.

The depository shall give to the safekeeping, handling and shipping of securities deposited with it by the foreign branch or foreign agency the same degree of care given by such depository to its own securities.

(j) Superintendent shall not pay for services rendered.

The superintendent shall not be required to pay for any of the services rendered or any expenses incurred by the depository or the foreign branch or foreign agency under or in connection with this Part or the deposit agreement.

(k) Termination of deposit agreement.

The foreign branch or foreign agency or the depository may terminate the deposit agreement by giving the other party thereto at least 60 days written notice of such termination, or such shorter notice as the superintendent may approve, provided that no termination by the foreign branch, the foreign agency or the depository shall be effective until:

(1) another depository has been designated by the foreign branch or foreign agency;

(2) such other depository has been approved by the superintendent;

(3) a deposit agreement has been executed in conformity with the provisions of this Part; and

(4) the depository has released to the foreign branch or foreign agency all the securities or funds on deposit in accordance with written instructions from the foreign branch or foreign agency, approved by order of the superintendent.

(l) Termination of deposit agreement by action of superintendent.

If the conditions provided in paragraphs (k)(1)-(4) of this section are not met within 60 days after notice of termination, or such shorter period as the superintendent may by order approve, the superintendent may order the depository to release the securities and/or funds on such terms as may be specified in such order, and in such case the superintendent shall furnish a copy of such order to the foreign branch or foreign agency. The depository shall in such case release the securities and funds upon the terms so specified, and the deposit agreement shall terminate upon such release.

3 CRR-NY 51.3 Requirements applicable to foreign branches and foreign agencies {#sec-3-crr-ny-51.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 51.3}

(a) Retention of receipts or statements.

Each foreign branch and foreign agency shall retain until completion of its next examination the originals of all receipts or statements obtained from a depository pursuant to section 51.2(b) of this Part. Copies of withdrawal requests and the certificate provided for in section 51.2(c)(1) of this Part shall be retained by the foreign branch or foreign agency for the same period of time.

(b) Withdrawal request and certificate.

Coincident with any withdrawal request, the foreign branch or foreign agency shall furnish to the superintendent a copy of the withdrawal request and the certificate provided for in section 51.2(c)(1) of this Part.

The amount of securities and/or funds remaining on deposit and the amount of “liabilities requiring cover” as certified pursuant to section 51.2(c)(1) of this Part shall be supported by data contained in the daily record required to be maintained pursuant to section 322.5 of this Title.

3 CRR-NY 51.4 Miscellaneous provisions {#sec-3-crr-ny-51.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 51.4}

(a) Reliance on written communication of department.

For the purposes of the deposit agreement, the foreign branch, the foreign agency and the depository shall accept and rely upon, as an order of the superintendent, any written communication with the seal of the department affixed thereto, and signed:

(1) by the superintendent;

(2) by a deputy superintendent of banks; or

(3) by any two employees jointly of the department whom the superintendent may designate, to the depository, the foreign branch or the foreign agency (whichever is the addressee of such communication).

(b) Release from compliance with terms or conditions of deposit agreement.

The superintendent may by order relieve the foreign branch, the foreign agency or the depository from compliance with any term or condition of the deposit agreement, including any term or condition prescribed by this Part, if the superintendent shall find such action necessary or proper to give effect to the purposes of section 202-b(1) of the Banking Law or of this Part.

Written communication to the superintendent regarding this Part should be addressed to the Banking Department at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title; Attention: Foreign and Wholesale Banks Division.

Part 52 MAINTENANCE OF ASSETS BY LICENSED FOREIGN BANKS IN NEW YORK

3 CRR-NY 52.1 Maintenance of assets {#sec-3-crr-ny-52.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 52.1}

The amount of eligible assets (as such term is defined in superintendent's regulations section 322.3), which is to be held by a foreign banking corporation licensed pursuant to article II of the Banking Law to maintain one or more branches or agencies in this State, is established at zero percentum of its liabilities appearing in the books, accounts and records of its agency, agencies, branch or branches in this State as liabilities of such agency, agencies, branch or branches, provided that the superintendent may impose specific asset maintenance requirements in cases where he deems it necessary for the protection of the public interest and the interest of depositors and creditors, and provided further that the superintendent in specific cases may impose such other requirements as he deems necessary in order to effectuate the purpose of the provisions of Banking Law section 202-b.

3 CRR-NY 52.2 Statement of policy {#sec-3-crr-ny-52.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 52.2}

Whether or not the foreign banking corporation is required to maintain eligible assets pursuant to the provisions of this Part, it is hereby declared to be the policy of the superintendent that the foreign banking corporation shall maintain at the branch or agency the evidence of indebtedness, or other documentation, for any asset which appears in the books, accounts and records of that branch or agency as an asset of such branch or agency.

Part 59 DESIGNATION OF RATING SERVICES

3 CRR-NY 59.1 Mortgage pass-through certificates {#sec-3-crr-ny-59.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 59.1}

For the purposes of Retirement and Social Security Law, section 177-c, the superintendent hereby designates Moody's Investors Services, Inc., Standard & Poor's Corporation and Fitch Investors, Service, Inc.

Part 60 ADDITIONS TO LEGAL LIST

3 CRR-NY 60.1 Corporate interest-bearing obligations made eligible for savings banks investment {#sec-3-crr-ny-60.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 60.1}

Purpose. This Part memorializes those securities which have been approved from time to time by the superintendent for investment by savings banks and savings and loan associations, under the authority contained in Banking Law, section 235.19 and which have not matured as of January 1, 1996.

THE NEW YORK CITY COMMUNITY PRESERVATION CORPORATION

Collateral trust notes issued pursuant to and have terms substantially similar to those set forth in an indenture that shall have received the prior specific approval of the superintendent, provided that no savings bank may invest in such collateral trust notes to a greater extent than five percent of net worth as of June 30, 1977 or such other date as may be established by the superintendent.

| | | | | --- | --- | --- | | AMERICAN CAN COMPANY: | | | | Deb. | 6's, | 1997 | | AMERICAN EXPRESS CREDIT: | | | | Sr. Notes | 7⅞'s, | 1996 | | Sr. Notes | 8¾'s, | 1997 | | AMOCO CO.: | | | | Deb. | 7⅞'s, | 1996 | | Deb. | 6's, | 1998 | | ARKLA INC.: | | | | 1st | 8's, | 1997 | | ASSOCIATES CORP. NORTH AMERICA: | | | | Sr. Notes | 8¼'s, | 1996 | | Sr. Notes | 8⅜'s, | 1998 | | ATLANTIC RICHFIELD CO.: | | | | Deb. | 9½'s, | 1996 | | Deb. | 5⅝'s, | 1997 | | BOEING CO.: | | | | Notes | 8⅜'s, | 1996 | | BORDEN COMPANY: | | | | Deb. | 3¾'s, | 1997 | | B P AMERICA INC.: | | | | Gtd. Notes, | 9⅜'s, | 1997 | | Gtd. Notes, | 9½'s, | 1998 | | CAPITAL CITIES/ABC FIN. CO.: | | | | Notes, | 8¼'s, | 1996 | | CHEVRON CORP.: | | | | s.f. Deb. | 8¾'s, | 1996 | | s.f. Deb. | 7's, | 1996 | | CIGNA CORP.: | | | | Notes, | 8's, | 1996 | | COCA COLA ENTERPRISES INC.: | | | | Notes, | 7⅞'s, | 1997 | | COMMONWEALTH EDISON COMPANY: | | | | s.f. Deb. | 2⅞'s, due | 04/01/2001 | | s.f. Deb. | 3⅛'s, due | 10/01/2004 | | s.f. Deb. | 3⅞'s, due | 01/01/2008 | | s.f. Deb. | 4⅝'s, due | 01/01/2009 | | s.f. Deb. | 4¾'s, due | 12/01/2011 | | DAYTON HUDSON CORP.: | | | | Notes, | 8⅜'s, | 1996 | | DELMARVA POWER & LIGHT COMPANY: | | | | 1st & Coll. Trust, | 6⅜'s, | 1997 | | DUQUESNE LIGHT COMPANY: | | | | s.f. Deb. | 5's, | 2010 | | EASTMAN KODAK COMPANY: | | | | Deb. | 8.55's, | 1997 | | Deb. | 9¼'s, | 1998 | | Deb. | 9⅜'s, | 2003 | | EXXON CORP.: | | | | Deb. | 6½'s, | 1998 | | FARMERS GROUP INC.: | | | | 1st | 8¼'s, | 1996 | | FORD MOTOR CO.: | | | | Nts. | 8½'s, | 1996 | | FORD MOTOR CREDIT: | | | | Nts. | 7.50-11⅞'s, | to 1997 | | GENERAL MOTORS: | | | | Notes | 8¼'s, | 2016 | | GENERAL MOTORS ACCEPTANCE CORPORATION: | | | | Notes | 14⅜-7¼'s, | to 1998 | | HOECHST CELANESE CORP.: | | | | Notes | 9.45's, | 1997 | | INDIANA & MICHIGAN ELECTRIC COMPANY: | | | | s.f. Deb. | 7¼'s, | 1998 | | JOHNSON CONTROLS INC.: | | | | Notes | 8⅞'s, | 1998 | | K MART: | | | | Deb. | 8⅛'s, | 1997 | | LOCKHEED CORPORATION: | | | | Notes | 8½'s, | 1996 | | MARRIOTT CORP.: | | | | Sr. Notes | 8⅛'s, | 1996 | | Sr. Notes | 9⅞'s, | 1997 | | MASCO CORP.: | | | | Notes | 8¾'s, | 1996 | | MCDONNELL DOUGLAS CORP.: | | | | Notes | 7⅞'s, | 1997 | | MONSANTO: | | | | Notes | 9⅜'s, | 1996 | | OHIO POWER COMPANY: | | | | s.f. Deb. | 5⅛'s, | 1996 | | s.f. Deb. | 6⅝'s, | 1997 | | PENNEY (J.C.) CO., INC.: | | | | Notes | 8¾'s, | 1996 | | Notes | 9⅜'s, | 1998 | | PEPSICO INC.: | | | | Notes | 7⅝'s, | 1998 | | RJR NABISCO, INC.: | | | | Notes | 8⅞'s, | 1998 | | ROCKWELL INTERNATIONAL: | | | | Notes | 7½'s, | 1997 | | SHELL OIL COMPANY: | | | | Notes | 8⅜'s, | 1996 | | STANDARD OIL COMPANY OF NEW JERSEY: (EXXON) | | | | Deb. | 6's, | 1997 | | Deb. | 6½'s, | 1998 | | TERMINAL RAILROAD ASSOCIATION OF ST. LOUIS: | | | | Ref. & Imp. | 4's, | 2019, Ser. C | | TRAVELERS CORP.: | | | | Notes | 7⅝'s, | 1997 | | TRW INC.: | | | | Notes | 8¼'s, | 1996 | | UNION OIL COMPANY OF CALIFORNIA: | | | | Deb. | 6⅝'s, | 1998 | | UNION PACIFIC CORP.: | | | | Notes | 8⅞'s, | 1998 | | UPJOHN COMPANY: | | | | Notes | 8's, | 1996 | | WESTINGHOUSE ELECTRIC CORPORATION: | | | | Notes | 7¾'s, | 1996 | | WEYERHAUSER COMPANY: | | | | Notes | 9⅜'s, | 1998 |

Part 61 DESIGNATIONS UNDER BANKING LAW SECTION 235

3 CRR-NY 61.1 Commercial paper {#sec-3-crr-ny-61.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 61.1}

For the purpose of Banking Law section 235 (12-a)(a), the superintendent hereby designates Moody's Investors Service, Standard & Poor's Corporation, Fitch Investors Service, Inc. and Duff and Phelps, Inc.

3 CRR-NY 61.2 Interest-bearing obligations {#sec-3-crr-ny-61.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 61.2}

For the purposes of Banking Law section 235(21-a), the superintendent hereby designates Moody's Investors Service, Standard & Poor's Corporation, Fitch Investors Service, Inc. and Duff and Phelps, Inc.

Part 62 INVESTMENTS IN HOUSING AND URBAN DEVELOPMENT PROJECTS

3 CRR-NY 62.1 Cooperative apartment housing projects of redevelopment companies {#sec-3-crr-ny-62.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 62.1}

Except as the superintendent shall otherwise provide, savings banks may sponsor and finance cooperative apartment housing projects undertaken by redevelopment companies organized pursuant to Private Housing Finance Law, section 103, to the extent and on the conditions hereinafter prescribed:

(a) Sponsorship of a cooperative apartment housing redevelopment project.

One or more savings banks may sponsor a cooperative apartment housing redevelopment project for the purpose of rehabilitating an area which shall be found to be substandard and insanitary. The area to be rehabilitated shall be located in a municipality and, if such savings bank is the only sponsor, in a county in which an office of the sponsoring savings bank is located. If there is more than one sponsoring savings bank, such municipality shall be located in the banking district in which the sponsoring savings banks owning 50 percent or more of the stock and obligation of the redevelopment company have their principal offices. The term municipality as used in this section shall be deemed to refer to a city, town or incorporated village. The project to be undertaken by such company may be undertaken independently or in conjunction with or as a portion of a slum clearance project under title I of an act of Congress entitled “Housing Act of 1949”, as amended, or under any State or municipally-sponsored slum clearance program.

(b) Agreement to be filed with superintendent.

No investment shall be made by any savings bank in the stock and obligations of a redevelopment company unless such company shall have filed with the superintendent its written agreement subjecting itself to the supervision of the department, submitting to periodic examinations by the department at such times and in such manner as the superintendent shall provide and agreeing to pay the charges for such examinations assessed against it by the superintendent in the same manner as in it were a banking organization organized under the laws of New York. The agreement respecting supervision shall terminate when the stock and junior obligations of the redevelopment company have been disposed of and the investment by the savings bank or banks in the redevelopment company consists solely of obligations secured by a first mortgage on the property of the redevelopment company.

A saving bank or banks sponsoring a redevelopment cooperative apartment housing project are hereby authorized to subscribe to the shares of such redevelopment company for a total purchase price not exceeding $10,000, and to advance to such company the funds required for the development of the plan of the project undertaken by such company upon issuance to the bank or banks by the company of income debenture certificates in such aggregate principal amount equal to the aggregate funds from time to time advanced by the bank or banks for planning purposes. In no event shall the aggregate amount of such advances for planning funds exceed the greater of:

(1) $100,000; or

(2) one percent of the estimated cost of the project. The aggregate of such advances to such company shall not exceed $400,000 without the prior written approval of the superintendent.

(d) Aggregate investment in mortgage loans to redevelopment companies.

The aggregate investment made by any savings bank in mortgage loans to redevelopment companies shall be subject to the limitations contained in Banking Law, section 235(28). The aggregate investment by any savings bank in the stock and obligations (other than obligations evidencing a mortgage loan) of redevelopment companies shall be subject to the limitations contained in Banking Law, section 235(21)(b).

(e) Aggregate investment in stocks and obligations of any redevelopment company.

The aggregate investment by any savings bank in the stock and obligations (including obligations evidencing mortgage loans) of any redevelopment company shall not exceed the lesser of three percent of its assets or 162/3 percent of its net worth.

(f) Authorization to loan to company undertaking project.

A savings bank sponsoring a redevelopment cooperative apartment housing project is authorized to loan to the company undertaking such project the amount required by the redevelopment company for the acquisition of title to the area and such loan, together with the aggregate principal amount of the income debenture certificates representing the advance planning funds of the company, shall be secured by a first mortgage upon the entire area of the redevelopment project. Upon the execution and delivery of such first mortgage, the income debenture certificates shall be cancelled by the bank and delivered to the company.

(g) Authorization to enter into a building loan contract with a redevelopment company.

A savings bank sponsoring a redevelopment cooperative apartment housing project is authorized to enter into a building loan contract with a redevelopment company and to invest its funds in the first lien bonds of such company issued under a trust indenture and pursuant to the building loan contract or a building loan bond and mortgage under which advances are made pursuant to the building loan contract. Such construction loan shall have a maturity not exceeding two years, provided that the investment by such savings bank in mortgage loans:

(1) to all redevelopment companies shall not, in the aggregate, exceed the lesser of 10 percent of its assets or 50 percent of its net worth; and

(2) to any redevelopment company shall not, in the aggregate, exceed the lesser of 3 percent of its assets or 162/3 percent of its net worth.

(h) Cost of redevelopment cooperative apartment housing project to be certified.

The estimated cost of a redevelopment cooperative apartment housing project prior to its completion shall be certified as to its reasonableness and correctness by an independent engineering organization and shall include for the purpose of arriving at the estimated cost, the cost to the company of the lands owned by the company, the cost of demolition, the cost of constructing the improvements, including planning, designing, engineering and landscaping, the cost of relocating tenants, the cost of interest and other carrying charges during the period of acquisition and of construction, all other costs necessarily incurred and properly attributable to undertaking, constructing and completing the project, and an allowance for working capital which shall not exceed an amount equal to three percent of the estimated cost.

(i) Acquisition of interest in real property by redevelopment company limited.

No redevelopment company owning, constructing or planning a cooperative apartment housing redevelopment project and sponsored by one or more savings banks shall acquire any interest in any real property other than a title in fee, nor shall it acquire any real property unless at the time of acquisition it shall obtain an opinion of qualified counsel or a policy of title insurance of a title company authorized to insure titles on real estate in the State of New York certifying that good and marketable title in fee is vested in the redevelopment company, provided that a redevelopment company may acquire an interest in real property, other than a title in fee, upon the prior written approval of the superintendent.

(j) Limitations on ownership and acquisition of stock or junior obligations.

A savings bank participating in the financing of a redevelopment company undertaking a cooperative apartment housing redevelopment project shall not at any time own or acquire any greater proportionate interest in the stock or junior obligations of such redevelopment company than its proportionate interest in the senior obligations of such company.

(k) Valuation on books of savings bank.

Any investment by a savings bank in the stock and obligations of a redevelopment company owning, constructing, or planning a cooperative apartment housing redevelopment project shall be entered on its books at the actual cost thereof and shall not thereafter be carried on its books at a value exceeding such cost as reduced by the proportionate share of the depreciation taken by such redevelopment company on the buildings and improvements owned by it which the investment of the savings bank bears to the total investment in such redevelopment company.

3 CRR-NY 62.2 Rental housing projects {#sec-3-crr-ny-62.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 62.2}

(a) Definitions.

As used in this section,

(1) the term housing project means a multi-family rental, cooperative or condominium housing project which:

(i) is financed, at least in part, under municipal, State or Federal programs providing grants, tax incentives or other forms of financial assistance other than mortgage loans insured or guaranteed by the Federal government; or

(ii) is financed, at least in part, by conventional mortgage loans or mortgage loans insured or guaranteed by the Federal government, is designed to provide a minimum of 35 dwelling units, and is designed to provide dwelling space at a maximum monthly charge per room of $70; and

(2) the term monthly charge per room means:

(i) in the case of a rental housing project, the initial average monthly rental per room; or

(ii) in the case of a cooperative or condominium housing project, the initial average monthly carrying charge per room plus the average of the amounts determined by allocating one-half of one percent of the original equity investment in the housing project by each co-operator or unit owner among the rooms occupied or to be occupied by him; and

(3) the term housing corporation means a corporation formed for the purpose of acquiring, constructing, owning, maintaining, operating, selling or conveying a single housing project and which shall have filed with the superintendent a written agreement subjecting itself to the supervision of the department, agreeing to make periodic reports, submitting to periodic examinations by the department at such times and in such manner as the superintendent shall require and agreeing to pay the charges for such examinations assessed against it by the superintendent in the same manner as if it were a banking organization organized under the laws of this State.

(b) Investments in housing corporations.

Except as the superintendent shall otherwise provide, a savings bank, individually or in participation with one or more savings banks, may invest in the stock or obligations of any housing corporation, provided that the making of such investment shall not cause:

(1) the aggregate amount invested by the savings bank in the stock and obligations of one such housing corporation to exceed the lesser of one percent of its assets or 10 percent of its net worth; or

(2) the aggregate amount so invested in all such housing corporations to exceed the lesser of five percent of its assets or 50 percent of its net worth.

No savings bank shall transfer or sell any stock of a housing corporation to any person or to any corporation other than a savings bank or to a corporation all of the capital stock of which is owned by not less than 20 savings banks or transfer or sell any obligation of a housing corporation to any person or to any corporation other than a savings bank, except as the superintendent shall approve in writing, unless:

(1) all of the stock and obligations of such housing corporation held by savings banks shall simultaneously be sold; or

(2) only obligations of such housing corporation continue to be held by savings banks and such obligations constitute:

(i) a 100 percent interest in a first mortgage qualifying as an eligible investment under the provisions of Banking Law, section 235(6); or

(ii) a security duly authorized as an investment for savings banks other than under the provisions of Banking Law, section 235(21).

(d) Valuation on books of savings banks.

Any investment by a savings bank in the stock and obligations of a housing corporation shall be entered on its books at the actual cost thereof and shall not thereafter be carried on its books at a valuation exceeding such cost as reduced by the greater of:

(1) the proportionate share of the depreciation taken by such housing corporation on the buildings and improvements owned by it which the investment of the savings bank bears to the total investment in such housing corporation; or

(2) amortization, commencing with the beginning of the second year after completion of the housing project undertaken by such housing corporation, at the rate of not less than two percent per annum of such cost.

3 CRR-NY 62.3 Investments by service agencies in urban development projects {#sec-3-crr-ny-62.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 62.3}

A corporation organized under the laws of this State, all of the stock of which is owned by not less than 20 savings banks or all of the stock of which is owned by not less than 20 savings and loan associations or Federal savings and loan associations in New York State (hereinafter referred to as a “service agency”), may invest directly, or through any one or more wholly-owned subsidiary corporations, in the stock of certain corporations and in certain other entities to the following extent:

(a) stock of any other corporation eligible for investment by savings banks under Banking Law, section 235(21)(a)(1) and (1-a);

(b) stock of any other corporation whose bonds, notes or other evidences of indebtedness are eligible for investment by savings banks under Banking Law, section 235(28), the New York State Urban Development Corporation Act, section 23, or the New York State Urban Development and Research Corporation Act, section 18;

(c) stock of any other corporation whose bonds, notes or other evidences of indebtedness are eligible for investment by savings banks under Banking Law, section 235, and which is organized and operated to acquire, construct, reconstruct, rehabilitate, improve, alter or repair or provide for the construction, reconstruction, improvement, alteration or repair of, or sell, lease or otherwise dispose of any “residential”, “industrial”, “land use improvement” or “civic project” or any combination thereof (as such terms are defined in the New York State Urban Development Corporation Act) located in this State which are financed, at least in part, under municipal, State or Federal programs providing grants, tax incentives or other forms of financial assistance, provided that:

(1) the investment in such stock shall not exceed that which a single savings bank would be permitted to make under Banking Law, section 235, or, if a savings bank would not be so permitted to invest in such stock; then

(2) the investment in the stock of any such corporation shall not exceed the lesser of one- tenth of one percent of the assets or one percent of the capital, surplus, undivided profits and reserves of the service agency making such investment and the investment in the stock of all such corporations shall not exceed the lesser of one percent of the assets or 10 percent of the capital, surplus, undivided profits and reserves of such service agency; and

(d) a redevelopment company organized as a partnership or trust as provided by Private Housing Finance Law, section 103(2) and (3), for the purpose of constructing, rehabilitating and operating housing projects and related facilities intended primarily for use by persons of low and moderate income, provided:

(1) the mortgage financing for such project or facility is provided by one or more savings banks directly or through a service agency or its wholly-owned subsidiary;

(2) any such projects or related facilities are financed, at least in part, under municipal, State or Federal programs providing grants, tax incentives or other forms of financial assistance, or under the provisions of section 221(d)(3) or section 236 of the National Housing Act, as amended, or any other provisions of the National Housing Act in effect from time to time permitting Federal insurance of mortgages up to 90 percent of the project value;

(3) the investment in any such entity shall not exceed 10 percent of the total cost of the project for which the entity was formed; and

(4) the investment in all such entities shall not exceed the lesser of five percent of the assets or 50 percent of the capital, surplus, undivided profits and reserves of the service agency making such investments.

Part 63 INVESTMENTS IN SAVINGS BANKS TRUST COMPANY AND OTHER SAVINGS BANKS SERVICE AGENCIES

3 CRR-NY 63.1 Investments in securities of trust company or other corporation wholly owned by savings banks {#sec-3-crr-ny-63.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.1}

Savings banks may invest in the capital stock, capital notes and debentures of any trust company and of any other corporation organized under the laws of this State, provided all the stock of such trust company or corporation is owned by not less than 20 savings banks and subject to the further conditions set forth in sections 63.2, 63.3 and 63.4 of this Part. For the purposes of this Part, such a trust company is referred to as a “savings banks trust company” and such a corporation is referred to as a “service agency”

3 CRR-NY 63.2 Investments in savings banks trust company {#sec-3-crr-ny-63.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.2}

No savings bank shall invest in the capital stock, capital notes and debentures of a savings banks trust company if the aggregate amount of it investments in such securities, including the proposed investment, would exceed two and one-half percent of the total assets of such savings bank as of the date of such investment.

3 CRR-NY 63.3 Investments in the capital stock of a service agency {#sec-3-crr-ny-63.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.3}

No savings bank shall invest in the capital stock of a service agency if the aggregate amount of its investments in such stock, including the proposed investment, would exceed three tenths of one percent of the total assets of such savings bank as of the date of such investment.

3 CRR-NY 63.4 Investments in the capital notes or debentures of a service agency {#sec-3-crr-ny-63.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.4}

(a) No savings bank shall invest in the capital notes or debentures of a service agency if the aggregate amount of its investment in such notes and debentures, including the proposed investment, would exceed the greater of two percent of the total assets of such savings bank as of the date of such investment or $20,000.

(b) Nor shall any savings bank invest in such capital notes or debentures unless:

(1) such service agency shall have filed with the superintendent its written agreement (and shall have complied with the terms thereof) subjecting itself to the supervision of the department submitting itself to periodic examinations by the department at such times and in such manner as the superintendent shall provide, and agreeing to pay the charges of such examinations assessed against it by the superintendent in the same manner as if it were a banking organization organized under the laws of New York; and

(2) such service agency restricts the investment of its funds to:

(i) investments which savings banks may make under the laws of this State excluding, except as permitted by subparagraph (ii) of this paragraph, those investments permitted solely by virtue of Banking Law, section 235(21);

(ii) investments in the stock of certain corporations and in certain other entities, either directly or through investment in the securities of any one or more wholly owned subsidiary corporations, which a service agency may make under section 62.3 of Part 62 (relating to housing and urban development projects), subject to the limitations thereof;

(iii) bonds and mortgages and notes and mortgages or part interests therein, on improved and unencumbered real property, including leasehold estates, located in any other state of the United States, the District of Columbia or the Commonwealth of Puerto Rico, which would qualify as investments for savings banks under the laws of this State except for restrictions governing the location of the property or the location of the principal office of the holder of any part interest;

(iv) investments in plots and buildings and related facilities to be used by a savings bank of New York State as a branch office, as may be or have been from time to time approved by the superintendent, either directly or through the stock and obligations of one or more wholly owned subsidiary corporations; and

(v) such other investments as the superintendent shall approve in writing.

3 CRR-NY 63.5 Investments by savings banks life insurance departments {#sec-3-crr-ny-63.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.5}

The life insurance department of a savings bank may invest in the capital stock, capital notes and debentures of a savings banks trust company or service agency, provided the aggregate amount of its investments in such stock, notes and debentures, including the proposed investment, would not exceed the greater of two percent of the sum of its policy reserves and policy liabilities or $20,000. The term policy reserves and policy liabilities shall have the meaning specified in Banking Law, section 275.

3 CRR-NY 63.6 Investments by savings banks life insurance fund {#sec-3-crr-ny-63.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.6}

Savings banks life insurance fund may invest in the capital stock, capital notes and debentures of a savings banks trust company or service agency, provided the aggregate amount of its investments in such stock, notes and debentures, including the proposed investment, would not exceed the greater of two percent of its total assets or $20,000.

3 CRR-NY 63.7 Transfer of property to a savings banks trust company {#sec-3-crr-ny-63.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.7}

A savings bank may, pursuant to Banking Law, section 234(14), transfer to a savings banks trust company, as trustee or agent upon such terms as may be agreed upon, for the purpose of liquidation, discharge, readjustment, improvement or rehabilitation, for the account and the expense of such savings bank, any property, security, investment, bond, mortgage, chose-in-action, or other security of whatever character and, notwithstanding any provision of law relating to the investment of its funds, take and hold any such savings banks trust company's certificate of deposit therefor, and any resulting income, money, property, security, investment, bond, mortgage, chose-in-action or other security of whatever character arising out of the management, liquidation, readjustment, improvement or rehabilitation thereof.

3 CRR-NY 63.8 Revocation, rescission or modification {#sec-3-crr-ny-63.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 63.8}

Any investment made under this Part may be rendered ineligible for investment at any time by further action of the superintendent.

Part 65 AGREEMENTS TO LIMIT PERSONAL LIABILITY ON INSURED MORTGAGES

3 CRR-NY 65.1 Limitation of personal liability of borrowers under bonds and mortgages insured by Federal Housing Commissioner {#sec-3-crr-ny-65.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 65.1}

A savings bank may agree to limit the personal liability of any individual, or of any trustee, partnership, association, corporation or other organization or legal entity, obligated or to be obligated under any bond, note, mortgage or deed of trust insured by the Federal Housing Commissioner, or for which a commitment to insure has been made by the Federal Housing Commissioner, provided that a savings bank may so agree only if the obligations of the commissioner to the savings bank with respect to such insurance or commitment will not be extinguished, reduced or limited by reason of such agreement.

Part 66 RECIPROCAL INTERSTATE ACQUISITIONS OF SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 66.1 Explanation {#sec-3-crr-ny-66.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 66.1}

Banking Law, section 413, created by chapter 118 of the Laws of 1987, provides that with the prior approval of the superintendent, a New York savings and loan holding company or a subsidiary thereof may acquire control of an out-of-state savings and loan holding company or an out-of-state insured institution, and an out-of-state savings and loan holding company or a subsidiary thereof may acquire control of a New York savings and loan holding company or a New York insured institution, subject to regulations to be adopted by the superintendent. Section 413 further requires that the terms and conditions prescribed by such regulations be substantially similar to those contained in section 142-b of the Banking Law governing reciprocal interstate acquisitions by bank holding companies.

3 CRR-NY 66.2 Definitions {#sec-3-crr-ny-66.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 66.2}

For purposes of this Part:

(a) insured institution shall have the same meaning as in title 12 United States Code, section 1730a;

(b) savings and loan holding company shall have the same meaning as in title 12 United States Code section 1730a;*

(c) New York insured institution shall mean an insured institution whose principal office is located in this State, and out-of-state insured institution shall mean an insured institution whose principal office is located in a state other than this State or the District of Columbia; and

(d) New York savings and loan holding company shall mean a savings and loan holding company which controls one or more New York insured institutions, and out-of-state savings and loan holding company shall mean a savings and loan holding company other than a New York savings and loan holding company which conducts its principal banking business in a state other than this State or the District of Columbia. The jurisdiction in which an out-of-state savings and loan holding company conducts its principal banking business is that state or the District of Columbia in which the total deposits of such company and its banking subsidiaries are largest.

3 CRR-NY 66.3 Acquisitions of New York insured institutions {#sec-3-crr-ny-66.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 66.3}

(a) Subject to the provisions of this Part, an out-of-state savings and loan holding company or subsidiary thereof may acquire control, directly or indirectly, of one or more insured institutions; provided, however, that no such acquisition of control shall be lawful without the prior approval of the superintendent. Any such acquisition of control approved by the superintendent shall not affect the powers or privileges of such insured institution or insured institutions. Any out-of-state savings and loan holding company or subsidiary thereof desiring to acquire control of one or more insured institutions shall file an application in writing with the superintendent and pay the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The application shall contain such information as the superintendent may deem necessary or appropriate for the purpose of making a determination under this Part. As used in this Part, the term control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an insured institution, whether through the ownership of voting stock of such insured institution, the ownership of voting stock of any company which possesses such power, or otherwise. Control shall be presumed to exist if any out-of-state savings and loan holding company or subsidiary thereof, directly or indirectly, owns, controls or holds with power to vote five per centum or more of the voting stock of such insured institution, but no person shall be deemed to control an insured institution solely by reason of being an officer or director of such institution or savings and loan holding company or subsidiary. The superintendent may in his or her discretion, upon the application of an out-of-state savings and loan holding company or subsidiary which, directly or indirectly, owns, controls or holds with power to vote or seeks to own, control or hold with power to vote, any voting stock of such insured institution, determine whether or not the ownership, control or holding of such voting stock would constitute control of such institution for purposes of this Part. No proposed acquisition of control pursuant to this Part shall be approved unless the superintendent finds that:

(1) the statute laws of the jurisdiction in which the operations of the out-of-state savings and loan holding company's insured subsidiaries are principally conducted specifically authorize the direct or indirect acquisition of control of one or more insured institutions in such jurisdiction by a savings and loan holding company or subsidiary thereof, the operations of which savings and loan holding company's insured subsidiaries are principally conducted in this State; or

(2) such statute laws authorize the acquisition of control because the out-of-state savings and loan holding company or subsidiary is authorized by Banking Law, section 413 and this Part to acquire control of and hold shares of insured institutions in this State.

(b) The direct or indirect acquisition of control by a savings and loan holding company or subsidiary thereof, under such statute laws, shall not affect the powers or privileges of the insured institution over which control is obtained, nor shall any such acquisition be subject to conditions or restrictions materially limiting the ability of a savings and loan holding company or subsidiary thereof to acquire insured institutions generally in such jurisdiction if such conditions or restrictions would not apply with equal effect to the acquisition of insured institutions in such jurisdiction by an out-of-state savings and loan holding company, or subsidiary thereof, which out-of- state savings and loan holding company or subsidiary conducts it principal banking business in such jurisdiction.

(c) Any out-of-state savings and loan holding company or subsidiary which proposes to acquire control of one or more insured institutions pursuant to the provisions of this article shall provide to the superintendent a copy of any original application to the applicable Federal regulatory agency for approval of such action, and a copy of any supplemental material or subsequent amendments thereto, at the same time the application, supplemental material or amendment is transmitted to such agency.

(d) An insured institution acquired pursuant to this subdivision may be either a newly organized institution, which at the time of acquisition has not commenced any part of its banking business, or an institution currently conducting banking business in this State.

(e) Any out-of-state savings and loan holding company or subsidiary which acquires control of an insured institution pursuant to the provisions of this Part shall file with the superintendent copies of all regular and periodic reports which such out-of-state savings and loan holding company is required to file under section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended, excluding any portions not available to the public.

3 CRR-NY 66.4 Acquisitions of out-of-state insured institutions {#sec-3-crr-ny-66.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 66.4}

(a) Except with the prior approval of the superintendent, no savings and loan holding company or subsidiary thereof shall acquire control of an out-of-state savings and loan holding company or an insured institution, the principal office of which is located in a state other than this State or the District of Columbia if the statute laws of the jurisdiction of the out-of-state savings and loan holding company of insured institution authorized such acquisition because of the provisions of Banking Law, section 413 and this Part.

(b) A savings and loan holding company or subsidiary thereof that seeks such approval shall file a written application with the superintendent and pay the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The application shall contain such information as the superintendent may deem necessary for the purposes of making a determination under this Part.

(c) The superintendent shall deny any application submitted for approval pursuant to section 66.5 of this Part if, after notice to and on opportunity to be heard by the applicant, the superintendent finds that either:

(1) (i) the applicant or any of its banking subsidiaries located in this State shall have received within the preceding 24 months an assessment pursuant to the requirements of the Federal Community Reinvestment Act of 1977, United States P.L. 95-128, or Banking Law, section 28-b, indicating that such subsidiary does not have an acceptable record of meeting the credit needs of its entire community, including low and moderate income neighborhoods, consistent with the safe and sound operation of such institution; or

(ii) subsequent to the most recent of such assessments as described in subparagraph (i) of this paragraph, an application submitted by the savings and loan holding company or any of its banking subsidiaries to the superintendent or the appropriate Federal regulatory agency, which application involves an assessment of the savings and loan holding company's or one or more of its banking subsidiaries' performance in meeting the credit needs of its community or communities, shall not have been approved because of an unacceptable record in meeting such credit needs; provided, however, the superintendent may approve any such proposed acquisition or control if the agency that makes such assessment indicates that it has been corrected or the applicant demonstrates to the satisfaction of the superintendent that substantial efforts have been made to comply with the requiremets of the Federal Community Reinvestment Act of 1977 or Banking Law, section 28-b; or

(2) the applicant fails to provide information or produce documents requested by the superintendent in relation to an application.

(d) Unless the superintendent shall have denied such application in writing within 120 days of the receipt thereof, or shall have advised the applicant in writing by certified or registered mail prior to the expiration of 120 days of his or her determination to extend such period an additional 60 days, such application shall be deemed approved.

3 CRR-NY 66.5 Violations {#sec-3-crr-ny-66.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 66.5}

As provided in Banking Law, section 413, violators of this Part shall be subject to the penalties prescribed in Banking Law, section 142-b, specifically:

(a) If a savings and loan holding company or subsidiary thereof acquires control of an out-of- state savings and loan holding company or insured institution in violation of this Part, the superintendent shall have the authority by order to enjoin or restrain such violation, including authority to order the bank holding company or subsidiary to divest any stock acquired in violation of such law. Any savings and loan holding company or subsidiary thereof which is the subject of an order pursuant to this subdivision may at any time within four months of the date of such order apply to the Supreme Court in the judicial district in which its principal office is located for an order setting aside or modifying the order for good cause shown.

(b) A savings and loan holding company or subsidiary, upon order of the superintendent pursuant to subdivision (a) of this section, shall divest any stock of an insured institution or out- of-state savings and loan holding company that it has acquired in violation of this Part within two years of the date of a divestiture order under subdivision (a) of this section, or within two years after such a divestiture order becomes final and subject to no further judicial review.

Part 67 PAYMENT OF INTEREST ON DAY OF DEPOSIT—DAY OF WITHDRAWAL ACCOUNTS IN SAVINGS BANKS AND STATE-CHARTERED SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 67.1 Minimum balance {#sec-3-crr-ny-67.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 67.1}

Savings banks and savings and loan associations may require that a minimum balance in a day of deposit-day of withdrawal account be maintained until the end of any dividend or interest period in which a withdrawal from such account is made; provided, however, that any savings bank or savings and loan association requiring a minimum deposit shall so indicate clearly on all passbooks issued for such accounts.

3 CRR-NY 67.2 [Renumbered] {#sec-3-crr-ny-67.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 67.2}

Part 68 INVESTMENTS IN SAVINGS AND LOAN SERVICE AGENCIES

3 CRR-NY 68.1 Investments in securities of corporations wholly owned by savings and loan associations {#sec-3-crr-ny-68.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 68.1}

Savings and loan associations may, pursuant to section 379-a(1) of the Banking Law, invest in stock, capital notes and debentures of any corporation organized under the laws of this State, other than a trust company, provided that all of the stock of such corporation is, or is to be, owned by not less than 20 savings and loan associations or Federal savings and loan associations located in New York State, and provided further that such investment shall be subject to the further conditions set forth in this Part.

3 CRR-NY 68.2 Investments in service agencies {#sec-3-crr-ny-68.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 68.2}

The corporations in which investments are authorized under this Part shall be established and operated for the primary purpose of providing services and common facilities to member savings and loan associations and others. For the purposes of this Part, such a corporation is referred to as a “service agency.”

3 CRR-NY 68.3 Investments in capital stock of service agency {#sec-3-crr-ny-68.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 68.3}

No savings and loan association shall invest in the capital stock of a service agency if the aggregate amount of its investment in such stock, including a proposed investment, would exceed the greater of three tenths of one percent of the total assets of such savings and loan association or $3,000 as of the date of such investment.

3 CRR-NY 68.4 Investments in the capital notes or debentures of a service agency {#sec-3-crr-ny-68.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 68.4}

(a) No savings and loan association shall invest in the capital notes or debentures of a service agency if:

(1) the aggregate amount of its investment in such notes and debentures, including the proposed investment, would exceed the greater of two percent of the total assets of such savings and loan association as of the date of such investment or $10,000; or

(2) the aggregate amount of capital notes and debentures of such service agency then issued and outstanding, including the notes and debentures proposed to be purchased by such savings and loan association would exceed an amount equal to 12 times the issued and outstanding stock, surplus and undivided profits of such service agency.

(b) Nor shall any savings and loan association invest in such capital notes or debentures, unless:

(1) such service agency shall have filed with the superintendent its written agreement (and shall have complied with the terms thereof) subjecting itself to the supervision of the department, submitting itself to periodic examinations by the department at such times and in such manner as the superintendent shall provide, and agreeing to pay the charges of such examinations assessed against it by the superintendent in the same manner as if it were a banking organization organized under the laws of New York; and

(2) such service agency restricts the investment of its funds to:

(i) investments which savings and loan associations may make under the laws of this State; provided, however, that such service agency may make investments which would be permitted a savings and loan association under section 379(7) of the Banking Law, subject to those limitations applicable to such investments in the case of savings banks, except that the limitations contained in section 235(31)(a) and (b) which restrict certain individual investments to one per centum of the assets of the savings bank or 10 per centum of its net worth, whichever is less, and the aggregate amount of such investments to two per centum of its assets or 20 per centum of its net worth, whichever is less, shall be changed to establish a limitation of an aggregate amount of not to exceed 30 per centum of the service agency's net worth;

(ii) investments in the stock of certain corporations which a service agency may make under section 62.3 of this Title (relating to housing and urban development projects), subject to the limitations thereof;

(iii) bonds and mortgages and notes and mortgages or part interests therein, on improved and unencumbered real property, including leasehold estates, located in New York State or any other State of the United States, the District of Columbia or the Commonwealth of Puerto Rico, which would qualify as investments for savings and loan associations under the laws of this State, except for restrictions governing the locations of the property or the location of the principal office of the holder or any part interest; and

(iv) such other investments as the superintendent shall approve in writing.

3 CRR-NY 68.5 Revocation, rescission or modification {#sec-3-crr-ny-68.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 68.5}

Any investment made under this Part may be rendered ineligible for investment at any time by further action of the superintendent.

Part 69 MANDATORY TRANSFERS TO SURPLUS FOR THRIFT INSTITUTIONS PURSUANT TO BANKING LAW, §§ 244(3) AND 387(1)

3 CRR-NY 69.1 Transfers to surplus funds of savings banks {#sec-3-crr-ny-69.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 69.1}

If, at the close of any accounting period, the net worth of any savings bank is less than 10 per centum of the amount due to depositors, 10 per centum of its net earnings for such period shall be credited to its surplus fund, or so much thereof less than 10 per centum as will make such net worth equal to 10 per centum of the amount due to depositors.

3 CRR-NY 69.2 Credits to surplus account of savings and loan associations {#sec-3-crr-ny-69.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 69.2}

When the net profits of any savings and loan association have been determined at the close of an accounting period, if its surplus account does not equal 10 per centum of its capital, five per centum of such net profits shall be credited to its surplus account, or so much thereof less than five per centum as will make such surplus account equal to 10 per centum of its capital.

Part 70 INTERLOCKING DIRECTORS AND OFFICERS OF BANKING ORGANIZATIONS AND BANK HOLDING COMPANIES

3 CRR-NY 70.1 Definitions {#sec-3-crr-ny-70.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 70.1}

The term executive officer as defined in this Part means each officer of a bank, trust company, bank holding company, foreign banking corporation, national bank, savings bank, savings and loan association or Federal savings and loan association who participates or has authority to participate in major policymaking functions of the institutions, regardless of whether he has an official title or whether his title contains a designation of assistant, and regardless of whether he is serving without salary or other compensation, provided that the chairman of the board of directors, the president, each vice-president, the cashier, the secretary and the treasurer are presumed to be executive officers, unless, by resolution of the board of directors or board of trustees, or by the bylaws of such institutions, any such officer is excluded from participation in major policymaking functions, and does not actually participate therein.

3 CRR-NY 70.2 Exceptions {#sec-3-crr-ny-70.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 70.2}

The superintendent may grant permission to one or more executive officers of any institution or institutions of a type named in section 70.1 of this Part to be an executive officer, director or trustee, or both an executive officer and a director or trustee, of any other such institution. Such permission may be granted after review by the superintendent of an application made by such executive officer or officers, or by such an institution which presently has, or is actively considering the election of, one or more such executive officers as an executive officer, director or trustee, or both an executive officer and a director or trustee, of the applying institution.

Part 71 ISSUANCE OF SUBORDINATED SECURITIES BY SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 71.1 Definitions {#sec-3-crr-ny-71.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.1}

As defined in this Part, the term savings institution means a savings bank or savings and loan association; and the term subordinated debt security means any unsecured note, bond, debenture, or other obligation or security issued pursuant to section 234(5-b) or 382-b(2) of the Banking Law, but shall not mean any note, bond, debenture, or other obligation or security subordinated to the claims of depositors issued to the Federal Deposit Insurance Corporation of the Federal Savings and Loan Insurance Corporation.

3 CRR-NY 71.2 Approval of superintendent {#sec-3-crr-ny-71.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.2}

(a) No savings institution shall issue subordinated debt securities unless it shall have obtained the prior written approval of the superintendent. The superintendent may grant approval in principle of the issuance of the subordinated debt securities, based on preliminary drafts of documents submitted with the application pursuant to section 71.4 of this Part. Final written approval, however, will not be given until final copies of the documents have been submitted to the department and reviewed.

(b) In granting approval, the superintendent may impose such restrictions and limitation on a particular issue as he shall deem necessary. Upon receipt of the superintendent’s final written approval, the applicant may proceed to issue the securities described in the application and in the manner described therein.

(c) Written approval of the superintendent shall also be required for any subsequent amendment to the terms or conditions governing the original issue.

3 CRR-NY 71.3 Restrictions and requirements as to securities {#sec-3-crr-ny-71.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.3}

(a) No subordinated debt securities may be issued by a savings institution in denominations of less than $50,000, or with an original maturity of less than seven years.

(b) Each certificate, note or other evidence of subordinated debt issued pursuant to this Part shall:

(1) indicate clearly on its face, in boldface type, that the security does not represent a savings account or other deposit and is not insured by any government agency;

(2) clearly state that the security is subordinated, as to principal and interest, to all deposits of the issuing savings institution, and is unsecured; and

(3) state the terms, if any, under which the issuing savings institution may prepay or call the obligation.

(c) No optional payment in whole or in part of the unpaid principal of subordinated debt securities shall be made without prior written approval of the superintendent.

3 CRR-NY 71.4 Applications {#sec-3-crr-ny-71.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.4}

(a) Each application by a savings institution to issue subordinated debt securities pursuant to this Part shall be in letter form and be accompanied by:

(1) a specimen of the certificates, notes or debentures to be issued, a copy of the proposed agreement or indenture pursuant to which the securities are to be issued, and a copy of any other agreement relating to the sale or distribution of the issue. Such documents may be in preliminary draft form but shall contain the basic provisions, terms, restrictions, and covenants relating to the issue. Definitive copies of documents shall be filed with the department as soon as available, and should be marked to indicate changes from prior drafts submitted;

(2) a certified copy of a resolution of the board of trustees or directors of the issuing institution:

(i) approving the issuance of subordinated debt securities in a specified maximum amount, the maximum interest rate at which the securities may be issued, the form and content of the note or certificate to be issued, the agreement of indenture and any collateral agreements; and

(ii) designating an officer or officers to submit application for approval to the appropriate supervisory authorities and to take other necessary action in connection therewith.

(b) Each application shall include the following information (a cross-reference to the appropriate section of the relevant agreement or indenture may be substituted):

(1) the aggregate dollar amount of the proposed issue and the lowest denomination to be issued;

(2) interest rate or rates to be paid (if such rate or rates is not determinable at the time the application is filed, a maximum rate should be estimated);

(3) an estimate of the effect on net annual operating income attributable to the issuance of subordinated debt securities;

(4) the maturity date of the proposed issue or, if maturing serially, a schedule of amounts and maturity dates;

(5) details of call, prepayment, and sinking fund provisions, or any of them;

(6) details of any covenants to be agreed to by the issuing institution, together with a specific explanation of the necessity for any covenants that place greater restrictions on the issuing institution than restrictions imposed on such institution by the provisions of the Banking Law or regulations issued thereunder;

(7) a statement of the intended use of the proceeds;

(8) a statement of the expected source of funds for repayment of the issue; and

(9) an opinion of counsel for the applicant that the issue is in compliance with all applicable State and Federal statutes and regulations relating to the issuance and sale of securities and is consistent with the issuing institution's charter and bylaws.

3 CRR-NY 71.5 Reports {#sec-3-crr-ny-71.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.5}

Within 30 days after the completion of the sale of subordinated debt securities, the savings institution shall file a report of the transaction with the superintendent stating the total face value of the securities sold, the rate of interest agreed upon and the net proceeds to the issuing institution. In addition, the issuing savings institution shall submit two condensed statements of condition acknowledged by its chief executive or financial officer: one as of the close of business on the day immediately preceding the sale and the other as of the close of business on the day on which the sale was consummated.

3 CRR-NY 71.6 [Repealed] {#sec-3-crr-ny-71.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 71.6}

Part 72 INVESTMENTS IN CERTIFICATES OF DEPOSIT OF BANKING CORPORATIONS

3 CRR-NY 72.1 Permissible investments {#sec-3-crr-ny-72.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 72.1}

Savings banks and savings and loan associations may invest in certificates of deposit of a banking institution described in section 235(12-a)(b) of the Banking Law which has total assets of less than $1 billion only if such certificates are issued by and payable in United States dollars at an office of such banking institution located within one of the states of the United States of America, and in certificates of deposit of a banking institution described in section 235(12-a)(b) of the Banking Law which has total assets of $1 billion or more only if such certificates are payable in United States dollars.

3 CRR-NY 72.2 Applicability {#sec-3-crr-ny-72.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 72.2}

This Part shall apply to investments made by savings banks and savings and loan associations on and after June 19, 1974, but shall not require the disposition of any investment theretofore made, not in conformity with this Part, prior to normal or earliest optional maturity date of such investment.

Part 73 ELECTRONIC FACILITIES

3 CRR-NY 73.1 General statement {#sec-3-crr-ny-73.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.1}

A banking organization may conduct a banking business at electronic facilities that are either established (i.e., owned or rented by a single organization) or shared, on a transaction fee or similar basis, by such banking organization, subject to the provisions of this Part. Such facilities are not branches but are subject to the limitations contained in sections 28-b and 105(1)(ii), 240(2)(b) or 396(2)(b) of the Banking Law, as the case may be, as if they were branches. In addition to the requirements of this Part, automated teller machines must comply with the security measures and reporting requirements set forth in article II-AA of the New York Banking Law and Part 301 of the Superintendent's regulations.

3 CRR-NY 73.2 Definitions {#sec-3-crr-ny-73.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.2}

For the purposes of this Part:

(a) Electronic facilities shall mean automated teller machines, point-of-sale terminals, and similar facilities at which the banking business may be conducted. Such term shall not include home banking terminals, telexes and similar equipment.

(b) Automated teller machines shall mean electronic devices, either on-line or off-line, which permit deposits, withdrawals, transfers of funds from one account to another, loan repayments or disbursements of funds pursuant to prearranged lines of credit. Except for facilities staffed for the purposes cited in section 73.7 of this Part, they shall not include staffed facilities.

(c) Point-of-sale terminals shall mean electronic devices, either on-line or off-line, whose function is to transfer funds or record transfers of funds in connection with the sale of goods or services but which may also be used to accept deposits and loan repayments, make cash withdrawals, and obtain funds pursuant to prearranged lines of credit. These terminals may be located only at bona fide checkout counters, cashier stations, customer convenience counters or other counters at which store functions are performed, or sales desks of other establishments, and may not be staffed by bank employees, with the exceptions noted in section 73.7 of this Part.

(d) Similar facilities shall mean electronic devices, either on-line or off-line, which may be used for making deposits, withdrawals, transfers of funds, loan repayments or disbursements of funds pursuant to prearranged lines of credit. Except as otherwise provided in section 73.7 of this Part, such facilities, if part of a store's bona fide customer convenience counter or other counter at which store functions are performed, or sales desks of other establishments, may be staffed but only by nonbank employees; if located anywhere else, they may not be staffed.

(e) Banking organizations shall mean banks, trust companies, savings banks, savings and loan associations, and out-of-state state bank with one or more branches in New York.

Any banking organization that has given the Superintendent the notice described in section 73.6 of this Part may establish or share an electronic facility upon receipt of written notification from the Superintendent that he or she does not object to the establishment or sharing of such facility. The Superintendent shall not object to the establishment or sharing of an electronic facility unless the banking organization submitting the notice fails to meet the requirements of Banking Law, section 28-b and Part 76 of this Title or the establishment or sharing of such facility is prohibited by the home office protection provisions of Banking Law, section 105(1)(ii), 240(2)(b) or 396(2)(b).

To the extent consistent with law, banking organizations may share electronic facilities they have established with other banking organizations, banking institutions not subject to the provisions of this Part, and nonbanking entities, and may share electronic facilities established by other banking organizations, banking institutions not subject to this Part or nonbanking entities.

3 CRR-NY 73.5 Facilities not requiring notification {#sec-3-crr-ny-73.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.5}

The following activities do not require notification to the Superintendent under this Part:

(a) the establishment by a banking organization of an electronic facility on the premises of one of its authorized, staffed banking offices or attached to the outer wall of such an office;

(b) the establishment or sharing of an electronic facility to the extent it is used solely to effect transactions among banking institutions, clearinghouses, clearing corporations, governmental institutions or governmental agencies, business firms or similar organizations, or between two or more of these types of organizations; and

(c) the sharing of an electronic facility when the customers of the sharing institution may use the facility solely to obtain information about account balances, make cash withdrawals (including those that require transfers of funds among a customer's accounts), and obtain cash advances against credit lines.

3 CRR-NY 73.6 Contents of notice {#sec-3-crr-ny-73.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.6}

The notice to the Superintendent for the establishment or sharing of an electronic facility shall include the following:

(a) the complete address of the proposed facility, including the name of the city, village, hamlet, or town in which the site is physically located (rather than that which is used in the mailing address, if different);

(b) identification of the type of facility and a statement as to whether the facility will have deposit-taking capability;

(d) details of any transaction involving the establishment or initial sharing of the facility with an insider as defined in Part 11 of this Title or with any related interest of such a person; and

(e) any additional information which the department may require on a case-by-case basis.

3 CRR-NY 73.7 Restrictions on electronic facilities {#sec-3-crr-ny-73.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.7}

(a) No electronic facility may be staffed by employees of a banking organization. However, employees of a banking organization may be used to demonstrate the equipment, to train nonbank employees for a reasonable period of time, to provide information, to repair and service the electronic equipment, or as security guards.

(b) All banking organizations shall take the necessary steps to protect their interests in the activities of their electronic facilities, including the acquisition of appropriate fidelity and other insurance coverage, and to safeguard the identity of bank customers in the use of such facilities.

(c) No new accounts may be opened at electronic facilities, and no cash, check, money order or draft of any kind may be taken with application forms if such forms are filled out and left at the electronic facility.

3 CRR-NY 73.8 to 73.9 to 73.9 [Repealed] {#sec-3-crr-ny-73.8-to-73.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.8 to 73.9}

3 CRR-NY 73.10 [Repealed] {#sec-3-crr-ny-73.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 73.10}

Part 75 CREDIT CARD ISSUANCE BY CREDIT UNIONS

3 CRR-NY 75.1 Issuance of credit cards {#sec-3-crr-ny-75.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 75.1}

State-chartered credit unions are authorized to issue credit cards to their members, for purposes of providing such members with access both to overdraft loans and/or cash advances and to purchases of goods or services, to the extent not inconsistent with the provisions of article XI of the Banking Law, provided that overdraft loans and/or cash advances shall be made on the terms and conditions contained in subdivision 5 of section 108 of the Banking Law, and that credit extensions shall be made pursuant to the provisions of section 413 of the Personal Property Law.

Part 76 COMPLIANCE WITH COMMUNITY REINVESTMENT ACT REQUIREMENTS

3 CRR-NY 76.1 Statement of policy; explanation {#sec-3-crr-ny-76.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.1}

In enacting the CRA, the New York State Legislature required the superintendent to assess a banking institution's record of helping to meet the credit needs of the local communities in which the banking institution is chartered, consistent with the safe and sound operation of the banking institution, and to take this record into account in the department's evaluation of those applications by banking institutions which are enumerated in sections 28-b, 225 and 413 of the New York State Banking Law. This Part is intended to carry out the purposes of the CRA. This Part establishes the framework and criteria by which the department assesses a banking institution's record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods and minority- and women-owned businesses, consistent with the safe and sound operation of the banking institution. In conducting such an assessment, the department may evaluate the banking institution by performing its CRA examination on-site at the institution or, alternatively, at the department; may require the submission of written responses to department requests for documentation and other information, including responses to the so-called “First Day Letter” or similar requests; may interview banking institution personnel; may conduct branch visits; and may require any other information or documentation, or utilize any other procedure that the superintendent may deem necessary. With respect to New York State-chartered multi-state banking institutions, the department will rely, in part, on the CRA evaluation by the host state, commonwealth or territory with regard to the branches located in the host state, commonwealth or territory or, in those instances in which there is no host state, commonwealth or territory CRA evaluation, upon the CRA evaluation of the appropriate Federal regulatory authorities; however, the department will independently review the factors set forth in section 28-b.3(a)(1), (2) and (3) of the Banking Law.

3 CRR-NY 76.2 Definitions {#sec-3-crr-ny-76.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.2}

For purposes of this Part, the following definitions apply:

(a) Affiliate means any company, including a subsidiary, that controls, is controlled by, or is under common control with another company.

(b) Area median income means:

(1) the median family income for the MSA, if a person or geography is located in an MSA, or for the metropolitan division, if a person or geography is located in an MSA that has been subdivided into metropolitan divisions; or

(2) the statewide nonmetropolitan median family income, if a person or geography is located outside an MSA.

(d) Banking institution means a New York State-chartered commercial bank, trust company, savings bank, savings and loan association or FDIC insured branch of a foreign bank.

(e) Branch means a staffed banking facility approved as a branch, whether shared or unshared, including, for example, a mini-branch in a grocery store or a branch operated in conjunction with any other local business or nonprofit organization.

(f) Community development means:

(1) affordable housing (including multifamily rental housing) for low- or moderate-income individuals;

(2) community services targeted to low- or moderate-income individuals or minority- or women-owned businesses;

(3) activities that promote economic development by financing businesses, including minority- and women-owned businesses, or farms that meet the size eligibility standards of the Small Business Administration's Development Company or Small Business Investment Company programs or have gross annual revenues of $1 million or less;

(4) activities that revitalize or stabilize:

(i) low- or moderate-income geographies;

(ii) designated disaster areas; or

(iii) distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and OCC, based on:

(a) rates of poverty, unemployment and population loss; or

(b) population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density and dispersion if they help to meet essential community needs, including needs of low-and moderate-income individuals;

(5) activities that seek to prevent defaults and/or foreclosures in loans included in paragraphs (1) and (3) of this subdivision.

(g) Community development loan means a loan that:

(1) has as its primary purpose community development; and

(2) except in the case of a wholesale or limited purpose banking institution:

(i) has not been reported or collected by the banking institution or an affiliate for consideration in the banking institution's evaluation as a home mortgage, small business, minority- or women-owned business, small farm, or consumer loan, unless it is a multifamily dwelling loan; and

(ii) benefits the banking institution's assessment area(s) or a broader statewide or regional area that includes the banking institution's assessment area(s).

(h) Community development service means a service that:

(1) has as its primary purpose community development ;

(2) is related to the provision of financial services; and

(3) has not been considered in the evaluation of the banking institution's retail banking services.

(i) Consumer loan means a loan to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. Consumer loans include the following categories of loans:

(1) motor vehicle loan, which is a consumer loan extended for the purchase of and secured by a motor vehicle;

(2) credit card loan, which is a line of credit for household, family, or other personal expenditures that is accessed by a borrower's use of a “credit card;”

(3) home equity loan, which is a consumer loan secured by a residence of the borrower;

(4) other secured consumer loan, which is a secured consumer loan that is not included in one of the other categories of consumer loans; and

(5) other unsecured consumer loan, which is an unsecured consumer loan that is not included in one of the other categories of consumer loans.

(j) Geography means a census tract delineated by the United States Bureau of the Census in the most recent decennial census.

(k) Home mortgage loan means a home improvement loan, a home purchase loan, a multi- family loan or a refinance loan, including a refinance loan involving a modification, extension and consolidation agreement.

(l) Home state means the state where a state-chartered multi-state banking institution is chartered.

(m) Host state means a state other than the home state of a multi-state banking institution where the banking institution maintains a branch.

(n) Income level includes:

(1) low-income, which means an individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography;

(2) moderate-income, which means an individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 and less than 80 percent, in the case of a geography;

(3) middle-income, which means an individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 and less than 120 percent, in the case of a geography; and

(4) upper-income, which means an individual income that is 120 percent or more of the area median income, or a median family income that is 120 percent or more, in the case of a geography.

(o) Limited purpose bank means a banking institution that offers only a narrow product line (such as credit card or motor vehicle loans) to a regional or broader market and for which a designation as a limited purpose banking institution is in effect.

(p) Loan location.

A loan is located as follows:

(1) a consumer loan is located in the geography where the borrower resides;

(2) a home mortgage loan is located in the geography where the property to which the loan relates is located; and

(3) a small business or small farm loan is located in the geography where the main business facility or farm is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.

(q) Metropolitan division means a metropolitan division as defined by the director of the Office of Management and Budget.

(r) Minority means a natural person who is American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and/or Hispanic or Latino.

(s) Minority-owned business means a business more than 50 percent of the ownership or control of which is held by one or more minority individuals.

(t) MSA means a metropolitan statistical area as defined by the director of the Office of Management and Budget.

(u) Multi-state banking institution means a banking institution that maintains branches in one or more host states.

(v) Qualified investment means a lawful investment, deposit, membership share, or grant that has as its primary purpose community development.

(w) Principal owner means any natural person who owns 25 percent or more of the equity interest of a business.

(x) Regulation BB of the Board of Governors of the Federal Reserve System means Part 228 of Title 12, Code of Federal Regulations, Parts 220 to 299 Banks and Banking (revised as of January 1, 2006). (This publication may be viewed at the New York City office of the Department of Financial Services located at One State Street, New York, NY 10004, and the Department of State located at One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231. It is published by the Office of the Federal Register, National Archives and Records Administration and is for sale by the U.S. Government Publishing Office, Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328.)

(y) Small banking institution.

(1) Definition. Small banking institution means a banking institution that, as of December 31 of either of the prior two calendar years, had total assets of less than $1 billion. Intermediate small banking institution means a small banking institution with assets of at least $250 million as of December 31 of both of the prior two calendar years and less than $1 billion as of December 31 of either of the prior two calendar years.

(2) Adjustment. The dollar figures in paragraph (y)(1) of this section shall be adjusted annually and published by the Federal Financial Institutions Examination Council, based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million.

(z) Small business loan means a small business loan as defined in Regulation BB of the Board of Governors of the Federal Reserve System (12 CFR* part 228). This definition is based on the size of the loan.

(aa) Small farm loan means a small farm loan as defined in Regulation BB of the Board of Governors of the Federal Reserve System (12 CFR* part 228). This definition is based on the size of the loan.

(ab) Wholesale banking institution means a banking institution that is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale banking institution by the appropriate Federal regulatory authority is in effect.

(ac) Women-owned business means a business more than 50 percent of the ownership or control of which is held by one or more women.

3 CRR-NY 76.3 Filing requirements {#sec-3-crr-ny-76.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.3}

Each banking institution, as that term is defined in section 76.2 of this Part, to which the act of Congress entitled the Community Reinvestment Act of 1977 (P.L. 95-221) applies shall file with the Superintendent of Banks a copy of each report and document which it is required to prepare and/or file with one or more Federal agencies by the Community Reinvestment Act of 1977 and the rules and regulations promulgated pursuant thereto, at the same time as it shall file such reports and documents with such agencies. Such documents shall include, but not be limited to, annual Home Mortgage Disclosure Act (“HMDA”) data, annual small business and farm loan data, a copy of its designation as a wholesale or a limited purpose banking institution, if any, community development loan data, if any, and assessment area data, if any. Community development loan data should include the aggregate number and aggregate amount of community development loans originated or purchased. With regard to assessment area data, a banking institution, except a small banking institution or a banking institution that was a small banking institution during the prior calendar year, shall submit a copy of the most recent list for each assessment area showing the geographies within the area which was submitted to the appropriate Federal regulatory authority. In addition, nothing shall preclude the superintendent from requiring the submission of additional information which he or she deems necessary, in order to appropriately evaluate an institution.

3 CRR-NY 76.4 Review of applications {#sec-3-crr-ny-76.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.4}

The superintendent will consider the factors set forth in section 28-b of the Banking Law and the performance tests and standards set forth in section 76.7 of this Part in assessing a banking institution's record of performance. Such assessment of a banking institution's record of performance, as set forth in this Part, may be the basis for denying an application by the superintendent, as applicable. Furthermore, the superintendent may condition the approval of any application as the facts and circumstances warrant.

3 CRR-NY 76.5 Community Reinvestment Act assessments; public disclosure {#sec-3-crr-ny-76.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.5}

(a) From time to time, as determined by the superintendent, the department will conduct community reinvestment evaluations of each banking institution to which this Part applies. To the extent feasible, such evaluations will occur with the same frequency as, and coincide with, CRA examinations conducted by a banking institution's primary Federal regulator. In general, the department will evaluate the CRA performance of a banking institution once every 24 to 36 months; except that banking institutions with total assets below $250 million and rated "satisfactory" or "outstanding" in their most recent CRA examination performed by the department generally will be examined once every 48 to 60 months, respectively. The assessment will be based upon information compiled by the department or obtained from other sources, including information obtained from other State and Federal banking regulators. This information will pertain to the factors set forth in section 28-b of the Banking Law and the performance tests and standards set forth in section 76.7 of this Part. The department assigns a rating for a banking institution assessed under the factors set forth in Banking Law, section 28-b and the tests set forth in section 76.7 of this Part. The lending, investment and service performance for each banking institution evaluated under section 76.7(a)(1) of this Part shall be assigned one of the five following ratings: outstanding, high satisfactory, low satisfactory, needs to improve or substantial noncompliance. A banking institution's performance need not fit each aspect of a particular rating profile in order to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. The banking institution's overall performance, however, must be consistent with safe and sound banking practices and generally with the appropriate rating profile. The department assessment shall form the basis of the biennial numerical CRA rating based on a 1-4 scoring system assigned to each such institution by the department. Specifically, such numerical scores shall represent performance assessments as follows:

–outstanding record of meeting community credit needs ("Outstanding" or "1");

–satisfactory record of meeting community credit needs ("Satisfactory" or "2");

–needs to improve record of meeting community credit needs ("Needs to Improve" or "3"); and

–substantial noncompliance in meeting community credit needs ("Substantial Noncompliance" or "4").

(b) Evidence of discriminatory or other illegal credit practices.

(1) The department's evaluation of a banking institution's CRA performance is adversely affected by evidence of discriminatory or other illegal credit practices in any geography by the banking institution or in any assessment area by any affiliate whose loans have been considered as part of the banking institution's lending performance. In connection with any type of lending activity described in section 76.8(a) of this Part, evidence of discriminatory or other credit practices that violate an applicable law, rule or regulation includes, but is not limited to:

(i) discrimination against applicants on a prohibited basis in violation, for example, of section 296-a of the New York State Executive Law, the Equal Credit Opportunity Act or the Fair Housing Act;

(ii) violations of either section 6-l of the Banking Law or the Home Ownership and Equity Protection Act;

(iii) violations of section 5 of the Federal Trade Commission Act;

(iv) violations of section 8 of the Real Estate Settlement Procedures Act; and

(v) violations of the Truth in Lending Act provisions regarding a consumer's right of rescission.

(2) In determining the effect of evidence of practices described in paragraph (1) of this subdivision on the banking institution's assigned rating, the department considers the nature, extent, and strength of the evidence of the practices; the policies and procedures that the banking institution (or affiliate, as applicable) has in place to prevent the practices; any corrective action that the banking institution (or affiliate, as applicable) has taken or has committed to take, including voluntary corrective action resulting from self-assessment; and other relevant information.

(c) The department will prepare a written summary of the results of such assessment. The CRA rating and the written summary will be made available to the public. In addition, each banking institution shall include a copy of such rating and the three most recent summaries in the banking institution's public file as required to be maintained by Federal CRA regulations.

3 CRR-NY 76.6 Assessment area delineation {#sec-3-crr-ny-76.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.6}

(a) In general.

A banking institution shall delineate one or more assessment areas within which the department evaluates the banking institution's record of helping to meet the credit needs of its community. The department does not evaluate the banking institution's delineation of its assessment area(s) as a separate performance criterion, but the department reviews the delineation for compliance with the requirements of this section.

(b) Geographic area(s) for wholesale or limited purpose banking institutions.

The assessment area(s) for wholesale or limited purpose banking institutions must consist generally of one or more MSAs or metropolitan divisions (using the MSA or metropolitan division boundaries that were in effect as of January 1st of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns, in which the bank has its main office, branches, and deposit-taking ATMs.

The assessment area(s) for a banking institution other than a wholesale or limited purpose banking institution must:

(1) consist generally of one or more MSAs or metropolitan divisions (using the MSA or metropolitan division boundaries that were in effect as of January 1st of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns; and

(2) include the geographies in which the banking institution has its main office, its branches, and its deposit-taking ATMs, as well as the surrounding geographies in which the banking institution has originated or purchased a substantial portion of its loans (including home mortgage loans, small business and small farm loans, and any other loans the banking institution chooses, such as those consumer loans on which the banking institution elects to have its performance assessed).

(d) Adjustments to geographic area(s).

A banking institution may adjust the boundaries of its assessment area(s) to include only the portion of a political subdivision that it reasonably can be expected to serve. An adjustment is particularly appropriate in the case of an assessment area that otherwise would be extremely large, of unusual configuration, or divided by significant geographic barriers.

(e) Limitations on the delineation of an assessment area.

Each banking institution's assessment area(s):

(1) must consist only of whole geographies;

(2) may not reflect illegal discrimination;

(3) may not arbitrarily exclude low- or moderate-income geographies, taking into account the banking institution's size and financial condition; and

(4) must delineate separate assessment areas for the areas served by the banking institution in each state in those instances in which a banking institution serves a geographic area that extends substantially beyond a state boundary.

(f) Use of assessment area(s).

The department uses the assessment area(s) delineated by a banking institution in its evaluation of the banking institution's CRA performance unless the department determines that the assessment area(s) do not comply with the requirements of this section.

3 CRR-NY 76.7 Performance tests and standards {#sec-3-crr-ny-76.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.7}

(a) Performance tests and standards.

The department shall assess the CRA performance of banking institutions in an evaluation as set forth below:

(1) Lending, investment and service tests. The department applies the lending, investment and service tests, as provided in sections 76.8, 76.9 and 76.10 of this Part, in evaluating the performance of a banking institution, except as provided in paragraphs (2), (3) and (4) of this subdivision.

(2) Community development test for wholesale or limited purpose banking institutions. The department applies the community development test for a wholesale or limited purpose banking institution, as provided in section 76.11 of this Part, except as provided in paragraph (4) of this subdivision.

(3) Small banking institution performance standards. The department applies the small banking institution performance standards, as provided in section 76.12 of this Part, in evaluating the performance of a small banking institution or a banking institution that was a small banking institution during the prior calendar year, unless the banking institution elects to be assessed as provided in paragraph (1), (2) or (4) of this subdivision. The banking institution may elect to be assessed as provided in paragraph (1) of this subdivision only if it collects and reports the Federal CRA data required for other banking institutions which are assessed pursuant to paragraph (1) of this subdivision.

(4) Strategic plan. The department evaluates the performance of a banking institution under a strategic plan if the banking institution submits, and the department approves, a strategic plan as provided in section 76.13 of this Part.

(b) Performance context.

The department will apply the tests and standards in subdivision (a) of this section and may also consider whether to approve a proposed strategic plan in the context of:

(1) demographic data including housing data and any other relevant data pertaining to a banking institution's assessment area(s);

(2) the performance of all, including similarly situated, lenders in the banking institution's assessment area(s);

(3) lending, investment and service opportunities in the banking institution's assessment area(s);

(4) the banking institution's product offerings and business strategy;

(5) institutional capacity and constraints;

(6) the banking institution's past performance;

(7) the banking institution's public file as required to be maintained by Federal CRA regulations;

(8) the banking institution's market share in its assessment area;

(9) community input; and

(10) any other information deemed relevant by the department.

3 CRR-NY 76.8 Lending test {#sec-3-crr-ny-76.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.8}

(a) Scope of test.

The scope of the lending test is as follows:

(1) The lending test evaluates a banking institution's record of helping to meet the credit needs of its assessment area(s) through its lending activities by considering a banking institution's home mortgage, small business, minority- and women-owned business, small farm, and community development lending. If consumer lending constitutes a substantial majority of a banking institution's business, the department will evaluate the banking institution's consumer lending in one or more of the following categories: motor vehicle, credit card, home equity, other secured, and other unsecured loans. In addition, at a banking institution's option, the department will evaluate one or more categories of consumer lending, if the banking institution has collected and maintained the data required by Regulation BB of the Board of Governors of the Federal Reserve System (12 CFR*part 228) for each category that the banking institution elects to have the department evaluate.

(2) The department considers originations and purchases of loans. The department may also consider any other loan data the banking institution may choose to provide, including data on loans outstanding, commitments and letters of credit.

(3) The department may consider loans originated or purchased by consortia in which the banking institution participates or by third parties in which the banking institution has invested.

(b) Performance criteria.

The department evaluates a banking institution's lending performance pursuant to criteria which may include the following:

(1) Lending activity. The number and amount of the banking institution's home mortgage, small business, minority- and women-owned business, small farm, and consumer loans, if applicable, in the banking institution's assessment area(s).

(2) Geographic distribution. The geographic distribution of the banking institution's home mortgage, small business, minority- and women-owned business, small farm, and consumer loans, if applicable, based on the loan location, including:

(i) the proportion of the banking institution's lending in the banking institution's assessment area(s);

(ii) the dispersion of lending in the banking institution's assessment area(s); and

(iii) the number and amount of loans in low-, moderate-, middle-, and upper-income geographies in the banking institution's assessment area(s).

(3) Borrower characteristics. The distribution, particularly in the banking institution's assessment area(s), of the banking institution's home mortgage, small business, minority- and women-owned business, small farm, and consumer loans, if applicable, based on borrower characteristics, including the number and amount of:

(i) home mortgage loans to low-, moderate-, middle-, and upper-income individuals;

(ii) small business and small farm loans to businesses and farms with gross annual revenues of $1 million or less;

(iii) small business and small farm loans by loan amount at origination;

(iv) loans to minority- and women-owned businesses;

(v) consumer loans, if applicable, to low-, moderate-, middle-, and upper-income individuals; and

(vi) the banking institution's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals.

(4) Community development lending. The banking institution's community development lending, including the number and amount of community development loans, and their complexity and innovativeness.

(5) Innovative or flexible lending practices. The banking institution's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies, or minority- or women-owned businesses.

Affiliate lending will be considered as follows:

(1) At a banking institution's option, the department will consider loans by an affiliate of the banking institution, if the banking institution provides data on the affiliate's loans to the department. The data provided should contain the information specified in section 228.42 of Regulation BB of the Board of Governors of the Federal Reserve System (12 CFR*part 228).

(2) The department considers affiliate lending subject to the following constraints:

(i) no affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase; and

(ii) if a banking institution elects to have the department consider loans within a particular lending category made by one or more of the banking institution's affiliates in a particular assessment area, the banking institution shall elect to have the department consider all the loans within that lending category in that particular assessment area made by all of the banking institution's affiliates.

(3) The department does not consider affiliate lending in assessing a banking institution's performance under subparagraph (b)(2)(i) of this section.

(d) Lending by a consortium or a third party.

Community development loans originated or purchased by a consortium in which the banking institution participates or by a third party in which the banking institution has invested:

(1) will be considered, at the banking institution's option, if the banking institution reports to the department the data specified in section 228.42 of Regulation BB of the Board of Governors of the Federal Reserve System (12 CFR* part 228) pertaining to these loans; and

(2) may be allocated among participants or investors, as they choose, for purposes of the lending test, except that no participant or investor:

(i) may claim a loan origination or loan purchase if another participant or investor claims the same loan origination or purchase; or

(ii) may claim loans accounting for more than its percentage share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.

3 CRR-NY 76.9 Investment test {#sec-3-crr-ny-76.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.9}

(a) Scope of test.

The investment test evaluates a banking institution's record of helping to meet the credit needs of its assessment area(s) through qualified investments that benefit its assessment area(s) or a broader statewide or regional area that includes the banking institution's assessment area(s).

(b) Exclusion.

Activities considered under the lending or service tests may not be considered under the investment test.

At a banking institution's option, the department will consider, in its assessment of a banking institution's investment performance, a qualified investment made by an affiliate of the banking institution, if the qualified investment is not claimed by any other institution.

(d) Performance criteria.

The department evaluates the investment performance of a banking institution pursuant to criteria which may include the following:

(1) the dollar amount of qualified investments;

(2) the innovativeness or complexity of qualified investments;

(3) the responsiveness of qualified investments to credit and community development needs; and

(4) the degree to which the qualified investments are not routinely provided by private investors.

3 CRR-NY 76.10 Service test {#sec-3-crr-ny-76.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.10}

(a) Scope of test.

The service test evaluates a banking institution's record of helping to meet the credit needs of its assessment area(s) by analyzing both the availability and effectiveness of a banking institution's systems for delivering retail banking services and the extent and innovativeness of its community development services.

(b) Area(s) benefited.

Community development services must benefit a banking institution's assessment area(s) or a broader statewide or regional area that includes the banking institution's assessment area(s).

At a banking institution's option, the department will consider, in its assessment of a banking institution's service performance, a community development service provided by an affiliate of the banking institution, if the community development service is not claimed by any other institution.

(d) Performance criteria.

The department evaluates the availability and effectiveness of a banking institution's systems for delivering retail banking services, pursuant to criteria which may include the following:

(1) the current distribution of the banking institution's branches among low-, moderate-, middle-, and upper-income geographies, giving additional consideration to branches located adjacent to low- or moderate-income geographies when such branches can be shown to serve the needs of low- or moderate-income individuals;

(2) in the context of the current distribution of its branches, the banking institution's record of opening and closing branches, particularly branches located in low- or moderate-income geographies or branches in adjacent geographies when such branches can be shown to serve the needs of low- or moderate-income individuals;

(3) the availability and effectiveness of alternative systems for delivering retail banking services (e.g., ATMs, ATMs not owned or operated by or exclusively for the banking institution, banking by telephone or computer, loan production offices, and bank-at-work or bank-by-mail programs) in low-and moderate-income geographies or primarily serving low- or moderate-income individuals; and

(4) the range of services provided in low-, moderate-, middle- and upper-income geographies and to low-, moderate-, middle- and upper-income individuals and the degree to which the services are tailored to meet the needs of those geographies and individuals.

(e) Performance criteria.

The department evaluates community development services pursuant to criteria which may include the following:

(1) the extent to which the banking institution provides community development services; and

(2) the innovativeness and responsiveness of community development services.

(f) Other performance criteria.

(1) The department will favorably consider a banking institution's marketing and/or advertising of its basic banking account as defined in section 14-f of the New York Banking Law and Part 9 of this Title or offering an approved alternative account which provides more advantageous terms for consumers than is required by section 14-f of the New York Banking Law and Part 9 of this Title.

(2) The department will favorably consider a banking institution's efforts to establish a Banking Development District, as defined in section 96-d of the New York Banking Law and Part 8 of this Title, within one or more of the institution's assessment areas.

3 CRR-NY 76.11 Community development test for wholesale or limited purpose banking institutions {#sec-3-crr-ny-76.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.11}

(a) Scope of test.

The department assesses a wholesale or limited purpose banking institution's record of helping to meet the credit needs of its assessment area(s) under the community development test through its community development lending, qualified investments, or community development services.

(b) Designation as a wholesale or limited purpose banking institution.

In order to receive a designation as a wholesale or limited purpose banking institution, a banking institution shall file a request, in writing, with the appropriate Federal regulatory authority in compliance with its rules and regulations regarding such designations. If the appropriate Federal regulatory authority approves the designation, it remains in effect until the banking institution requests revocation of the designation or until one year after the appropriate Federal regulatory authority notifies the banking institution that the designation has been revoked on its own initiative.

The department evaluates the community development performance of a wholesale or limited purpose banking institution pursuant to criteria which may include the following:

(1) the number and amount of community development loans (including originations and purchases of loans and other community development loan data provided by the banking institution, such as data on loans outstanding, commitments, and letters of credit), qualified investments, or community development services;

(2) the use of innovative or complex qualified investments, community development loans, or community development services and the extent to which the investments are not routinely provided by private investors; and

(3) the banking institution's responsiveness to credit and community development needs.

(d) Indirect activities.

At a banking institution's option, the department will consider in its community development performance assessment:

(1) qualified investments or community development services provided by an affiliate of the banking institution, if the investments or services are not claimed by any other institution; and

(2) community development lending by affiliates, consortia and third parties, subject to the requirements and limitations set forth in section 76.8(c) and (d) of this Part.

(e) Benefit to assessment area(s).

Benefits to assessment area(s) are set forth below:

(1) Benefit inside assessment area(s). The department considers all qualified investments, community development loans, and community development services that benefit areas within the banking institution's assessment area(s) or a broader statewide or regional area that includes the banking institution's assessment area(s).

(2) Benefit outside assessment area(s). The department considers the qualified investments, community development loans, and community development services that benefit areas outside the banking institution's assessment area(s), but within New York State, if the banking institution has adequately addressed the needs of its assessment area(s).

3 CRR-NY 76.12 Small banking institution performance standards {#sec-3-crr-ny-76.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.12}

(a) Performance criteria.

(1) Small banking institutions with assets of less than $250 million. The department evaluates the record of a small banking institution that is not, or that was not during the prior calendar year, an intermediate small bank, of helping to meet the credit needs of its assessment area(s) pursuant to the criteria set forth in subdivision (b) of this section.

(2) Intermediate small banking institutions. The department evaluates the record of a small banking institution that is, or that was during the prior calendar year, an intermediate small banking institution, of helping to meet the credit needs of its assessment area(s) pursuant to the criteria set forth in subdivisions (b) and (c) of this section.

(b) Lending test.

A small banking institution's lending performance is evaluated pursuant to the following criteria:

(1) the banking institution's loan-to-deposit ratio, adjusted for seasonal variation and, as appropriate, other lending-related activities, such as loan originations for sale to the secondary markets, community development loans, or qualified investments;

(2) the percentage of loans and, as appropriate, other lending-related activities located in the banking institution's assessment area(s);

(3) the banking institution's record of lending to and, as appropriate, engaging in other lending-related activities for borrowers of different income levels, businesses and farms of different sizes, and minority- and women-owned businesses;

(4) the geographic distribution of the banking institution's loans; and

(5) the banking institution's record of taking action, if warranted, in response to written complaints about its performance in helping to meet credit needs in its assessment area(s).

An intermediate small banking institution's community development performance also is evaluated pursuant to the following criteria:

(1) the number and amount of community development loans;

(2) the number and amount of qualified investments;

(3) the extent to which the banking institution provides community development services; and

(4) the banking institution's responsiveness through such activities to community development lending, investment and service needs.

3 CRR-NY 76.13 Strategic plan {#sec-3-crr-ny-76.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.13}

(a) Alternative election.

The department will assess a banking institution's record of helping to meet the credit needs of its assessment area(s) under a strategic plan if:

(1) the banking institution has submitted the plan to the department as provided for in this section;

(2) the department has approved the plan;

(3) the plan is in effect; and

(4) the banking institution has been operating under an approved plan for at least one year.

(b) Data reporting.

The department's approval of a plan does not affect the banking institution's obligation, if any, to report other required data.

(1) Term. A plan may have a term of no more than five years, and any multi-year plan must include annual interim measurable goals under which the department will evaluate the banking institution's performance.

(2) Multiple assessment areas. A banking institution with more than one assessment area may prepare a single plan for all of its assessment areas or one or more plans for one or more of its assessment areas.

(3) Treatment of affiliates. Affiliated institutions may prepare a joint plan if the plan provides measurable goals for each institution. Activities may be allocated among institutions at the institutions' option, provided that the same activities are not considered for more than one institution.

(d) Public participation in plan development.

Before submitting a plan to the department for approval, a banking institution shall:

(1) informally seek suggestions from members of the public in its assessment area(s) covered by the plan while developing the plan;

(2) once the banking institution has developed a plan, formally solicit public comment on the plan for at least 30 days by publishing notice in at least one newspaper of general circulation in each assessment area covered by the plan; and

(3) during the period of formal public comment, make copies of the plan available for review by the public at no cost at all offices of the banking institution in any assessment area covered by the plan and provide copies of the plan upon request for a reasonable fee to cover copying and mailing, if applicable.

(e) Submission of plan.

The banking institution shall submit its plan to the department at least three months prior to the proposed effective date of the plan. The banking institution shall also submit with its plan a description of its informal efforts to seek suggestions from members of the public, any written public comment received, and, if the plan was revised in light of the comment received, the initial plan as released for public comment.

(f) Plan content.

The content of the plan shall be as follows:

(1) Measurable goals.

(i) A banking institution shall specify in its plan measurable goals for helping to meet the credit needs of each assessment area covered by the plan, particularly the needs of low- and moderate-income geographies, low- and moderate- income individuals, and minority- and women-owned businesses, through lending, investment, and services, as appropriate.

(ii) A banking institution shall address in its plan all three performance categories and, unless the banking institution has been designated as a wholesale or limited purpose banking institution, shall emphasize lending and lending-related activities. Nevertheless, a different emphasis, including a focus on one or more performance categories, may be appropriate if responsive to the characteristics and credit needs of its assessment area(s), considering public comment and the banking institution's capacity and constraints, product offerings, and business strategy.

(2) Confidential information. A banking institution may submit additional information to the department on a confidential basis, but the goals stated in the plan must be sufficiently specific to enable the public and the department to judge the merits of the plan.

(3) Satisfactory and outstanding goals. A banking institution shall specify in its plan measurable goals that constitute “satisfactory” performance. A plan may specify measurable goals that constitute “outstanding” performance. If a banking institution submits, and the department approves, both “satisfactory” and “outstanding” performance goals, the department will consider the banking institution eligible for an “outstanding” performance rating.

(4) Election if satisfactory goals not substantially met. A banking institution may elect in its plan that, if the banking institution fails to meet substantially its plan goals for a satisfactory rating, the department will evaluate the banking institution's performance under the lending, investment, and service tests, the community development test, or the small banking institution performance standards, as appropriate.

(g) Plan approval.

Approval of a plan shall be as follows:

(1) Timing. The department will act upon a plan within 60 calendar days after receipt of the complete plan and other material required under subdivision (e) of this section. If the department fails to act within this time period, the plan shall be deemed approved unless the department extends the review period for good cause.

(2) Public participation. In evaluating the plan's goals, the department considers the public's involvement in formulating the plan, written public comment on the plan, and any response by the banking institution to public comment on the plan.

(3) Criteria for evaluating plan. The department evaluates a plan's measurable goals using the following criteria, as appropriate:

(i) the extent and breadth of lending or lending-related activities, including, as appropriate, the distribution of loans among different geographies, businesses and farms of different sizes, and individuals of different income levels, the extent of lending to minority- and women-owned businesses, the extent of community development lending, and the use of innovative or flexible lending practices to address credit needs;

(ii) the amount and innovativeness, complexity, and responsiveness of the banking institution's qualified investments; and

(iii) the availability and effectiveness of the banking institution's systems for delivering retail banking services and the extent and innovativeness of the banking institution's community development services.

(h) Plan amendment.

During the term of a plan, a banking institution may request the department to approve an amendment(s) to the plan on grounds that there has been a material change in circumstances. The banking institution shall develop an amendment(s) to a previously approved plan in accordance with the public participation requirements of subdivision (d) of this section.

3 CRR-NY 76.14 High cost areas {#sec-3-crr-ny-76.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.14}

The department recognizes that the demographics and housing characteristics of an area may be such that the gap between housing costs and area median income greatly restricts the affordability of owner-occupied housing for low-and moderate-income persons residing in such an area. At the same time, there may exist a shortage of credit which endangers the preservation, stabilization or improvement of middle-income geographies or limits access to credit for middle- income persons residing in such an area. Where, based on relevant, current and verifiable data (including but not limited to the most recent census data pertaining to such area) these conditions are found to exist, the department may, in its assessment of the institution's performance, be flexible in its consideration of a banking institution's activities pertaining to owner-occupied housing in middle-income geographies or for middle-income individuals residing in such an area. Consideration of such activities shall be in addition to, and not in lieu of, consideration of activities in low-or moderate-income geographies and activities which serve low- or moderate- income individuals.

3 CRR-NY 76.15 Other documents {#sec-3-crr-ny-76.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.15}

When taking any action under section 29 of the Banking Law relating to the opening of a branch or public accommodation office or under section 601-b of the Banking Law relating to the approval or disapproval of a merger or purchase of assets, the superintendent shall request from the applicant banking institution and from the appropriate Federal bank regulatory authorities any documents, other than those required to be filed with the superintendent by this Part or by other applicable statutes or regulations:

(a) filed with the Federal bank regulatory authorities in connection with the application: or

(b) produced by the applicant banking institution or others in connection with the application.

3 CRR-NY 76.16 Minority- and women-owned business loan data collection {#sec-3-crr-ny-76.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 76.16}

(a) Purpose.

The purpose of this section is to facilitate the department’s evaluations of banking institutions’ records of meeting the credit needs of their local communities, in compliance with to section 28-b of the New York Banking Law, including the assessment factors delineated in section 28-b(3)(a).

(b) Information gathering.

Subject to the requirements of this section, in the case of any application for credit by a business to a banking institution which has originated at least 25 credit transactions for businesses in each of the two preceding calendar years, the banking institution shall:

(1) inquire whether the business is a minority- or women-owned business, without regard to whether such application is received in person, by mail, by telephone, by electronic mail or other form of electronic transmission, or by any other means, and whether or not such application is in response to a solicitation by the banking institution;

(2) at the time of application, notify such applicants in writing, or orally for applications made by telephone or another medium that does not involve providing any paper or electronic documents, that:

(i) any applicant for credit may refuse to provide any information requested pursuant to this subdivision in connection with any application for credit; and

(ii) that the banking institution is prohibited from discriminating on the basis of any information provided in response to an inquiry made pursuant to this subdivision or on whether the applicant provides this information; and

(3) maintain a record of the responses to such inquiry, separate from the application and accompanying information.

(c) A banking institution may inform the applicant that New York State law requires it to ask for the principal owners’ ethnicity and race to help ensure that all applicants for credit are treated fairly and that communities’ credit needs are being fulfilled.

(d) A banking institution is neither required nor permitted to verify the minority-owned business status or women-owned business status that the applicant provides, or report any information on an applicant’s principal owners based on visual observation and/or surname of any individual associated with the applicant.

(e) No access by underwriters.

(1) Limitation. Where feasible, no loan underwriter or other officer or employee of a banking institution, or any affiliate of a banking institution, involved in making any determination concerning an application for credit shall have access to any information provided by the applicant pursuant to a request under subdivision (b) of this section in connection with such application.

(2) Limited access. If a banking institution determines that a loan underwriter or other officer or employee of a banking institution, or any affiliate of a banking institution, involved in making any determination concerning an application for credit should have access to any information provided by the applicant pursuant to a request under subdivision (b) of this section, the banking institution shall provide written notice to the applicant, at the time of application or as reasonably practicable thereafter, of the access of the underwriter to such information.

(f) Form and manner of information.

(1) In general. As applicable, each banking institution shall compile and maintain a record of the information provided by any applicant pursuant to a request under subdivision (b) of this section, or a record that an applicant declined to provide such information. The department will issue a sample data collection form that banking institutions may use to collect information provided by applicants pursuant to this section and may update such form from time to time as the department deems necessary.

(2) Itemization. Information compiled and maintained under paragraph (1) of this subdivision shall be itemized in order to clearly and conspicuously disclose:

(i) an alphanumeric identifier, unique within the banking institution to the specific application, which can be used to identify and retrieve the specific files corresponding to the application;

(ii) the date the application was received by the banking institution;

(iii) the means by which the applicant submitted the application to the banking institution;

(iv) the type of loan or other credit being applied for, including:

(a) the credit product; and

(b) the length of the loan term, in months, if applicable;

(v) the purpose of the loan or other credit being applied for;

(vi) the amount of the loan, credit, or credit limit applied for;

(vii) if the application is approved, the amount of the credit transaction or the credit limit approved for such applicant;

(viii) the type of action taken with respect to such application, namely originated, approved but not accepted, denied, withdrawn by the applicant, or incomplete;

(ix) the date the action reported pursuant to subparagraph (viii) of this paragraph was taken;

(x) for denied applications, the principal reason or reasons the banking institution denied the application;

(xi) the census tract in which the principal place of business of the applicant is located;

(xii) the gross annual revenue of the applicant’s business for the last fiscal year preceding the date of the application;

(xiii) the number of non-owners working for the applicant;

(xiv) the time the applicant has been in business, described in whole years, as provided by the applicant, unless the banking institution verifies the information provided, in which case it shall use the verified information;

(xv) pricing information for transactions that were originated or approved but not accepted, including:

(a) the interest rate that is or would be applicable to the loan or other credit applied for;

(b) the total amount of all charges payable directly or indirectly by the applicant and imposed directly or indirectly by the banking institution at or before origination as an incident to or a condition of the extension of credit;

(c) the total amount of all charges included in clause (xi) of this paragraph that are fees paid by the applicant directly to a broker or to the banking institution for delivery to a broker;

(d) the total amount of all non-interest charges that are scheduled to be imposed over the first annual period of the credit transaction;

(e) for a merchant cash advance or other sales-based financing transaction, the difference between the amount advanced and the amount to be repaid; and

(f) whether the terms of the covered credit transaction include a charge imposed for paying all or part of the transaction’s principal before the date on which the principal is due;

(xvi) whether the business is a minority-owned business, a women-owned business, or both, as defined in this part, or whether the business has invoked its right to refuse to provide any information requested pursuant to this section;

(xvii) the race and ethnicity of the applicant’s principal owners, and

(xviii) any additional data that the department determines would aid in fulfilling the purposes of this section.

(3) No personally identifiable information. In compiling and maintaining any record of information under this section, a banking institution may not include in such record the name, specific address (other than the census tract required under subparagraph (2)(v) of this subdivision), telephone number, electronic mail address, or any other personally identifiable information concerning any individual who is connected with the minority- or women-owned business applicant.

(4) Previously collected data. A banking institution is permitted, but not required, to reuse previously collected data to satisfy paragraph (2) of this subdivision, and not required to restate the disclosures otherwise required by paragraph (b)(2) of this section, if:

(i) the data were collected within the same calendar year as the current application; and

(ii) the banking institution has no reason to believe the data are inaccurate.

(5) Race and ethnicity of the applicant’s principal owners.

(i) When asking for a principal owner’s ethnicity and race, a banking institution shall allow the applicant to respond using aggregate and disaggregated ethnicity and race categories and subcategories. The disaggregated subcategories shall include the “other” disaggregated subcategories that provide the option to self-identify using free-form text on a paper or electronic data collection form or using language that informs the applicant of the opportunity to self-identify when taking the application by means other than a paper or electronic data collection form, such as by telephone.

(ii) When asking for a principal owner’s ethnicity and race, a banking institution may, but is not obligated to, use the sample data collection form in Appendix A to Part 76 of this Title.

(iii) A banking institution shall permit an applicant to identify its principal owners as being of the same particular disaggregated race and/or ethnicity subcategories specified in 12 CFR Part 1003 (“Regulation C”) and its appendices.

(iv) A banking institution shall offer the applicant the option of selecting more than one ethnicity and race for each principal owner. If an applicant selects more than one ethnicity or race for a principal owner, the banking institution shall report each selected designation. The banking institution shall also report any additional information that the applicant has provided as free-form text in the appropriate data reporting field.

(v) If an applicant provides ethnicity or race information for one or more principal owners, the banking institution shall report the ethnicity and race as provided by the applicant.

(vi) If the applicant declines to provide a principal owner’s ethnicity or race, the banking institution shall report that the applicant declined to provide this information. The banking institution shall report that the applicant declined to provide information only if the applicant specifically declines to provide that information. If the applicant does not respond to a request about a principal owner’s ethnicity or race, the banking institution shall report that the information was not provided by the applicant. If an applicant provides some but not all of the requested ethnicity and race information, the banking institution shall report the information that was provided by the applicant and shall report that the applicant declined to provide or did not provide (as applicable) the remainder of the information.

(vii) If an applicant provides information in response to the question requesting a given principal owner’s ethnicity or race and also indicates that the applicant does not wish to provide the information, the banking institution shall report the information on ethnicity or race that was provided by the applicant (rather than reporting that the applicant declined to provide the information).

(viii) If a banking institution reports ethnicity or race information based on previously collected data, the banking institution shall also report that it is providing that information based on previously collected data.

(ix) If a banking institution reports one or more principal owner’s ethnicity or race information based on previously collected data, the banking institution does not need to collect any additional ethnicity or race information. However, the banking institution may need to report that the applicant did not provide or declined to provide information when the banking institution previously collected the data, as applicable.

(6) Joint applications from multiple entities. In the event of a single application from multiple entities operating pursuant to a joint venture agreement or other form of business combination, the banking institution shall obtain information pursuant to this section for all entities participating in the application.

(g) Availability of information.

(1) Submission to Department.

(i) The data required to be compiled and maintained under this section by any banking institution shall be submitted to the department upon the department’s request.

(ii) Each banking institution shall submit to the department a copy of each report and document which it is required to prepare and file with the Consumer Financial Protection Bureau and/or another Federal agency by section 704B of the Equal Credit Opportunity Act, codified at 15 USC section 1691c-2, as implemented by regulation, upon the department’s request.

(2) Retention of information. Information compiled and maintained under this section shall be retained by the banking institution for not less than six years after the date of preparation.

(3) Availability of information. The department and banking institutions will maintain any information compiled under this section that could be used to identify any applicant or their associated business as confidential, except as required by Federal law.

(h) Alternative forms of compliance.

(1) The department may, at its discretion, determine that a banking institution’s or group of banking institutions’ compliance with the requirements of section 704B of the Equal Credit Opportunity Act, codified at 15 USC section 1691c-2, as implemented by regulation, shall constitute compliance with the data collection requirements of this section.

(i) Application defined. For the purposes of this section only, the term “application” means an oral or written request by a business for a loan or other extension of credit that is made in accordance with procedures used by a banking institution for the type of credit requested, including such requests received by the banking institution that are incomplete or subsequently withdrawn, and shall not mean:

(a) reevaluation, extension, or renewal requests on an existing business credit account, unless the request seeks additional credit amounts; or

(b) inquiries and prequalification requests.

(j) Compliance date and transitional period.

(1) The compliance date for this section is six months after the date of publication of the Notice of Adoption in the State Register.

(2) Banking institutions shall have an additional transition period of three months from the compliance date of this section to comply with the requirements set forth in paragraph (1) of this section to limit, where feasible, underwriter access to any information provided by the applicant pursuant to a request under subdivision (b) of this section. During this transition period, banking institutions that can feasibly limit access, but need to make technological and process adjustments to do so, may rely on paragraph (2) of this section.

Part 77 INVESTMENTS IN COMMERCIAL, CORPORATE AND BUSINESS LOANS BY SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS; LEASING TRANSACTIONS; LETTERS OF CREDIT

3 CRR-NY 77.1 Explanatory note {#sec-3-crr-ny-77.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.1}

Sections 235(8-c) and 380-k of the Banking Law permit savings banks and savings and loan associations to invest in promissory notes representing commercial, corporate or business loans subject to the individual and aggregate restrictions provided therein. Sections 235(28-b) and 380-j permit such institutions to acquire and lease personal property. Other provisions of the Banking Law empower such institutions to invest in loans secured by mortgages on commercial real estate, and such loans are often made to corporate obligors or other business entities. Moreover, such institutions may, under other provisions of law, invest in certain corporate interest-bearing securities. The authority to make the investments referred to in this section are additional authority and, except as specifically provided herein, shall not be deemed to limit the investment authority of such institutions which is provided under any other provision of law.

3 CRR-NY 77.2 Definition {#sec-3-crr-ny-77.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.2}

For purposes of this Part, the term commercial, corporate or business loan shall mean any loan, represented by a promissory note, or other evidence of indebtedness, not otherwise authorized or permitted by any other provision of the Banking Law, made by a savings bank or a savings and loan association:

(a) to a partnership, corporation or unincorporated association; or

(b) to a natural person for purposes other than personal, family or household use;

provided that any loan that would otherwise qualify as a commercial, corporate or business loan but for the fact that such loan also qualifies as an investment under section 235(31) or 379(7) of the Banking Law may, at the election of the savings bank or savings and loan association, be treated as a commercial, corporate or business loan for purposes of this Part. In determining whether a loan to a natural person is a commercial loan, a savings bank or savings and loan association may rely on the borrower's statement of purpose if accepted in good faith.

3 CRR-NY 77.3 Loans to one borrower {#sec-3-crr-ny-77.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.3}

(a) The aggregate unpaid principal amount of all commercial, corporate and business loans (including lease financing) to any borrower made by a savings bank or savings and loan association shall, if unsecured, not exceed 15 per centum of the net worth of such savings bank or savings and loan association or, if secured, shall not exceed such percentage amounts in relation to net worth as are applicable to banks and trust companies under the provisions of section 103(1) of the Banking Law.

(b) In computing the total commercial, corporate and business loans by any savings bank or savings and loan association:

(1) to any natural person, there shall be included all commercial, corporate and business loans by the institution to any partnership or unincorporated association of which he is a member, and all commercial, corporate and business loans made for his benefit or for the benefit of such partnership or association;

(2) to any partnership or unincorporated association, there shall be included all commercial, corporate and business loans by the institution to its individual members and all commercial, corporate and business loans made by the institution for the benefit of such partnership or unincorporated association or any member thereof;

(3) to any corporation, there shall be included all commercial, corporate and business loans made by the institution for the benefit of the corporation. A loan shall be deemed to be made for the benefit of a corporation only to the extent that the proceeds of such loan:

(i) are to be loaned to the corporation;

(ii) are to be used for acquisition (otherwise than in connection with a public offering) from the corporation by a person in control of, or under common control with, the corporation of any stock or other securities issued by the corporation; or

(iii) are to be transferred to the corporation without fair and adequate consideration, and the discharge of an equivalent amount of debt previously incurred in good faith and for value shall be considered fair and adequate consideration. A loan shall not be deemed to be made for the benefit of a corporation if such loan is made to a person other than the corporation and is secured as provided in section 235(5-a), 235(6) or 380(1) of the Banking Law and regulations promulgated thereunder or is secured by collateral having an ascertained market value, or otherwise having a value as collateral as found in good faith by an officer of such institution, at least equal to the amount of the loan; provided that stock or other securities issued by, or a lien on property of, such corporation shall not be considered collateral for the purposes of this provision.

(c) Notwithstanding compliance by the institution with the provisions of subdivision (a) of this section, if the aggregate unpaid principal amount of commercial, corporate or business loans made by the institution to a borrower together with the aggregate unpaid principal amount of other loans or leases to and letters of credit opened for and the amount of other investments in, such borrower under other provisions of the Banking Law exceeds prudent lending standards, the department may criticize such undue concentration of credit and take such other supervisory action with respect thereto as may be deemed necessary or appropriate.

3 CRR-NY 77.4 Participations {#sec-3-crr-ny-77.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.4}

A savings bank or savings and loan association may participate in and invest in any loan:

(a) which, if originated by another savings bank or savings and loan association, satisfies all the requirements of this Part; or

(b) which, if originated by any other lender, is made either:

(1) to a partnership, corporation or unincorporated association; or

(2) to a natural person for purposes other than personal, family or household use.

Any participation or investment made pursuant to the provisions of this section shall be deemed to be a commercial, corporate or business loan made by the participating institution for purposes of this Part. No authority to participate in letters of credit shall be deemed granted hereunder.

3 CRR-NY 77.5 Letters of credit {#sec-3-crr-ny-77.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.5}

For purposes of sections 235(8-c) and 380-k of the Banking Law, a commercial, corporation or business loan shall be deemed to include commercial letters of credit and standby letters of credit as a category of commercial loan transaction so long as they meet the requirements of this section. However, all amounts to be drawn under commercial letters of credit and the amounts for which a savings bank or savings and loan association makes a commitment under a standby letter of credit are to be aggregated and shall usually be considered unsecured loans. Consequently, they shall be subject to the 15 per centum unsecured loan limit per borrower. The following requirements apply to commercial letters of credit and to standby letters of credit:

(a) each letter of credit must conspicuously state that it is a letter of credit;

(b) the institution's undertaking must contain a specified expiration date or must be for a definite term;

(d) the institution's obligation to pay must arise only upon presentation of a draft or other documents as specified in the letter of credit and the institution must not be called upon to determine questions of fact or law at issue between the parties to the underlying transaction; and

(e) the customer of the institution must have an unqualified obligation to reimburse the savings bank or savings and loan association for payments made under the letter of credit.

All amounts representing obligations entered into under commercial or standby letters of credit must be reported to the Board of Trustees of the savings bank or the Board of Directors of the savings and loan association in the same manner as set forth for loans in section 252 of the Banking Law.

3 CRR-NY 77.6 Leasing {#sec-3-crr-ny-77.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.6}

(a) Pursuant to Banking Law, sections 235(28-b) and 380-j, a savings bank and a savings and loan association may acquire and lease personal property.

(b) Such leases are subject only to the same limitations as are imposed on such investments for commercial banks or trust companies under Banking Law, section 96(12) and, to the extent they are deemed to be loans, to individual borrowing limitations.

(c) For loan limit purposes, such leases are considered to be secured loans to the lessee except to the extent there is a net unrecovered investment at the end of the lease term. To that extent, the lease is considered an unsecured loan.

(d) Lease payments are considered to be in the nature of rent and not interest.

(e) All leases authorized hereunder must be on a nonoperating basis. For instance, for purposes of automobile leasing, the savings bank or savings and loan association may not directly or indirectly, provide for the servicing, repair or maintenance of the leased vehicle during the lease term; purchase parts and accessories in bulk or for an individual vehicle after the lessee has taken delivery of the vehicle; provide for the loan of an automobile during servicing of the leased vehicle; purchase insurance for the lessee; or provide for the renewal of the vehicle's license merely as a service to the lessee where the lessee could renew the license without authorization from the lessor.

3 CRR-NY 77.7 [Repealed] {#sec-3-crr-ny-77.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.7}

3 CRR-NY 77.8 to 77.9 to 77.9 [Renumbered] {#sec-3-crr-ny-77.8-to-77.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 77.8 to 77.9}

Part 78 PERSONAL LOAN DEPARTMENTS OF SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 78.1 Explanatory note {#sec-3-crr-ny-78.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 78.1}

Sections 235(8-b) and 380-i of the Banking Law permit savings banks and savings and loan associations, respectively, to operate personal loan departments. Other long-standing provisions of the Banking Law empower savings banks and savings and loan associations to invest in certain secured and unsecured personal loans. The authority to operate a personal loan department pursuant to sections 235(8-b) and 380-i is an additional authority and, except as specifically provided herein, shall not be deemed to limit the investment authority of a savings bank or savings and loan association which is provided under any other provision of the law.

3 CRR-NY 78.2 General authority for personal loan department {#sec-3-crr-ny-78.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 78.2}

A savings bank and savings and loan association may operate a personal loan department under the same requirements as are provided in section 108(4) of the Banking Law for a bank or trust company and may make any loan or advance that a bank or trust company may make pursuant to the provisions of section 108(4)-(5) of the Banking Law on the same terms and conditions as provided in such sections.

3 CRR-NY 78.3 [Repealed] {#sec-3-crr-ny-78.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 78.3}

3 CRR-NY 78.4 [Repealed] {#sec-3-crr-ny-78.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 78.4}

Part 79 REVERSE MORTGAGE LOANS

3 CRR-NY 79.1 Scope and application of this Part {#sec-3-crr-ny-79.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.1}

Article 12-D of the Banking Law requires certain lenders engaged in the business of making mortgage loans to obtain a license from the superintendent. Article 12-D of the Banking Law also provides exemptions from such licensing requirements for certain exempt organizations, provided that the superintendent is notified that they are making mortgage loans in this State and they comply with any regulations applicable to persons so engaged. This Part sets forth requirements that are applicable to both licensed entities and exempt organizations engaged in the making of reverse mortgage loans in this State. General Regulations of the Superintendent Parts 80 and 82 of this Title shall not apply to RPL 280-b loans to the extent that such application would conflict with the HUD/HECM reverse mortgage loan program.

3 CRR-NY 79.2 Definitions {#sec-3-crr-ny-79.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.2}

For purposes of this Part:

(a) The term advertisement means any information, whether disseminated through print or published material, electronic media, audio or visual material, or descriptive literature used to inform consumers about or induce consumers to apply for a reverse mortgage loan. The term advertisement shall not include:

(1) direct personal contacts relating to the negotiation of a specific transaction;

(2) informational material, such as, interest-rate and loan-term memos, distributed only to business entities;

(3) notices required by Federal or State law, if the law mandates that specific information be displayed and only the information so mandated is included in the notice;

(4) news articles the use of which is controlled by the news medium

(5) market-research or educational materials that do not solicit business; or

(6) communications about an existing credit account, such as a promotion encouraging additional or different uses of an existing credit card account

(b) The term application fee means any fee collected in connection with an application for a reverse mortgage loan including any charge for soliciting, processing, placing or negotiating a reverse mortgage loan. The term application fee does not include a commitment fee or a lock-in fee, nor does such term include payments to be remitted to third-party service providers.

(c) The term arrears means unpaid amounts due after expiration of the deadline, all grace periods and payment agreements.

(d) The term authorized designee means the third party designated by the mortgagor to receive notices in accordance with sections 280(2)(f), 280-b(2)(m) and (6) of the Real Property Law.

(e) The term broker means a mortgage broker as defined in article 12-D of the Banking Law.

(f) The term business day means any day of the week except for Saturday, Sunday and any legal holiday.

(g) The term clear and conspicuous means that the statement, representation or term being disclosed is of such size, color, contrast, and/or audibility and is so presented as to be readily noticed and understood by the person to whom it is being disclosed. If such statement is necessary as a modification, explanation, or clarification to other information with which it is presented, it must be presented in close proximity to the information it modifies, in a manner so as to be readily noticed and understood.

(h) The term counseling statement means a written disclosure prepared either by the local or county office for the aging or in accordance with section 79.9(a)(1) of this Part, on the advisability and availability of independent counseling and information services.

(i) The term eligible surviving non-mortgagor spouse means the spouse of a mortgagor, who is not also a mortgagor, and who:

(1) met, and continues to meet the requirements of the subject reverse mortgage loan both at the time of the loan closing and at the time of the mortgagor’s death;

(2) was either:

(i) legally married - as determined by the law of the state in which the spouse and mortgagor reside(d) or the state of celebration - to the mortgagor at the time of loan closing and who remained married to the mortgagor until the mortgagor’s death; or

(ii) engaged in a committed relationship with the mortgagor akin to marriage but was prohibited, at the time of the loan origination, from legally marrying the mortgagor based on the gender of both the mortgagor and non-mortgagor spouse, but was legally married prior to the death of the mortgagor, as determined by the law of the state in which the spouse and mortgagor reside(d) or the state of celebration, to the mortgagor and remained married until the death of the mortgagor; and

(3) currently resides and resided in the property secured by the reverse mortgage loan as his or her principal residence at origination of the reverse mortgage loan and throughout the duration of the life of the reverse mortgage loan.

(j) The term exempt organization means any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the comptroller of the currency to transact business in this State, national bank, Federal savings bank, Federal savings and loan association, Federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state, or any instrumentality created by the United States or any state with the power to make mortgage loans.

(k) The term housing counselor means a Housing and Urban Development counselor or any other counseling service as listed on a counseling statement supplied by the county or local office for the aging.

(l) The term lender means any person or entity engaged in the business of making reverse mortgage loans.

(m) The term mortgagee means a lender or lenders, an assignee or assignees thereof, or a servicer or servicers acting on behalf of a lender or assignee.

(n) The term mortgagor means each original borrower on the reverse mortgage loan and his or her heirs, executors, administrators and assignees.

(o) The term principal place of residence means living and sleeping quarters.

(p) The term property charges means charges related to the mortgaged property’s property taxes, hazard insurance premiums, any applicable flood insurance premiums, ground rents, condominium fees, planned unit development fees, homeowners’ association fees, water/utility bills and any other special assessments that may be levied by any municipality or pursuant to State Law.

(q) The term reverse mortgage loan means an RPL 280 loan, RPL 280-a loan or RPL 280-b loan, which is secured by a first mortgage on real property, located in the State of New York, improved by a one- to four-family residence or condominium that is the residence of the mortgagor, the proceeds of which are advanced to the mortgagor during the life of the loan in equal installments, in advances through a line of credit or otherwise, in lump sums, or through a combination thereof.

(r) The term RPL 280 loan means a loan made under section 280 of the Real Property Law.

(s) The term RPL 280-a loan means a loan made under section 280-a of the Real Property Law.

(t) The term RPL 280-b loan or HUD/HECM loan means a loan made under the Demonstration Program of Insurance of Home Equity Conversion Mortgages for Elderly Homeowners reverse mortgage loan program, 12 USC section 1715z-20 and in accordance with section 280-b of the Real Property Law.

(u) The term servicer means a mortgage loan servicer as defined in Part 418 of this Title.

(v) The term set aside account means any account that a mortgagee establishes or controls to pay some or all property charges on behalf of a mortgagor with respect to a reverse mortgage loan, including charges that the parties have voluntarily agreed that the mortgagee should collect and pay, and includes any arrangement by which the mortgagee reserves a portion of the mortgagor’s principal for subsequent payment of property charges or conditional repairs under a repair rider. The definition encompasses any account established for any of the above purposes, regardless of title given, including a reserve account, reserve fund, repair set aside account, life expectancy set aside account or escrow account. For purposes of this section, the term set aside account excludes any account that is under the mortgagor’s total control such as a line of credit, as detailed in section 79.12(c) of this Part.

(w) The term termination shall mean acceleration of a reverse mortgage loan as a result of the borrower’s mortgagor’s default.

3 CRR-NY 79.3 Authority to make reverse mortgage loans {#sec-3-crr-ny-79.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.3}

(a) No person or entity may engage in the business of making a reverse mortgage loan unless they are licensed to make mortgage loans pursuant to section 591 of the Banking Law or are an exempt organization.

(b) In addition to the requirements of subdivision (a) of this section, effective March 5, 2020, no person or entity may engage in the business of making a reverse mortgage loan unless they have applied and are granted such right by the superintendent.

(c) An application for authority to make reverse mortgage loans must be made in accordance with the following, as applicable:

(1) Any person or entity licensed pursuant to section 591 of the Banking Law must apply to the department for authority to make reverse mortgages loans and demonstrate, to the satisfaction of the superintendent, the following:

(i) the lender satisfies the financial responsibility requirements set forth in section 410.1 of this Title and:

(a) as it relates to the origination of RPL 280 and RPL 280-a loans, maintains an irrevocable standby letter of credit in favor of the lender:

(1) the irrevocable standby letter of credit must meet the following criteria:

(i) the initial term is at least two years;

(ii) it is provided by a financial institution that is not affiliated with the lender; and

(iii) it is in an amount necessary to fund all reverse mortgage loan requirements anticipated to be made over the next 12 rolling months or an amount to be determined by the superintendent and published on the department’s website, whichever is greater.

(2) The standby letter of credit requirements above do not apply to the origination of a loan:

(i) which is closed during a period of time when the lender has held a rating of either 4A1 or 5A1 from Dun & Bradstreet Credit Services for the immediately preceding three consecutive years; or

(ii) the proceeds of which are fully dispersed at the loan closing.

(b) as it relates to the origination of RPL 280-b loans, maintains authorization from the Federal Housing Administration (FHA) to originate FHA loans.

(ii) As it relates to the origination of RPL 280, 280-a and 280-b loans, at the time of application and for as long as the lender makes reverse mortgage loans, the lender will maintain a minimum capital amount as published on the department’s website. A lender may rely on the capital of its parent to satisfy the requirements of this subdivision provided that for any year in which a lender seeks to so rely, it shall provide to the department a certified financial statement of the parent showing a net worth of at least an amount to be determined by the superintendent and published on the department’s website, as of the close of its most recent fiscal year and a binding written commitment from the parent to the entity to make a minimum of such amount available to the lender as a capital contribution in connection with its reverse mortgage lending program; and

(iii) The following documents, as applicable, must be provided with any application made pursuant to subdivision (c) of this section:

(a) a copy of the standby letter of credit;

(b) an audited financial statement for the most recent fiscal year;

(d) a copy of the lender’s approval letter authorizing the origination of FHA loans;

(e) proof of the lender’s 4A1 or 5A1 rating from Dun & Bradstreet Credit Services; and

(f) such other information and documents as shall be requested by the superintendent.

(2) The application provisions of paragraph (1) of this subdivision shall not apply to exempt organizations provided that such exempt organization notifies the superintendent that it is making reverse mortgage loans in this State and submits the following information and documents as applicable:

(i) the name, address, telephone number, and principal place of business of the exempt organization;

(ii) the name of an executive officer responsible for the exempt organization’s reverse mortgage loan program;

(iii) the basis for its exemption pursuant to section 590(1)(e) of the Banking Law;

(iv) the designation by any out-of-state exempt organization of an agent within the State of New York for service of process for any matter arising from a reverse mortgage loan;

(v) a copy of any trust agreement entered into between the exempt organization and a trustee pursuant to section 79.5(g)(2) of this Part;

(vi) the name, address, telephone number, and principal place of business of any trustee and a designation in accordance with the requirements of section 131(3) of the Banking Law.

(vii) such other information and documents as shall be requested by the superintendent.

(d) In order to facilitate an orderly transition and minimize disruption in the mortgage marketplace, any person or entity, subject to the requirements of subdivision (b) of this section, who was both licensed to make mortgage loans pursuant to section 591 of the Banking Law, or is an exempt organization and engaged in the business of making RPL 280-b loans as of March 5, 2020, shall file with the superintendent, by June 5, 2020, an application in accordance with subdivision (c) of this section.

(e) All persons and entities covered by this subdivision may continue to engage in the business of making RPL 280-b loans until the earlier of the date they receive notice that their application under this Part has been denied or April 5, 2021 in the case of those covered by paragraph (d)(1) of this section or June 5, 2021 in the case of those covered by paragraph (d)(2) of this section.

3 CRR-NY 79.4 Advertising restrictions {#sec-3-crr-ny-79.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.4}

(a) Any advertisement for a reverse mortgage loan shall indicate the name of the entity and, in the event the entity maintains an office in New York, the street address for such office.

(b) Disclosures required by this section shall be clear and conspicuous.

(1) Material terms. An advertisement that references any of the following terms shall include the appropriate qualification listed in subparagraph (2) of this paragraph:

(i) the mortgage insurance premium percentage;

(ii) the interest rate;

(iii) the number of payments or period of payments to the mortgagor;

(iv) the amount of any payments; or

(v) the amount of any origination fees.

(2) An advertisement referencing any of the terms listed in subparagraph (1) of this paragraph shall include the following disclosures as applicable:

(i) the terms provided are projections and actual terms may vary;

(ii) the terms of repayment, which reflect the obligations over the full term of the loan, including any payment of property charges; and

(iii) that origination fees for HUD/HECM loans are capped.

(d) Every lender and broker shall maintain samples of all of its advertisements including, commercial scripts of all radio broadcasts, television broadcasts, and electronic media, for a period of three years from the date of last publication.

3 CRR-NY 79.5 Requirements for reverse mortgage loans {#sec-3-crr-ny-79.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.5}

All reverse mortgage loans shall comply with the following requirements:

(a) The security instrument shall expressly and conspicuously bear a legend identifying the security as a “reverse mortgage.”

(b) The mortgagor may prepay any reverse mortgage loan without penalty at any time. The payment of any fees or charges, such as a termination fee, that otherwise would be due at maturity without prepayment shall not be deemed a penalty for these or any other purposes.

(c) Mortgagees shall be prohibited from using or attaching any property or asset of the mortgagor except the real property securing the reverse mortgage loan.

(d) In the event that a mortgagee fails to make payment of or remit to the mortgagor any monies required under any reverse mortgage loan within 15 calendar days of its due date, the mortgagee shall forfeit twice the interest that would have been earned on the outstanding loan principal for the entire period during which payments to the mortgagor were late, unless the mortgagee otherwise has the right to terminate the reverse mortgage loan pursuant the “Lender’s Limited Waiver of the Right of Foreclosure” executed in accordance with section 79.7(d) of this Part and due notice has been provided to the mortgagor or authorized designee.

(e) No reverse mortgage loan commitment or approval shall be issued by a lender until the applicant presents a counseling acknowledgment (herein defined), provided in accordance with section 79.9(a)(4) of this Part and including the name address telephone number and signature of the applicant and, if applicable, the non-mortgagor spouse and the housing counselor, as well as, the date of the counseling which must be no more than 6 months prior to the date of the signing of the commitment.

(1) A HUD Certificate of HECM Counseling may be substituted for the counseling acknowledgment for RPL 280-b loans.

(2) All completed counseling acknowledgments and HUD Certificates of HECM Counseling shall be maintained by the mortgagee, for inspection by the superintendent, in an accurate, reproducible, and accessible format for the entire term of the reverse mortgage loan, and thereafter in accordance with applicable statutes.

(f) Interest shall only accrue from the time monies are actually advanced to or on behalf of the mortgagor. Accrued interest may be added to the loan principal.

(g) A reverse mortgage loan which provides for the purchase of an annuity shall comply with the following conditions as applicable:

(1) the company that issues the annuity must have a rating of excellent or superior from A.M. Best Company and must be licensed by the State of New York; and

(2) if a trustee holds the annuity in trust during the life of the mortgagor, then:

(i) the trustee must be a banking organization or a trust company which is incorporated, chartered, organized or licensed under the laws of this State or any other state or the United States;

(ii) pursuant to section 131(3) of the Banking Law, any out-of-state trustee must appoint the superintendent as agent for service of process for any matter arising from a reverse mortgage loan made to a New York resident;

(iii) the trust agreement must provide that it is governed by New York law;

(iv) payments derived from the annuity must be paid by the trustee directly to the mortgagor irrespective of whether the payment is made on behalf of the mortgagee; and

(v) the mortgagor must have a beneficial interest in the trust irrespective of whether the mortgagee also has a beneficial interest in the trust.

(h) Except for purchase money reverse mortgage loans, the issuance of a commitment is a prerequisite to the closing of any reverse mortgage loan and an applicant (or mortgagor) shall not be bound for three business days after acceptance, in writing, of such commitment during which time, such applicant (or mortgagor) reserves the right to cancel the commitment but may still be responsible for fees actually paid to third parties. An applicant may not waive the provisions of this subsection.

(i) A mortgagee may, at its option, for the period of time commencing at the end of the loan term, or 10 years after the reverse mortgage loan commences, whichever occurs first, and ending at such time as the reverse mortgage loan is paid in full, receive no more than 20 percent of the future appreciation of the property securing the loan, i.e., “shared appreciation,” or charge a fixed rate of interest on the outstanding balance of monies advanced under the loan or any combination thereof. Such appreciation shall not be considered interest for purposes of any law regulating the maximum rate of interest which may be charged, taken or received, including pursuant to sections 190.40 and 190.42 of the Penal Law. Loans which contain “equity participation,” may not provide for any other forms of equity sharing or shared appreciation.

(j) All mortgagor shall retain the right to lifetime possession of the real property that serves as security for a reverse mortgage loan, as long as there is no event that would allow the mortgagee to terminate the reverse mortgage loan pursuant to the “Lender’s Limited Waiver of the Right of Foreclosure” executed in accordance with section 79.7(d) of this Part.

(k) The security agreement must include the following:

(1) a list of termination events;

(2) the mortgagee’s obligation to notify the mortgagor or authorized designee, in writing, of any event that could lead to termination; and

(3) the name of a third-party, if any, chosen by the mortgagor as an authorized designee to whom the mortgagee is obligated to send written notice of any event that could lead to termination.

(l) Reverse mortgage loan applicants are required to wait three days after submitting an application before signing a commitment or in any way proceeding with a reverse mortgage loan. The three-day period cannot be waived.

(m) Requirements specific to RPL 280 and RPL 280-a loans.

(1) The maximum loan to value ratio for any loan at the time of loan closing shall not exceed 80 percent of the anticipated value of the property at anticipated loan maturity or at any time prior thereto. The loan to value ratio shall be calculated by dividing the numerator, as defined in subparagraph (i) of this paragraph, by the denominator, as defined in subparagraph (ii) of this paragraph.

(i) The numerator of the ratio shall include all principal, all accrued loan interest, all fees, costs and payments incurred in connection with the origination of the loan including but not limited to charges for the purchase of annuities, the payment of real estate taxes and insurance to the extent that a set aside account is established to fund real estate tax and insurance obligations or the lender has committed to advance funds to pay for such taxes and insurance on the property securing the reverse mortgage loan and any shared appreciation assuming:

(a) no prepayment of the reverse mortgage loan;

(b) any loan amounts, such as credit lines and set aside accounts, which may be drawn at the discretion of the mortgagor or by the mortgagee are drawn fully at the earliest opportunity;

(c) the historical interest rate if fixed or, if variable, the yearly average of the base index and margin chosen by the lender; and

(d) if applicable, a projected appreciation or depreciation rate for home prices which is determined by the same factor as is used in the denominator set forth in subparagraph (ii) of this paragraph.

(ii) The denominator of the ratio shall be determined by increasing or decreasing the appraised value of the real property (as determined at loan closing, or no earlier than 30 calendar days prior, by an independent certified or licensed appraiser as provided for in article 6-E of the Executive Law) by a factor that the creditor reasonably believes will be the average annual increase or decrease in the value of the real property securing the reverse mortgage loan from the loan closing until the anticipated loan maturity; provided, however, that this factor shall in no event exceed the average of the yearly changes in the Consumer Price Index for the geographic area closest to the real property for the eight years preceding the year in which the loan is made without the superintendent's prior written approval.

(iii) For a term reverse mortgage loan, the anticipated loan maturity shall be the date of maturity of the loan. (iv) For a tenure reverse mortgage loan, the superintendent may, in his or her discretion, review and approve the data and assumptions used to establish the anticipated loan maturity for each reverse mortgage loan.

(iv) For a tenure reverse mortgage loan, the superintendent may, in his or her discretion, review and approve the data and assumptions used to establish the anticipated loan maturity for each reverse mortgage loan.

(2) As an alternative to subdivision (1) of this section, the parties may agree that the total obligation of the mortgagor to the mortgagee arising from the reverse mortgage loan shall be no greater than 80 percent of the future appraised value of the property at maturity, calculated in accordance with the standards set forth in subparagraph (1)(i) of this subdivision. The 80 percent cap shall be exclusive of any actual losses incurred by the mortgagee as a direct result of a breach of a loan covenant by the mortgagor. The difference between the principal and accrued interest and 80 percent of the actual value of the property at maturity shall be known as “equity participation.”

(3) At the end of the term for all RPL 280 and RPL 280-a term loans, the mortgagor may request that the real property securing the loan be reappraised to increase the payments made to the mortgagor or to extend the loan term. Except for term loans insured by any agency of the State of New York, such reappraisal may be performed at the mortgagee’s sole discretion. In all cases, the mortgagee may require the mortgagor to pay the cost of such reappraisal in advance. In the event the value of the property has increased, the mortgagee may increase the loan payments or extend the loan term (and, for term loans insured by any agency of the State of New York, must increase the loan payment(s) or extend the loan term), subject to the following:

(i) The loan-to-value ratio limitations, as determined pursuant to this Part as of the date on which the increase or extension would begin, shall not be exceeded.

(ii) Any existing insurance coverage shall be increased to insure the additional amounts to be due.

(iii) The mortgagor shall execute all documents reasonably requested by the mortgagee and pay all reasonable fees and costs associated with the increase in payments or the extension of the loan term provided that such fees and costs have been previously disclosed in writing to the mortgagor.

(4) A lender must, in accordance with the financial assessment form provided by the department, review all applicants for financial fitness as it relates to the payment of an applicant’s property charges. In the event that the results of the financial assessment require a set aside account to be established, such account may bear interest at a rate that is different from the interest rate on other advances made pursuant to the terms of the reverse mortgage loan. A mortgagee may only charge interest on advances actually made from the set aside account and not on the entire balance in the set aside account.

3 CRR-NY 79.6 Maintenance of real property securing reverse mortgage loans {#sec-3-crr-ny-79.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.6}

(a) Mortgagor shall be required to maintain the real property securing the reverse mortgage loan in a reasonably similar condition, state and repair as the property is in at the time of closing or after repairs have been made for which funds have been disbursed or set aside at closing for later disbursement and that the mortgagor agreed to make as a condition of the closing of the loan. For purposes of this section, the term “reasonably similar condition, state and repair” is relevant only to the extent that such condition, state or repair threatens to materially damage the property or its market value.

(b) If the mortgagor fails to maintain the real property securing the reverse mortgage loan in accordance with subsection (a) the mortgagee may arrange for such maintenance upon receiving consent to enter upon the premises, which is not to be unreasonably withheld by the mortgagor. Notwithstanding applicable state and federal rules and laws, a mortgagee may pay for maintenance work done in accordance with this section in the following ways:

(1) by deducting necessary amounts from a set aside account;

(2) by withholding from one or more monthly payments otherwise due to the mortgagor no more than 25 percent of each such monthly payment, until the repairs are paid for; or

(3) by adding the amount to the loan principal.

If a set aside account has been established, then, to the extent possible, the mortgagee must deduct the cost of the repair from such fund before choosing option paragraph (2) or (3) of this subdivision. If a set aside account has not been established, then the mortgagee may choose whether to proceed according to option paragraph (2) or (3) of this subdivision or a combination thereof.

(c) The mortgagee shall notify the mortgagor or authorized designee of the need for maintenance and, unless an imminent threat of material damage to the property or its market value exists, provide the mortgagor 90 calendar days before arranging for such maintenance. If an imminent danger to life or property exists, the mortgagee may proceed on as little as 48 hours’ notice to the mortgagor.

(d) The mortgagee shall have the right to inspect the real property securing the loan on 72 hours’ notice but not more often than is reasonably necessary to assure the real property securing the reverse mortgage loan is being maintained in a reasonably similar condition, state and repair as the property was in at the time of closing or after repairs have been made for which funds have been disbursed or set aside at closing for later disbursement and that the mortgagor agreed to make as a condition of the closing of the loan.

(e) Mortgagees must have written policies and procedures in place to allow for the appeal of any determination made in accordance with this section. Such policies and procedures must be made available to the mortgagor upon request.

3 CRR-NY 79.7 Termination of reverse mortgage loans {#sec-3-crr-ny-79.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.7}

(a) Reverse mortgage loans may be terminated by the mortgagee solely in the event of any of the following:

(1) the sale, conveyance, transfer or assignment of any part of the real property securing the loan or any of the mortgagor’s rights in the real property, whether voluntarily or involuntarily;

(2) the mortgagor’ death, or if there is more than one mortgagor, then the death of the last living mortgagor. If an eligible surviving non-mortgagor spouse lives at the mortgage premises, such spouse may live in the property for the rest of his or her life as long as they cure any default in payment of property charges and remain there as their primary residence;

(3) the mortgagor, without notifying the mortgagee of an anticipated date of return and making arrangements satisfactory to mortgagee for the maintenance of the real property, ceases, in any 365-day period, to use the real property as his or her principal place of residence or in excess of 180 nonconsecutive days. This provision is subject to the following:

(i) the mortgagee’s consent to the arrangements made pursuant to this paragraph shall not be unreasonably withheld;

(ii) a mortgagor staying in a rehabilitative facility or nursing home is not subject to the notice requirements of this subsection;

(iii) a mortgagor staying in a rehabilitative facility or nursing home will not trigger termination for failure to use the real property as his or her principal place of residence until such failure persists for 12 consecutive months.

(4) the mortgagor’s real estate taxes or insurance premiums, as required pursuant to the security agreement, are in arrears;

(5) the mortgagor:

(i) is the subject of an involuntary petition in bankruptcy that is not discharged within 90 calendar days after it is filed; or

(ii) applies for or permits the appointment of a receiver, trustee or custodian for the real property securing the loan which is not discharged within 90 calendar days after the date of appointment; provided, however, that the appointment of a conservator, guardian, committee or other fiduciary of the person to act on the mortgagor' behalf in connection with a determination by a court that the mortgagor is incompetent will not terminate the loan; or

(6) the mortgagor fails to maintain the real property in accordance with section 79.6 of this Part.

(b) The mortgagor, his or her authorized designee or estate shall notify the mortgagee, in writing, immediately upon learning of the occurrence of any event listed in subdivision (a) of this section.

(c) Within 30 business days of learning of the occurrence of any event listed in subdivision (a) of this section, the mortgagee shall notify the mortgagor and their authorized designee, in writing, of such occurrence, along with information on the right to cure. The mortgagee must then allow the mortgagor 45 calendar days to cure. A mortgagee may only terminate a reverse mortgage loan if the mortgagor fails to cure any termination event within such 45-calendar day period.

(d) All lenders must prepare a form entitled “Lender's Limited Waiver of the Right of Foreclosure.” This document shall, clearly and conspicuously, identify every event, as provided for in this section that would give the mortgagee authority to terminate the loan, and shall be provided to and signed by the mortgagor at the closing of every loan. The lender shall furnish a copy of the executed form to every mortgagor at closing and shall keep the original form on file for the life of the loan, and thereafter in accordance with applicable statutes.

(e) A mortgagor may designate no more than two persons or entities to whom the mortgagee shall send copies of all notices that this section requires the mortgagee to send to the mortgagor. It shall be the obligation of the mortgagor and any authorized designee to provide the mortgagee with current mailing information for any person designated to receive such additional notice.

(f) In the event that a mortgagee seeks to foreclose on a reverse mortgage loan solely on the basis of any event listed in paragraphs (a)(3) or (4) of this section, the mortgagee shall make efforts to verify the mortgagor’ principal place of residence and, if, during the verification process, no responses are received in response to mailings relating thereto, such mortgagee shall cause a telephone call to be made to the mortgagor, or, if the mortgagor is unreachable by telephone, either an authorized designee(s) or, in the event that the mortgagor has no authorized designee, then the local or county office for the aging and an in person visit to be made to the mortgagor at the mortgaged real property. During such visit, the mortgagee or its agent shall provide clear information as to who they are, that the visit pertains to the reverse mortgage loan, the reason for the home visit, and the telephone number to call for further information. The mortgagee must wait at least 30-days following such visit, in addition to any additional time or notice requirements specified by any other provision of law, before initiating a foreclosure action on the basis of any event listed in paragraphs (a)(3) and (4) of this section. If any mortgagor contacts the mortgagee and provides proof of compliance with the relevant residency requirements after such visit but before the commencement of a foreclosure action, the mortgagee shall be barred from initiating such foreclosure action unless and until such time as a new event, as outlined in subdivision (a) of this section, occurs.

3 CRR-NY 79.8 Permitted fees, costs and payments {#sec-3-crr-ny-79.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.8}

(a) At the time of taking an application, and at no time prior, lenders or brokers may charge the following costs and fees, as applicable, and none other, provided that the disclosures required by section 79.9(a) of this Part have been provided to each applicant, and that the costs and fees are fully disclosed, reasonably related to the services provided to or performed on behalf of the applicant, and, when applicable, whether any cost or fee charged to the applicant for a service to be provided by a third-party provider is actually paid by the lender or broker to a third-party provider:

(1) an application fee, provided that:

(i) the amount, along with whether the fee is non-refundable, is fully disclosed prior to the taking of an application; and

(ii) the fee is not derived as a percentage of the principal amount of the loan or amount financed;

(2) the cost of appraising or surveying the property once; and

(3) the cost of a credit report.

(b) At the time of closing, and at no time prior, other than principal, interest, shared appreciation and equity participation, lenders or brokers may charge, in connection with the origination of reverse mortgage loans, the following fees, costs and payments, as applicable, and none other, provided that such fees, costs and payments have been disclosed pursuant to section 79.9 of this Part, are reasonably related to the services provided to or performed on behalf of the applicant, and provided further that, when applicable, the costs or payments are actually paid by the lender or broker to a third-party provider:

(1) a loan origination fee;

(2) the cost of document preparation;

(3) the cost of a title examination, an abstract of title and title insurance;

(4) the cost of a search for tax liens existing at the time of closing if such search is not included in the title examination;

(5) the payment to discharge any existing liens on the real property securing the loan;

(6) the cost of recording the reverse mortgage loan;

(7) the cost of actual attorney’s fees charged in connection with the closing of such loan;

(8) the cost of a flood zone search;

(9) the cost of an inspection to be paid in connection with the origination of the loan but not subsequent to the loan closing;

(10) the payment for any repairs contracted for at or before the loan closing irrespective of whether such repairs are completed at time of closing and/or whether the funds have been set aside;

(11) a one-time payment for a tax reporting service;

(12) the cost of purchasing mortgage insurance;

(13) the payment of real estate taxes and property insurance; and

(14) the cost of mortgage brokerage services, not to exceed three points based on the value of the real property securing the reverse mortgage loan at the time of loan closing, as such service is defined in Part 38 of this Title and which service is rendered by a person or entity authorized by article 12-D of the Banking Law.

(c) At termination of the loan, mortgagees may charge a termination or maturity fee, which shall be no more than the actual cost of arranging for the sale or court-approved foreclosure of the real property securing the loan. Such fee may include actual broker’s fees, advertising costs, moving and/or storage costs and legal and other fees representing actual fees or costs charged to the mortgagee.

(d) Mortgagees may not charge any fees for the establishment, maintenance or termination of set aside account with respect to any reverse mortgage loan.

(e) Nothing herein shall be construed as prohibiting the inclusion of any fees or charges in an insurance claim related to such reverse mortgage loan.

3 CRR-NY 79.9 Required disclosures and counseling for reverse mortgage loans {#sec-3-crr-ny-79.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.9}

(a) Upon accepting an application or charging any fee authorized under section 79.8(a) of this Part, each loan applicant must be provided with a counseling packet, including the following documents, as is relevant to the type of loan being offered:

(1) A counseling statement – the following notice, or a notice to like effect, in Times New Roman, 28-point type face, on a separate sheet:

A reverse mortgage loan is a complex financial product that provides a means of using the equity you have built up in your home, or the value of your home, as a source of additional income. If you decide to obtain a reverse mortgage loan, you will sign binding legal documents that will have important legal and financial implications for you and your estate.

It is therefore important that you consult a housing counselor, in addition to, tax, legal and financial advisers regarding entitlements and tax and estate planning consequences of a reverse mortgage loan.

Your lender must provide a list, approved by the Department of Financial Services, of housing counselors available in your community.

Senior citizen advocacy groups advice against using the proceeds of a reverse mortgage loan to purchase an annuity or related financial product. If you are considering obtaining lump sum proceeds for this purpose or any other purpose, you should discuss the financial implications of doing so with your tax, legal and financial advisors, as well as, your housing counselor and family members.

IMPORTANT NOTICE REGARDING THE COOLING-OFF PERIOD: New York State requires a 3-day cooling-off period after the submission of an application for a reverse mortgage loan. During this 3-day period of time, you cannot be required to sign a commitment or in any way proceed with the loan. The purpose of this requirement is to provide you with time to consider whether to secure a reverse mortgage loan. Potential borrowers are advised to seek additional information from a housing counselor or other appropriate professional during this 3-day period. The 3-day cooling-off period cannot be waived.

Interest accrues from the time monies are advanced to or on behalf of the mortgagor.

You have a right to designate a third party to be notified in writing of any event that could lead to termination of the reverse mortgage loan and to whom a copy of any foreclosure documents must be furnished.

(2) Additional disclosures – an additional notice including the following information:

(i) the disclosing party’s toll-free telephone number for questions, comments or complaints. If there is no toll-free telephone number, the disclosing party must disclose that it will accept collect calls;

(ii) the telephone number and internet website address provided by the Federal Department of Housing and Urban Development for the purposes of acquiring reverse mortgage loan counseling;

(iii) a notice that the mortgagor or applicant can submit written complaints to the New York State Department of Financial Services, Mortgage Banking, at the address and website set forth in section 1.1 of Supervisory Policy G 1 of this Title;

(iv) a list of every event which would allow the mortgagee to terminate or accelerate the loan or could otherwise result in the forced sale of the mortgaged property. Such events shall be explained clearly and in a manner which ensures that the applicant reasonably understands their implications. If applicable, the list shall be accompanied by an explicit warning that the mortgagor may be compelled to move out of his or her home at the expiration of the loan term;

(v) the only asset of the mortgagor which may be used to satisfy the reverse mortgage loan is the real property securing the loan, subject to any limitation thereon as the mortgagor and mortgagee may agree to pursuant to section 79.5(c) of this Part;

(vi) the loan may be prepaid at any time without penalty, how the value of the home will be determined at the time of prepayment, and the method by which the then outstanding loan balance will be prepaid;

(vii) all fees, costs and payments to be paid by the mortgagor;

(viii) a description of any conditions or limitations on the refinancing or extension of any loan, and if applicable, the mortgagor’ right to refinance or extend the loan;

(ix) if applicable, the availability of an annuity, whether an annuity will be required, and if there is an annuity, when the annuity payments will commence, who will own the annuity and, any affiliation between the disclosing party and the company from which the annuity will be purchased;

(x) whether the broker or any entity acting in a mortgage brokerage capacity, as a general business practice, utilizes the services of two or fewer lenders, and if so, the name(s) of the lender(s);

(xi) for term loans, a schedule and explanation of estimated payments to the mortgagor, whether or not property taxes and insurance premiums are to be deducted from such payments, and the total payment in dollars over the term of the loan. In addition, the disclosure shall state the repayment date and other events which cause the loan to become due and payable;

(xii) for tenure loans, a schedule of estimated payments to the mortgagor shall be furnished. The lender or broker shall label such schedules as “estimates;”

(xiii) a statement indicating whether a set aside account is required to pay property charges and, if so, an approximation of the amount to be set aside;

(xiv) a statement indicating whether and what type(s) of mortgage and/or property insurance will be required and the cost of any premiums, broken down monthly and over the life of the loan;

(xv) if applicable, that the loan provides for the mortgagee to receive a percentage of the future appreciated value of the property, i.e., “shared appreciation,” what that percentage is, and the method of calculating such amount. In addition, the lender shall provide both a narrative explanation and an example of the application of its methodology. This example must use as its projected real estate appreciation or depreciation rate for home prices, the average of the yearly changes in the Consumer Price Index for Shelter for New York-Newark-Jersey City area for the eight years preceding the year in which the loan is made;

(xvi) the interest rate(s) to be charged on the outstanding principal and whether the rate(s) are fixed, variable or both. For a term loan with a fixed rate of interest, the lender or broker shall also disclose the total interest payable on the loan principal, assuming maturity of the loan at expiration of the term. For a term loan with a variable rate of interest, the lender shall disclose also the estimated total interest payable on the loan principal using the yearly average of the base index and margin chosen by the lender for the eight-year period preceding the loan closing and assuming the maturity of the loan at expiration of the term. A shared appreciation mortgage constitutes a variable interest rate mortgage and is subject to the same disclosure requirements state and federal law imposes on all variable interest rate mortgages. For tenure reverse mortgage loans, the same disclosures shall be made, except that maturity shall be assumed at the actuarial life expectancy of the mortgagor, or, if there is more than one mortgagor, the younger of the mortgagors; and

(xvii) that the loan provides for the lender to receive any form of equity participation the maximum total percentage obligation of the mortgagor to the lender arising from the reverse mortgage loan, what is included in this maximum and what is excluded from it. In addition, the lender shall provide both a narrative explanation and an example demonstrating equity participation.

(3) Counseling checklist – a checklist of issues to be discussed with a housing counselor, printed on a separate sheet of paper in Times New Roman 28-point font and including the following:

(i) how unexpected medical or other events that cause the applicant to move out of the home earlier than anticipated, either permanently or for more than one year, will impact the projected total annual loan cost of the mortgage;

(ii) the extent to which the applicant’s financial needs could be better met by options other than a reverse mortgage loan;

(iii) whether the applicant intends to use the proceeds of the reverse mortgage loan to purchase an annuity or other insurance products and the consequences of doing so;

(iv) the effect of repayment of the loan on non-borrowing residents of the home after all mortgagors have died or permanently left the home;

(v) the applicant’s ability to finance routine or catastrophic home repairs, especially if maintenance is a factor that may determine when the mortgage becomes payable or will allow the mortgagee to accelerate or terminate the reverse mortgage loan;

(vi) a statement that the reverse mortgage loan has tax and estate planning consequences and may affect levels of, or eligibility for, government benefits, grants or pensions, and that applicants are advised to explore those matters with appropriate professionals; and

(vii) the ability of the applicant to finance alternative living accommodations, such as assisted living or long-term care nursing home registry, after the applicant's equity is depleted.

(4) Counseling acknowledgment– a blank acknowledgment, printed on a separate sheet of paper, allowing for an applicant to choose from the following options:

(i) the terms of the reverse mortgage loan have been explained, in-person, by an attorney, a housing counselor or any other in-person counseling services indicated on the counseling statement; and

(ii) either:

(a) for RPL 280-b loans. The applicant, although made aware of the importance of in-person counseling and its local availability through the provision of such information by the lender, chooses to engage in the required counseling via telephone; or

(b) for RPL 280 and RPL 280-a loans. The applicant, although made aware of the importance of counseling and its local availability through the provision of such information by the lender, chooses not to take advantage of in-person counseling services.

(b) Prior to executing a commitment, the lender shall provide the following notice:

IMPORTANT NOTICE REGARDING THE RIGHT TO CANCEL: The State requires a 3-day right to cancel period after the signing of a commitment for reverse mortgage loan. During this 3-day period of time, you have the right to cancel and cannot be required to close or proceed with the loan but may still be responsible for fees actually paid to third parties. The purpose of this requirement is to provide you with time to reconsider your decision. Potential borrowers may wish to seek additional information from a housing counselor or other appropriate professional during this 3-day period. The 3-day right to cancel period cannot be waived.

(c) Six months prior to the end of a term loan, the mortgagee shall notify the mortgagor or an authorized designee, in writing, if applicable:

(1) that the mortgagor will be responsible to make real estate tax and insurance payments; and

(2) that the mortgagor will have to vacate his or her home upon the expiration of the term and the exact date that such move-out is required.

(d) All notices required by this subdivision must be mailed in hard copy to each applicant or mortgagor unless each applicant or mortgagor has consented in writing to receiving notice electronically. Thereafter, any such electronic notice must comply with the following requirements:

(1) no electronic or digital signature shall be deemed acceptable unless completed in accordance with article 3 of the New York State Technology Law;

(2) receipt of all electronic notices must be confirmed through the use of a “required confirm button” without which the transaction may not proceed further;

(3) a hard-copy of any disclosures sent electronically shall be mailed, within three business days of the electronic transmission, to each applicant or mortgagor who indicates that he or she does not have the computer capacity to download and print such disclosures;

(4) a mortgagee shall either keep a copy of the digitally signed disclosures or be able to demonstrate that the transaction could not proceed further than the display of the disclosures without the applicant's use of the “required confirm button”; and

(5) in those instances, in which a hard copy is not mailed pursuant to paragraph (3) of this subdivision, the mortgagee must be able to demonstrate that information was obtained as to the applicant or mortgagor’s computer capacity to download and print such disclosures.

3 CRR-NY 79.10 Availability of RPL 280 and RPL 280-a loans {#sec-3-crr-ny-79.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.10}

(a) The requirements of Real Property section 280(10) shall not apply to the extent that the lender determines that there are no or insufficient applications for RPL 280-a loans, the individuals who apply for RPL 280-a loans do not qualify for such loans, or mortgage insurance for the principal and any accrued but unpaid interest for RPL 280-a loans is not available for the type of reverse mortgage loan made by the lender through the private market or any agency of the State of New York. Such determination may only be reached after making a documented and diligent effort to obtain such mortgage insurance, which determination shall be subject to review by the superintendent at his or her discretion.

(b) A lender shall, among other things:

(1) advertise its RPL 280-a loan programs to the same extent as it advertises its RPL 280 loan programs in all the counties in which the lender makes RPL 280 loans;

(2) ensure that all advertising materials, including brochures, for any reverse mortgage loans designed specifically for New York residents mention both the lender's RPL 280-a and RPL 280 loans and prominently display or state the lender’s name;

(3) make promotional materials for its RPL 280-a loans available to the local and county offices for the aging, the New York State Office for the Aging and the Department of Financial Services, to the extent reasonably requested by them, in all counties in which the lender makes RPL 280 loans; and

(4) require its loan officers to inform applicants for RPL 280 loans of the lender's RPL 280-a loan programs.

(c) Lenders must maintain an application log for all applications. In addition, the lender must maintain rejected mortgage application files for a minimum of three years.

(d) Any lender may, at its option, offer only one reverse mortgage loan program provided such program meets the requirements of a RPL 280-a loan.

(e) RPL 280-b loans do not fulfill the requirement that a lender shall make at least as many RPL 280-a loans as it makes RPL 280 loans unless the loan would otherwise qualify in all respects as a RPL 280-a loan.

3 CRR-NY 79.11 Prohibited conduct and administrative penalties {#sec-3-crr-ny-79.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.11}

(a) A mortgagee or broker, as applicable, may not:

(1) make a RPL 280, RPL 280-a or RPL 280-b loan in the State of New York without having a reverse mortgage program that has been approved by the superintendent;

(2) make a reverse mortgage loan to a mortgagor who has not been provided with the counseling acknowledgment prior to counseling or has not completed the counseling acknowledgment prior to commitment in accordance with sections 79.5(e) and 79.9(a)(4) of this Part;

(3) make any false promise to influence, persuade or induce a consumer to sign a reverse mortgage loan application or documents;

(4) pressure or coerce a consumer to sign a reverse mortgage loan application or reverse mortgage loan documents by misrepresenting or omitting material information about the terms of the reverse mortgage loan;

(5) discourage a consumer in a reverse mortgage loan transaction from seeking or obtaining independent legal counsel or legal advice or discouraging inclusion of family members from counseling sessions or from otherwise participating in the process;

(6) fail to make any disclosure to a consumer required by and at the time specified by any applicable state or federal law, regulation or directive;

(7) accept telephone applications;

(8) request or accept a confession of judgment; or

(9) steer, direct, recommend, or otherwise encourage a consumer to seek the services of any particular housing counselor, or encourage a consumer not to seek the services of any particular housing counselor.

(10) make any false or misleading statement or classification of a reverse mortgage product being offered including, but not limited to any statement that the product offered:

(i) is a government benefit or is not a loan;

(ii) has been endorsed by Federal Housing Administration or Housing and Urban Development; and

(iii) contains any features or limitations that are inconsistent with state or federal rules and requirements;

(11) make any false or misleading statement or classification of any advertisement, including, but not limited to, use of the words “public service announcement;”

(12) make any false or misleading statement about default or foreclosure including, but not limited to, any statement that a mortgagor can “never lose” their home or there is “no risk” to a mortgagor’s home;

(13) make any false or misleading statement about “fixed” rates and payments including, but not limited to, using the word “fixed” in an advertisement for an adjustable rate reverse mortgage loan;

(14) make any false or misleading statement about monthly payments or the overall cost of the product including, but not limited, to any statement that a:

(i) mortgagor will “never make monthly payments” or not be required to repay a reverse mortgage loan “during your lifetime;”

(ii) mortgagor will “never owe more than the value of your home;” and

(iii) reverse mortgage loans provide payments “for life;”

(15) create a false sense of urgency by providing any misleading or inaccurate information about limits on the availability of a reverse mortgage product or any feature thereof;

(16) make any false or misleading use of the name of the consumer’s current financial institution, including but not limited to, using such name in an advertisement that is not sent by or on behalf of the consumer’s current financial institution;

(17) provide any information about material terms or required disclosures partially in a foreign language, while providing information about other material terms or required disclosures only in English; and

(18) make any false or misleading statement about government entitlements, sponsorships or insurance including, but not limited to, statements which may give a reverse mortgage applicant the impression that their financial interests are government insured or otherwise protected.

(b) A violation of this Part shall constitute grounds for the revocation or termination of a reverse mortgage program approval issued to a lender.

3 CRR-NY 79.12 Special provisions regarding payment of real estate taxes and insurance {#sec-3-crr-ny-79.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.12}

(a) Mortgagor shall have the right to choose a property insurer(s) subject to the mortgagee’s consent which shall not be unreasonably withheld. If the mortgagor fails to choose a property insurer(s) in a timely manner or if the insurer(s) is not acceptable to the mortgagee, then the mortgagee may insure the property with a carrier(s) of its choice in accordance with 11 NYCRR Part 227.

(b) Notwithstanding applicable State or Federal rule or law, the mortgagee may advance the funds necessary to pay property insurance premiums or real estate taxes under the following circumstances:

(1) the borrower's payment of such property charges is already more than 30 days overdue;

(2) the reverse mortgage loan has already been called due and payable; or

(3) a set aside account has been established and the taxing jurisdiction offers a discount for disbursements on a lump sum annual basis or imposes an additional charge or fee for installment disbursements and the mortgagee has chosen to take advantage of the discount for the borrower or avoid the additional charge or fee for installments.

If a set aside account has been established, then, to the extent possible, the mortgagee must reimburse itself from such fund before choosing option (2) or (3) (paragraph [2] or [3] of this subdivision).

(c) Notwithstanding applicable State or Federal rule or law, a mortgagee that chooses to advance funds in accordance with subsection (b) of this section may then reimburse itself in any of following individual or combined ways:

(1) by deducting necessary amounts from a line of credit;

(2) by withholding from one or more monthly payments otherwise due to the mortgagor no more than 25 percent of each such monthly payment, until such time as the amount paid is realized; or

(3) by adding the amount to the loan principal.

(d) If a line of credit payment method, distinct from the mortgagor’s set aside account, is established in conjunction with a reverse mortgage loan, to pay the mortgagor’s real estate taxes or insurance (hazard or flood, as necessary) on the real property securing the reverse mortgage loan, the mortgagee is to notify the mortgagor, in writing, of the amount of each deduction from and the amount remaining in the line of credit. Such notice must be given at least 90 calendar days prior to the due date of any payment for which insufficient funds are available.

3 CRR-NY 79.13 Policies and procedures {#sec-3-crr-ny-79.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.13}

The board of directors or trustees of every State-chartered bank, trust company, savings bank, savings and loan association, or credit union and the appropriate officers of a foreign bank maintaining an insured branch in this State, as well as, all mortgage bankers, mortgage loan servicers and mortgage brokers which shall engage in the business of making, soliciting, processing or servicing reverse mortgage loans shall adopt such policies and procedures as are necessary to safely conduct such business and to establish, monitor and periodically reevaluate appropriate limitations on the institution’s aggregate reverse mortgage loan portfolio. Such policies and procedures shall be consistent with safe and sound practices and shall take into account the banking institution’s size and financial condition, local economic conditions, the availability of insurance for the portfolio or any portion thereof, consumer and homeowner protections, and any other factors that the institution deems relevant. Such policies and procedures shall be subject to the superintendent's periodic review.

3 CRR-NY 79.14 Transition Period {#sec-3-crr-ny-79.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.14}

Notwithstanding any other applicable Federal or State law or rule, for 120 days including and following the March 5, 2020 effective date of this Part, mortgagees either originating or servicing RPL 280-b loans shall not be in violation of this Part if they comply with the Part 79 that was in effect prior to March 5, 2020.

3 CRR-NY 79.15 [Repealed] {#sec-3-crr-ny-79.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 79.15}

Part 80 INVESTMENT IN JUNIOR LIEN MORTGAGE LOANS BY COMMERCIAL BANKS, SAVINGS BANKS, CREDIT UNIONS, MORTGAGE BANKERS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 80.1 Definitions {#sec-3-crr-ny-80.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.1}

For purposes of this Part:

(a) The term lender shall mean a bank, trust company, savings bank, savings and loan association, credit union, mortgage bankers or exempt organization as defined in section 590 of the Banking Law.

(b) The term natural person shall mean an individual.

(1) a mortgage on real property which is:

(i) improved by a one-to-four-family owner-occupied residence;

(ii) subject to the lien of one or more prior mortgages or similar recorded encumbrances; or

(2) a junior interest in or junior lien on certificates of stock or other evidences of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of cooperative ownership of residential real estate.

(d) The term electronically transmitted or electronic media shall mean any transmission via diskette, wire or tape including but not limited to the Intranet (interactive or otherwise), the Internet, any other computer network, electronic mail, or any other similar method of transmission.

3 CRR-NY 80.2 General authority {#sec-3-crr-ny-80.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.2}

(a) A lender is authorized to make junior mortgage loans in accordance with the provisions of this Part. However, junior mortgage loans which equal or exceed $250,000 when combined with the outstanding unpaid principal balance on existing loans secured by the type of security described in section 80.1(c) of this Part at the time such junior mortgage loan is made, shall be exempt from the provisions of this Part. Except as provided herein, nothing in this Part shall be deemed to limit the authority which a lender may otherwise have under any other provision of law, including sections 103(4-a), 235(6-a), 454(16) and 380(4-a) of the Banking Law to make junior mortgage loans in accordance with such provisions whether or not such loans are secured by one-to-four family owner-occupied residences. A junior mortgage loan, including a revolving credit line as authorized by section 80.10 of this Part, shall be repayable in monthly installments, which may be installments of interest only, and may be structured as a fixed-rate mortgage, a wrap-around mortgage or any type of adjustable rate or other mortgage form as agreed to by the lender and the borrower, unless specifically prohibited by this Part or by section 82.1(b) or 82.2(b) of this Title.

(b) Balloon payment mortgages shall be for a term of not less than three years.

3 CRR-NY 80.3 Maximum amount {#sec-3-crr-ny-80.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.3}

Every lender which engages in the business of making junior lien mortgage loans shall adopt policies and procedures as are appropriate with respect to the maximum amount which, when added to the aggregate amount unpaid upon all prior mortgages, liens, and other encumbrances of record upon the real property or shares (in the case of a cooperative apartment unit), the lender shall advance pursuant to a junior mortgage loan. Such policies and procedures shall be subject to the superintendent's periodic review.

3 CRR-NY 80.4 Disclosure {#sec-3-crr-ny-80.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.4}

(a) Prior to accepting an application for a loan, a lender must disclose in writing or via electronic media to each loan applicant, in one or more documents, and in plain language, the terms of the type(s) of loan(s) sought by the applicant. The disclosure statement provided to an applicant shall include at least such of the following information as is relevant to the type of loan being offered:

(1) the term to maturity;

(2) the initial interest rate, if known, or the manner in which the initial interest rate will be established;

(3) the amount of the initial payment, if known, and an explanation of the lender's amortization schedule for the loan, including how the lender determines both the amount of each payment and the proportion of each payment which will be credited to interest;

(4) a full explanation of how the interest rate, the payment, the loan balance, or the term to maturity may be adjusted (including identification of the index/indices to be used and how index values may be obtained by the borrower), and how the adjustment of one may affect the others including disclosure of the intervals at which the lender may change the rate on the loan, the time(s) or date(s) at which the lender calculates the rate with respect to the index/indices, and any conditions or events on which the changes in rate are contingent;

(5) the fact that the borrower will receive notification in writing or via electronic media from the lender of increases in the rate or changes in the term of payment, and what information will be contained in each notice of an adjustment and, in the case of a nonamortizing or partially amortizing loan, in the notice of maturity, and how far in advance of an adjustment or maturity each notice will be provided;

(6) where a valid prepayment penalty will be provided for in the loan contract, a description of such penalty;

(7) if the loan contract will provide for escrow payments, a statement of that fact and an explanation of the purpose of requiring escrow payments and how the amount of such payments is established;

(8) a hypothetical example, illustrative of the type of credit being offered, of the effect or the combination of effects that an increase in the rate on the loan may have on the amount of the monthly payment, or the number of monthly payments or the amount of the final payment; and

(9) the history of the movements in the index chosen for the loan, including the highest and lowest interest rates reached by the index, and the dates at which these levels were reached, for each of the three calendar years preceding the year in which the loan is made, provided further that if a loan is made after August 31st of any calendar year, the disclosures shall include the high and low figures for the index's performance through June 30th of that year and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding the calendar year in which the loan is made for any loan made prior to March 1st of a calendar year.

If an application is accepted by telephone, the lender shall mail, deliver or transmit by electronic media the required disclosure statement within three business days.

(b) In the case of a balloon-payment mortgage loan, the disclosure required to be given pursuant to subdivision (a) of this section shall include the following notice, or a notice to like effect, as applicable, which notice may be given in writing or via electronic media and which shall also be included in the loan contract:

THE TERM OF THE LOAN IS __ YEARS. AS A RESULT, YOU WILL BE REQUIRED TO REPAY THE ENTIRE PRINCIPAL BALANCE AND ANY ACCRUED INTEREST THEN OWING __ YEARS FROM THE DATE ON WHICH THE LOAN IS MADE.

THE LENDER HAS NO OBLIGATION TO REFINANCE THIS LOAN AT THE END OF ITS TERM. THEREFORE, YOU MAY BE REQUIRED TO REPAY THE LOAN OUT OF ASSETS YOU OWN OR YOU MAY HAVE TO FIND ANOTHER LENDER WILLING TO REFINANCE THE LOAN.

ASSUMING THIS LENDER OR ANOTHER LENDER REFINANCES THIS LOAN AT MATURITY, YOU WILL PROBABLY BE CHARGED INTEREST AT MARKET RATES PREVAILING AT THAT TIME AND SUCH RATES MAY BE HIGHER THAN THE INTEREST RATE ON THIS LOAN. YOU MAY ALSO HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW MORTGAGE LOAN.

If the lender guarantees refinancing of the loan for additional terms until the principal balance has been repaid but does not provide for the recalculation of the interest rate at the time of each refinancing according to a prespecified index, the disclosures and the loan contracts shall include the following notice, or a notice to like effect, as applicable which notice may be given in writing or via electronic media and:

THE TERM OF THE LOAN IS __ YEARS. AT MATURITY, __YEARS FROM THE DATE ON WHICH THE LOAN IS MADE, AND AT THE TIME OF EACH FURTHER REFINANCING, THE LOAN WILL BE REFINANCED AT AN INTEREST RATE ESTABLISHED BY THE LENDER WITH REFERENCE TO MARKET RATES. SUCH INTEREST RATE(S) MAY BE HIGHER THAN THE INTEREST RATE PAID ON THIS LOAN.

In addition, at the time it commits itself to make the loan, the lender must inform the applicant in writing or via electronic media of the principal balance which will be due at maturity of the loan or the initial term of the loan (assuming all scheduled principal payments, if any, are made in accordance with the loan contract) and the fact that the borrower will receive notice of maturity in writing or, where the borrower has consented in advance, via electronic media from the lender and the time periods within which such notice will be sent.

YOU SHOULD CHECK WITH YOUR LEGAL ADVISOR AND WITH OTHER MORTGAGE LIEN HOLDERS AS TO WHETHER ANY PRIOR LIENS CONTAIN ACCELERATION CLAUSES WHICH WOULD BE ACTIVATED BY A JUNIOR ENCUMBRANCE.

(d) With regard to the electronic transmission of disclosures, a hard-copy of such disclosure shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such disclosure. In those instances in which a hard-copy of the disclosure is not mailed to the applicant, the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such disclosure.

3 CRR-NY 80.5 Notification {#sec-3-crr-ny-80.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.5}

(a) At least 30 but not more than 120 days prior to a payment adjustment and at least 90 but not more than 120 days prior to the expected maturity of a balloon-payment mortgage, a lender shall provide the borrower with notice in writing or, where the borrower has consented in advance, via electronic media, of the adjustment or of maturity. However, where the loan contract provides that changes in the interest rate shall occur more frequently than changes in the payment, the lender need not notify the borrower of changes in the rate, nor of changes in the loan balance or term resulting from a rate change, until notice of a payment adjustment is given. (For purposes of notification, either in writing or, where the borrower has consented in advance, via electronic media, a payment adjustment is considered to occur as of the date of the interest-rate change immediately preceding the due date of the adjusted payment.) In addition, where the loan contract sets out a schedule of payment adjustments, notice need not be given of payment changes made pursuant to that schedule.

(b) In the case of a revolving credit line secured by a junior mortgage, written or, where the borrower has consented in advance, electronic notification of payment changes need only be given at the time the adjusted payment is due.

(c) With regard to the electronic transmission of notices, a hard-copy of such notice shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such notice. In those instances in which a hard-copy of the notice is not mailed to the applicant, the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such notice.

3 CRR-NY 80.6 Adjustments to rate, payment, balance or term {#sec-3-crr-ny-80.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.6}

Except for such further limitations on adjustments (i.e., “ ceilings”, “floors” or “initial discounts”) as may be set forth in the loan contract:

(a)

(1) adjustments to the interest rate shall correspond directly to the movement of an interest-rate index or of an index that measures the rate of inflation, which index is readily available to and verifiable by the borrower and is beyond the control of the lender; provided that a lender may decrease the interest rate at any time, and provided further, that interest rate adjustments may be rounded to the nearest fraction of a percentage point when so stated in the contract. A lender may also increase the interest rate pursuant to a formula or schedule that specifies the amount of the increase, the time at which it may be made, and which is set forth in the loan contract;

(2) adjustments to the monthly payment and loan balance may be made to reflect interest- rate adjustments and, in the case of a payment adjustment, where the adjustment reflects change in the loan balance or is made pursuant to a formula or schedule specifying the percentage or dollar change in the payment, as set forth in the contract;

(3) any combination of indices or a moving average of index values may be used as an index, but a lender may not change or reserve the right to change the index or indices specified in the loan contract unless the initial index or indices specified become(s) unavailable during the term of the loan; and

(4) the loan term may be adjusted only to reflect a change in the interest rate, the payment or the loan balance.

(b) Mortgage bankers.

(1) Mortgage bankers may use any single index from among the indices approved by the Superintendent of Banks pursuant to Superintendent's Regulations, Part 334, on such terms as stated therein. Adjustments in the rate for the loan shall correspond directly to the movements of the index. As provided in section 590-a(3) of the Banking Law, the interest rate of the junior mortgage loan must be reduced in proportion to any decrease in the index rate, while increases in the interest rate based upon changes in the index rate may be made at the option of the mortgage banker. Although any loan may only use a single index for the life of the loan, the mortgage banker may provide for the use of an index similar to the index actually used in the event that the latter index should become unavailable for use during the term of the loan.

(2) The loan contract may provide for payment adjustments to be made pursuant to a formula or schedule specifying the percentage or dollar change in the payments. The loan term may be adjusted only to reflect a change in the interest rate and adjustments to the payment.

3 CRR-NY 80.7 Appraisal {#sec-3-crr-ny-80.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.7}

No junior mortgage loan shall be made except upon a written and signed certificate which states that the property securing such loan has been examined and which appraises the value of such property. For mortgage loans in an amount greater than $250,000, the appraised value shall be determined by an appraiser licensed or certified or working under the supervision of an appraiser who is licensed pursuant to article 6-E of the Executive Law.

3 CRR-NY 80.8 Rate of interest and permitted charges {#sec-3-crr-ny-80.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.8}

The rate or rates of interest that a lender may take or receive on a junior mortgage loan shall be the rate or rates agreed upon by the lender and the borrower. Such interest may be charged relative to unpaid principal balances or may be precomputed; provided that if a precomputed junior mortgage loan is repaid prior to maturity for any reason, any unearned interest shall be refunded according to the actuarial method based on scheduled remaining balances. The unpaid principal balance may include items listed in subdivisions (a)-(u) of this section. No fee, commission, expense or other charge to the borrower in addition to the interest charge provided for in this section shall be taken, received, reserved or contracted for by a lender in connection with the making or maintenance of a junior mortgage loan, except, where applicable, to the extent not otherwise inconsistent with any other provision of law:

(a) a loan origination fee, commitment fee or similar charge;

(b) a fee or charge for appraising or surveying the property securing such junior mortgage loan;

(c) fees or premiums for a title examination, an abstract of title, title insurance or similar purposes, a credit report fee and a fee taken at closing for a search for tax liens existing at the time of closing if such search is not included in the title examination provided such fees or premiums actually will be paid by the lender;

(d) fees or charges prescribed by law which actually are or will be paid by the lender to public officials for determining the existence of or for perfecting or releasing or satisfying any security related to the junior mortgage loan;

(e) fees or charges which actually are or will be paid by the lender for any transfer, mortgage recording or related tax;

(f) reasonable attorney's fees representing actual fees charged to the lender in connection with the closing of such junior mortgage loan;

(g) charges for credit life, credit accident and health insurance, credit unemployment insurance, and mortgage guaranty insurance;

(h) reasonable attorney's fees not in excess of 15 percent of the unpaid debt in the event of default if such junior mortgage loan is referred to an attorney who is not a salaried employee of the lender for collection;

(i) a late charge on any payment that is due and unpaid;

(j) fees or charges for processing stop payment orders;

(k) fees or charges for handling checks drawn on insufficient funds in accordance with the provisions of section 5-328 of the General Obligations Law;

(l) fees or charges for replacing lost or stolen checks;

(m) fees or charges for printing checks;

(n) fees or charges for converting, at the borrower's request, all or part of a loan to a closed- end fixed or variable rate term loan;

(o) fees or charges for reducing the interest rate on existing junior lien loans or for any other loan modification requested by the borrower;

(p) fees or charges taken at closing for a flood zone search;

(q) an annual fee;

(r) an application fee and/or processing fee each in an amount reasonably related to the services to be performed on behalf of the applicant, which fee shall not be figured as a percentage of the principal amount of the loan, credit line or amount financed;

(s) fees or charges for dishonoring a check(s) that cannot be approved since the borrower is in violation of the terms of the agreement or where payment of such a check(s) would cause the borrower to be in violation of the terms of the agreement, but not more than once in a monthly billing cycle;

(t) an overlimit fee or charge which may be imposed whenever the specified credit limit is exceeded, but not more than once in a monthly billing cycle; and

(u) such other fees or charges as may be specifically authorized by rule or regulation.

The fees and/or charges permitted in subdivisions (j), (l), (m), (q), (s) and (t) of this section are permitted only in connection with a revolving credit account.

3 CRR-NY 80.9 Prohibited clauses {#sec-3-crr-ny-80.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.9}

A contract, note or instrument evidencing or securing a junior mortgage loan shall not contain:

(a) any acceleration clause providing that the junior mortgage loan may be declared due and payable upon the mere condition that the lender deems itself insecure with respect to the unpaid balance of such junior mortgage loan;

(b) any power of attorney to confess judgment or any other power of attorney;

(d) any assignment of or order for the payment of any salary, wages, commissions or other compensation for services, or any part thereof, earned or to be earned; or

(e) any provision prohibiting prepayment of the junior mortgage loan in whole or in part or imposing a penalty, except as otherwise permitted by section 5-501(3)(b) of the General Obligations Law, and then only if according to the provisions of the note and mortgage, the interest rate for the loan shall remain fixed for a period of at least five years, the mortgage broker, mortgage banker and/or exempt organization complies with the provisions of sections 38.2, 38.3 and 38.4 of this Title which pertain to prepayment penalties and the loan contract provides for a prepayment penalty; or

(f) any clause allowing the lender to change any term of the mortgage agreement other than in those instances set forth in section 226.5b(f)(3) of Regulation Z (12 CFR part 226).

3 CRR-NY 80.10 Revolving credit accounts {#sec-3-crr-ny-80.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.10}

A revolving credit line secured by a junior mortgage must also comply with the following requirements:

(a) the line of credit must be in an amount of $2,500 or more;

(b) disclosure shall be provided as set forth in section 80.4 of this Part and in addition, the disclosure shall include a statement to the effect that the cost of title insurance and mortgage recording tax shall be based on the maximum amount of the credit line available to the borrower, whether advanced or not;

(c) with each monthly statement, the lender must provide the borrower with a statement which discloses the following items, to the extent applicable:

(1) previous balance;

(2) identification of transactions;

(3) credits;

(4) periodic rate(s) and fact that it (they) may vary;

(5) balance on which finance charge is computed;

(6) amount of finance charge;

(7) annual percentage rate;

(8) other charges;

(9) closing date of billing cycle;

(10) new balance;

(11) free-ride period; and

(12) address for notice of billing errors;

(d) the junior mortgage loan shall be deemed to be made in the maximum amount of the credit line available to the borrower, whether advanced or not, for such purposes as title insurance and loan-to-value ratios; and

(e) no prepayment penalty shall be permitted where such junior mortgage loan secures a revolving credit line.

3 CRR-NY 80.11 Bridge loans {#sec-3-crr-ny-80.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.11}

(a) A lender may make a junior mortgage loan (as such term is defined in section 80.1 of this Part) on the terms and conditions listed in subdivisions (b) and (c) of this section, provided that the borrower occupies the property at the time the loan is made and provided that the proceeds of the loan are used or are to be used by the borrower to finance the purchase of replacement residential property, as such use is ascertained by the lender prior to processing of the application by means of a copy of a contract executed by the loan applicant for the purchase of the replacement property and by any additional means that the lender may require.

(b) A bridge loan, as defined in subdivision (a) of this section, may be made by a lender for a maximum term of one year. A bridge loan may be made, at the option of the lender, without any required repayment of either principal or interest during the term of the loan, provided that no compounding of interest occurs. In addition, the period for the loan may be divided into two terms, in which event, prior to commencement of the additional term, the borrower may be required to pay off any interest accumulated over the first term.

(1) The loan shall be due and payable upon the closing of the borrower's sale of the property securing the loan.

(2) The loan may be prepaid by the borrower at any time, without penalty.

(3) The notification provisions of section 80.5 of this Part shall apply to the loan throughout its duration.

(4) The disclosure provisions of section 80.4 of this Part shall apply, except that the alternative disclosures for balloon-payment loans contained in section 80.4(b) shall be stated as:

(i) In the case where the lender is offering a single-term loan, or where the lender will offer an extension of the loan, which extension was not provided for at the commencement of the loan:

THE TERM OF THE LOAN IS [MONTHS] [ONE YEAR]. AS A RESULT, YOU WILL BE REQUIRED TO REPAY THE ENTIRE PRINCIPAL BALANCE AND ANY ACCRUED INTEREST THEN OWING [MONTHS] [ONE YEAR] FROM THE DATE ON WHICH THE LOAN IS MADE.

(ii) In the case where the lender is offering a loan divided into two terms:

THE TERM OF THE LOAN IS MONTHS. AT MATURITY, MONTHS FROM THE DATE ON WHICH THE LOAN IS MADE, AND IN THE EVENT A REFINANCING IS REQUIRED, THE LOAN WILL BE EXTENDED AT [AN INTEREST RATE TO BE DETERMINED AT THE SOLE DISCRETION OF THE LENDER] [THE SAME RATE] [THE SAME RATE TO BE DETERMINED BY MOVEMENT IN INDEX]. SUCH INTEREST RATE MAY BE HIGHER THAN THE INTEREST RATE TO BE PAID ON THIS LOAN.

In cases where the lender will extend the loan for a second term at the same rate of interest, the last sentence of the above disclosure shall be omitted.

(5) Whether the loan is offered for one term or two terms, fees and points may be taken only once at the inception of the loan, and the borrower may not be charged more than three points at that time. For purposes of this section:

(i) Permissible fees are limited to a property appraisal fee and to the fees and expenses for obtaining a credit history of the applicant. Any amount collected in excess of the actual cost of the credit report fee and property appraisal fee must be returned at or prior to closing.

(ii) A point is one percent of the principal amount of the loan, which may be charged only at the time of closing of the bridge loan.

(6) The loan shall be at a fixed rate of interest within each term of the loan.

3 CRR-NY 80.12 Compliance with Federal regulation {#sec-3-crr-ny-80.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.12}

(a) Lenders which comply with sections 226.19(b) and 226.20(c) of Regulation Z (12 CFR part 226) or the provisions of 12 CFR 563.99 will be deemed to be in compliance with sections 80.4(a) and 80.5 of this Part to the extent that sections 80.4(a) and 80.5 pertain to adjustable-rate junior mortgage loan transactions whether or not the transactions would otherwise be subject to section 226.19(b) or 12 CFR 563.99(b).

(b) Lenders which comply with sections 226.5b and 226.7 of Regulation Z (12 CFR part 226) will be deemed to be in compliance with sections 80.4(a) and 80.10(c) of this Part to the extent that sections 80.4(a) and 80.10(c) pertain to home equity plans whether or not the plans would otherwise be subject to sections 226.5b and 226.7; provided that lenders supply a copy of the disclosures required by section 226.5b for retention by the borrower.

3 CRR-NY 80.13 [Renumbered] {#sec-3-crr-ny-80.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 80.13}

Part 81 ISSUANCE OF LARGE-DENOMINATION OBLIGATIONS BY LICENSED AGENCIES OF FOREIGN BANKS

3 CRR-NY 81.1 Explanatory note {#sec-3-crr-ny-81.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 81.1}

Section 202-a of the Banking Law authorizes the superintendent to adopt regulations that permit a foreign banking corporation, licensed pursuant to article II of the Banking Law to maintain one or more agencies in New York, to issue to a corporation, partnership, trust, unincorporated association, joint-stock association or similar association obligations each in a principal amount of not less than $100,000.

3 CRR-NY 81.2 Definitions {#sec-3-crr-ny-81.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 81.2}

For purposes of this Part:

(a) The term agency shall mean any agency of a foreign banking corporation licensed pursuant to article II of the Banking Law.

(b) The term large-denomination obligation shall mean any obligation, evidenced by a promissory note, a certificate of deposit, a statement, or a book entry, in the amount of $100,000 or more.

3 CRR-NY 81.3 Authority to issue large-denomination obligations {#sec-3-crr-ny-81.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 81.3}

(a) Any agency which shall have given notice to the superintendent as provided hereunder shall be authorized to issue large-denomination obligations to any foreign or domestic corporation, partnership, trust, unincorporated association, joint-stock association or similar association upon the expiration of 30 days from the date such notice is given unless the superintendent shall have objected in writing to such agency within such 30-day period. The notice to be provided pursuant to this Part shall be in such form and contain such information as the superintendent may prescribe.

(b) For purposes of this Part, a large-denomination obligation, evidenced by a promissory note or a certificate of deposit in bearer form, shall be deemed to be issued to the initial holder thereof.

Part 82 ALTERNATIVE MORTGAGE INSTRUMENTS

3 CRR-NY 82.1 Authorization for alternative mortgage instruments {#sec-3-crr-ny-82.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.1}

(a) Notwithstanding any provisions of State law, regulation or interpretation to the contrary, this Part constitutes the exclusive authority for banks, trust companies, savings banks, savings and loan associations, credit unions, persons and entities engaging in the business described in section 590, article 12-D of the Banking Law (other than federally licensed branches and agencies of foreign banking corporations, national banks, Federal savings banks, Federal savings and loan associations, Federal credit unions and their subsidiaries which are exempt from licensing as mortgage bankers) and branches or agencies of foreign banking corporations licensed pursuant to article II of the Banking Law (“lender”) to make, sell, purchase or participate in mortgage loans in a principal amount of less than $250,000 other than fixed-rate, equal payment, self-amortizing loans. For purposes of this Part, the term mortgage loan is limited to the types of loans described in section 82.2(a) of this Part. Such institutions may make, sell, purchase or participate in the types of mortgage loans described in this Part, provided all such loans are made in accordance with the provisions of this Part. Such loans shall be repayable either in biweekly or in monthly installments. The authorization for graduated payment mortgage loans contained in this Part is made pursuant to the superintendent’s authority under section 6-f of the Banking Law, any other provisions of State law to the contrary notwithstanding. Mortgage loans in the principal amount of $250,000 or more, which would otherwise not be subject to this Part, may be structured to provide for negative amortization, if the lender adheres to the provisions of sections 82.5 and 82.6 of this Part.

(b) Nothing in this Part authorizes a mortgage loan which contains a demand feature or a mortgage loan which is structured either as a price level adjusted mortgage (PLAM) or a shared appreciation mortgage (SAM). Further, a balloon mortgage loan, a pledge-account mortgage loan and a growing equity mortgage loan may not be structured to provide for negative amortization.

3 CRR-NY 82.2 Scope {#sec-3-crr-ny-82.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.2}

(a) Applicability.

This Part applies to loans secured by a first mortgage on real property improved by a one- to four-family residence occupied by the owner (including individual condominium units) or by a first lien on an ownership interest in certificates of stock or other evidence of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of real estate. For purposes of this Part all such loans are mortgage loans.

(b) Permissible features.

Subject to the limitations set forth in section 82.3 of this Part, a lender may adjust the interest rate, payment, balance or term to maturity on any mortgage loan as is authorized by the loan contract. In addition, this Part authorizes a lender to make, sell, purchase or participate in balloon payment, growing equity and pledged account mortgage loans in a principal amount of less than $250,000 and which may be structured as nonamortizing or partially amortizing provided that a balloon-payment mortgage loan must have an initial fixed-rate period of three years.

The mortgage loans authorized by this Part may be made in an amount not exceeding 90 percent of the appraised value of the property, or 90 percent of the purchase price or the appraised value of the stock and lease in the case of a cooperative apartment unit, as calculated at the time the loan is made, provided that such loan-to-value ratio may equal 97 percent for any such loan except a balloon-payment mortgage loan if:

(1) in addition to provisions for full amortization of the loan, the loan contract requires, except in the case of cooperative apartment loans, that the pro rata portion of estimated annual taxes and assessment on the security property (based on the number of installments due annually) be paid to the lending institution with each installment payment; and

(2) during the time that the unpaid balance of the loan exceeds a loan-to-value ratio of 90 percent (as determined at the time the loan is made) the part of such balance exceeding 80 percent of value is guaranteed or insured by a mortgage insurance company; except that any unpaid loan balance secured by a pledged savings account or pledged securities or other guarantee or collateral, the value of which, as found in good faith by an officer of the lender, equals or exceeds the part of the loan balance exceeding 80 percent of the loan need not be so guaranteed or insured.

For mortgage loans in an amount greater than $250,000, the appraised value shall be determined by an appraiser licensed or certified or working under the supervision of an appraiser who is licensed or certified pursuant to article 6-E of the Executive Law.

(d) Term.

The term of any such mortgage loan may not exceed 40 years; the term of any balloon-payment mortgage may not be less than three years.

(e) Electronic disclosures and notifications.

Electronic disclosures and notifications are permitted as set forth in this Part. The term electronically transmitted or electronic media shall mean any transmission via diskette, wire or tape including but not limited to the Intranet (interactive or otherwise), the Internet, any other computer network, electronic mail, or any other similar method of transmission.

3 CRR-NY 82.3 Adjustments to rate, payment, balance or term {#sec-3-crr-ny-82.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.3}

Except for such further limitations on adjustment (i.e., “ceilings”, “floors” or “initial documents”) as may be set forth in the loan contract:

(a) Adjustments to the interest rate shall correspond directly to the movement of an interest rate index or an index that measures the rate of inflation, which index is readily available to and verifiable by the borrower and is beyond the control of the lender; provided that a lender may decrease the interest rate at any time, and provided further, that interest rate adjustments may be rounded to the nearest fraction of a percentage point when so stated in the contract. A lender may also increase the interest rate pursuant to a formula or schedule that specifies the amount of the increase, the time at which it may be made, and which is set forth in the loan contract.

(b) Adjustments to the monthly payment and loan balance may be made to reflect interest rate adjustments and, in the case of a payment adjustment, where the adjustment reflects change in the loan balance or is made pursuant to a formula or a schedule specifying the percentage or dollar change in the payment, as set forth in the contract.

(c) Any combination of indices or a moving average of index values may be used as an index, but a lender may not change or reserve the right to change the index or indices specified in the loan contract unless the initial index or indices specified become(s) unavailable during the term of the loan.

(d) The loan term may be adjusted only to reflect a change in the interest rate, the payment or the loan balance.

3 CRR-NY 82.4 Negative amortization (deferral and capitalization) {#sec-3-crr-ny-82.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.4}

During the term of the loan the loan-to-value ratio may increase above the initial loan-to-value ratio if the increase results from a change authorized under sections 82.3 and 82.2(b) of this Part, but the loan balance may not exceed 125 percent of the original appraised value of the property unless the loan contract provides that the payment shall be adjusted at least once every five years, beginning no later than the tenth year of the loan, to a level sufficient to amortize the loan at the then existing interest rate and loan balance over the remaining term of the loan.

3 CRR-NY 82.5 Notifications {#sec-3-crr-ny-82.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.5}

At least 30 but not more than 120 days prior to a payment adjustment and at least 90 but not more than 120 days prior to the expected maturity of a balloon-payment mortgage, a lender shall provide the borrower with notice, in writing, or, where the borrower has consented in advance, via electronic media of the adjustment or of maturity. However, where the loan contract provides that changes in the interest rate shall occur more frequently than changes in the payment, the lender need not notify the borrower of changes in the rate, nor of changes in the loan balance or term resulting from a rate change, until notice of a payment adjustment is given or at least annually. For purposes of notification, either in writing or, where the borrower has consented in advance, via electronic media, a payment adjustment is considered to occur as of the date of the interest rate change immediately preceding the due date of the adjusted payment. In addition, where the loan contract sets out a schedule of payment adjustments, notice need not be given of payment changes made pursuant to that schedule. With regard to the electronic transmission of notices, a hard-copy of such notice shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such notice. In those instances in which a hard-copy of the notice is not mailed to the applicant, the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such notice.

3 CRR-NY 82.6 Disclosure {#sec-3-crr-ny-82.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.6}

(a) Prior to accepting an application for a loan, a lender must disclose in writing or via electronic media to each loan applicant, in one or more documents, and in plain language, the terms of the type(s) of loan(s) available to the applicant. The disclosure material provided to an applicant shall include at least such of the following information as is relevant to the type of loan being offered:

(1) the term to maturity;

(2) the initial interest rate, if known, or the manner in which the initial interest rate will be established;

(3) the amount of the initial payment, if known, and an explanation of the lending institution's amortization schedule for the loan, including how the lending institution determines both the amount of each payment and what proportion of each payment will be credited to interest;

(4) a full explanation of how the interest rate, the payment, the loan balance or the term to maturity may be adjusted (including identification of the index/indices to be used and how index values may be obtained by the borrower), and how the adjustment of one item may affect the others;

(5) what information will be contained in each notice of an adjustment and, in the case of a non- or partially amortized loan, in the notice of maturity, and how far in advance of an adjustment or maturity each notice will be provided;

(6) where a valid prepayment penalty will be provided for in the loan contract, a description of such penalty;

(7) if the loan contract will provide for escrow payments, a statement of that fact and an explanation of the purpose of requiring escrow payments and how the amount of such payments is established;

If an application is accepted by telephone, the lender shall mail, deliver or transmit by electronic media the required disclosure statement within three business days.

THE TERM OF THE LOAN IS __ YEARS. AS A RESULT, YOU WILL BE REQUIRED TO REPAY THE ENTIRE PRINCIPAL BALANCE AND ANY ACCRUED INTEREST THEN OWING __ YEARS FROM THE DATE ON WHICH THE LOAN IS MADE.

ASSUMING THIS LENDER OR ANOTHER LENDER REFINANCES THIS LOAN AT MATURITY, YOU WILL PROBABLY BE CHARGED INTEREST AT MARKET RATES PREVAILING AT THAT TIME AND SUCH RATES MAY BE HIGHER THAN THE INTEREST RATE PAID ON THIS LOAN. YOU MAY ALSO HAVE TO PAY SOME FOR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW MORTGAGE LOAN.

If the lender guarantees refinancing of the loan for additional terms until the principal balance has been repaid but does not provide for the recalculation of the interest rate at the time of each refinancing according to a pre-specified index, the disclosures and the loan contract shall include the following notice or a notice to like effect, as applicable, which notice may be given in writing or via electronic media:

THE TERM OF THE LOAN IS __ YEARS. AT MATURITY, __YEARS FROM THE DATE ON WHICH THE LOAN IS MADE, AND AT TIME OF EACH FURTHER REFINANCING, THE LOAN WILL BE REFINANCED AT AN INTEREST RATE ESTABLISHED BY THE LENDER WITH REFERENCE TO MARKET RATES. SUCH INTEREST RATE(S) MAY BE HIGHER THAN THE INTEREST RATE PAID ON THIS LOAN.

In addition, at the time it commits itself to make the loan, the lender must inform the applicant in writing or via electronic media of the principal balance which will be due at maturity of the loan or the initial term of the loan (assuming all scheduled principal payments, if any, are made in accordance with the loan contract and the fact that the borrower will receive notice of maturity in writing or, where the borrower has consented in advance, via electronic media from the lender and the time periods within which such notice will be sent).

(c) In the case of a graduated payment mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include a disclosure that the interest costs for the loan will be higher than the interest costs for a fixed-rate amortizing loan of the same term and for the same amount, together with an explanation for this result.

(d) In the case of a pledged-account mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include an example of the difference in interest cost between a loan secured by property and a savings account and a loan secured by property alone.

(e) In the case of a step mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include the initial interest rate and dollar amount of the monthly payment in addition to a table which indicates the monthly payments at identified interest rates for the entire term.

(f) In the case of a preferred rate mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include the event that would allow the creditor to increase the interest rate, the rules relating to the termination of the preferred rate, any fees that may be charged when the rate is changed and how the new rate will be determined.

(g) With regard to the electronic transmission of disclosures, a hard-copy of such disclosure shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such disclosure. In those instances in which a hard-copy of the disclosure is not mailed to the applicant, the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such disclosure.

3 CRR-NY 82.7 Prepayment penalties {#sec-3-crr-ny-82.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.7}

In addition to the requirements set forth in section 5-501(3)(b) of the General Obligations Law which limit prepayment penalties to the first year of a mortgage loan, no prepayment penalty may be taken for any mortgage loan made pursuant to this Part unless, according to the provisions of the note and mortgage, the interest rate for the loan shall remain fixed for a period of at least five years, the loan contract provides for a prepayment penalty and the mortgage broker, mortgage banker and/or exempt organization complies with the provisions of sections 38.2, 38.3 and 38.4 of this Title which pertain to prepayment penalties.

3 CRR-NY 82.8 First lien revolving credit lines {#sec-3-crr-ny-82.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.8}

(a) Notwithstanding the provisions of sections 82.1 through 82.7 of this Part, except to the extent such provisions are incorporated herein, a lender may offer a revolving credit line secured by a first lien on the type of property described in section 82.2(a) of this Part, to a natural person who owns the property free of any prior mortgage lien, provided that the loan is made pursuant to the provisions of sections 80.3, 80.4 (excluding the provisions of sections 80.4[c]), 80.5(b), 80.6 (without reference to Part 334 of the superintendent's regulations), 80.7, 80.8, 80.9 (excluding the provisions of sections 80.9[e]) and 80.10 of this Title and, if applicable, subdivision 2 of section 590-a of the Banking Law.

(b) Such loans may be made as fixed-rate loans or with the features authorized by this Part, provided that no such loans may contain negative amortization features.

3 CRR-NY 82.9 Compliance with Federal regulation {#sec-3-crr-ny-82.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.9}

(a) Any bank, trust company, savings bank, savings and loan association, credit union, mortgage banker and branch or agency of a foreign banking corporation licensed pursuant to article 2 of the Banking Law which complies with sections 226.19(b) and 226.20(c) of Regulation Z (12 CFR part 226) or the provisions of 12 CFR 563.99 will be deemed to be in compliance with sections 82.5 and 82.6(a) of this Part to the extent that sections 82.5 and 82.6(a) pertain to adjustable-rate first lien mortgage loan transactions whether or not the transactions would otherwise be subject to section 226.19(b) or 12 CFR 563.99(b).

(b) Any bank, trust company, savings bank, savings and loan association, credit union, mortgage banker, and branch or agency of a foreign banking corporation licensed pursuant to article 2 of the Banking Law which complies with sections 226.5b and 226.7 of Regulation Z (12 CFR part 226) will be deemed to be in compliance with sections 80.4(a) and 80.10(c) to the extent that sections 80.4(a) and 80.10(c) pertains to home equity plans whether or not the plans would otherwise be subject to sections 226.5b and 226.7; provided that such lenders supply a copy of the disclosures required by section 226.5b for retention by the borrower.

3 CRR-NY 82.10 Bridge loans {#sec-3-crr-ny-82.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 82.10}

(a) A lender may make a first-lien mortgage loan on the terms and conditions listed in subdivisions (b) and (c) of this section, provided that the borrower occupies the property at the time the loan is made and provided that the proceeds of the loan are used or are to be used by the borrower to finance the purchase of replacement residential property, as such use is ascertained by the lender prior to processing of the application by means of a copy of a contract executed by the loan applicant for the purchase of the replacement property and by any additional means that the lender may require.

(b) A bridge loan, as defined in subdivision (a) of this section, may be made by a lender for maximum term of one year. A bridge loan may be made, at the option of the lender, without any required repayment of either principal or interest during the term of the loan, provided that no compounding of interest occurs. In addition, the period for the loan may be divided into two terms, in which event, prior to commencement of the additional term, the borrower may be required to pay off any interest accumulated over the first term.

(1) The loan shall be due and payable upon the closing of the borrower's sale of the property securing the loan.

(2) The loan may be prepaid by the borrower at any time, without penalty.

(3) The notification provisions of section 82.5 of this Part shall apply to the loan throughout its duration.

(4) The disclosure provisions of section 82.6 of this Part shall apply, except that the alternative disclosures for balloon-payment loans contained in section 82.6(b) of this Part shall be stated as:

(i) In the case where the lender is offering a single term loan, or where the lender will offer an extension of the loan, which extension was not provided for at the commencement of the loan:

(ii) In the case where the lender is offering a loan divided into two terms:

In cases where the lender will extend the loan for a second term at the same rate of interest, the last sentence of the above disclosure shall be omitted.

(i) permissible fees are limited to a property appraisal fee and the fees and expenses for obtaining a credit history of the applicant. Any amount collected in excess of the actual cost of the credit report fee and property appraisal fee must be returned at or prior to closing; and

(ii) a point is one percent of the principal amount of the loan, which may be charged only at the time of closing of the bridge loan.

(6) The loan shall be at a fixed rate of interest within each term of the loan.

Part 83 SHARED APPRECIATION MORTGAGE MODIFICATION

3 CRR-NY 83.1 Scope and application of this Part {#sec-3-crr-ny-83.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.1}

Section 6-f of the Banking Law authorizes the superintendent to adopt rules and regulations relating to shared appreciation mortgages (certain terms used in this Part are defined in section 83.2 of this Part). Accordingly, these regulations permit banks, trust companies, foreign banking corporations licensed to maintain a branch or agency in this State, savings banks, savings and loan associations, credit unions and persons and entities engaging in the business described in section 590 of the Banking Law (lender), to make residential mortgage loans, which provide for the lender, or its assignee (together with lender, hereinafter defined as holder) to receive a share in the future appreciation of the property serving as security for the loan.

Section 6-f provides that a holder may enter into a written agreement with a mortgagor under which the holder conditionally reduces an amount of principal of the then outstanding mortgage loan in order to assist a mortgagor at risk of foreclosure. The written agreement may permit the holder to share in the appreciation of the market value of the residential property securing such loan.

3 CRR-NY 83.2 Definitions {#sec-3-crr-ny-83.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.2}

For purposes of this Part:

(a) Appraised value means the dollar value determined by an independent and impartial analysis of the nature, quality, value or utility of a residential property conducted by an independent licensed appraiser.

(b) Appraisal report means any written or electronic communication of an appraised value, which shall include all information customary in such report.

(c) Capital improvement means any addition or alteration to real property that meets all three of the following conditions, in accordance with the New York State Department of Taxation and Finance, Tax Bulletin ST-104, and any clarifications or amendments thereto:

(1) it substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property;

(2) it becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and

(3) it is intended to become a permanent installation.

(d) Debt-to-income ratio or DTI shall be the result of dividing the mortgagor’s monthly housing payment (principal, interest, taxes and insurance) by the mortgagor’s gross monthly income. Gross monthly income shall be deemed to be income determined in accordance with 24 CFR 92.203(a).

(e) Gross sales proceeds means the contract price as stated on the final HUD-1 settlement issued pursuant to the sale or transfer of the residential property that is the subject of the shared appreciation mortgage modification agreement.

(f) Holder means a servicer, as defined by 3 NYCRR, section 418.3, a lender, or any person or entity who holds the mortgage loan as an asset and has the ability to negotiate terms thereof.

(g) Interest arrears means any interest past due for 30 days or more.

(h) Licensed appraiser means a person licensed under article 6-E of the Executive Law of New York who performs appraisals in conformity with the uniform standards of professional appraisal practice.

(i) Market value means a value which is the fair market value determined as a result of a sale or transfer in an arms-length transaction.

(j) Modified mortgage loan means a mortgage loan entered into in connection with a shared appreciation agreement.

(k) Mortgage loan means a loan to a natural person made primarily for personal, family or household use, secured by either a mortgage, deed of trust or other equivalent consensual security interest on a residential property or any certificate of stock or other evidence of ownership in, and proprietary lease from, a corporation or partnership formed for the purpose of cooperative ownership of residential real property and shall include any refinance or modification of any such existing loan.

(l) Mortgagor means a natural person obligated to repay the mortgage loan secured by the residential property that is the subject of the shared appreciation mortgage modification agreement.

(m) Owner occupied when used in conjunction with the term residential property, means that the owner of the underlying residential property occupies at least one unit of the residential property as a principal residence.

(n) Relative is a person connected with another by blood or affinity.

(o) Residential property means real property located in this State improved by a one- to four-family dwelling (as defined in 12 CFR 226.2[a][19]), residence or residential unit in a building used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such residence is to be constructed.

(p) Shared appreciation agreement means an agreement between the mortgagor and the holder that provides for the holder to share in the appreciation of the value of the residential property upon sale thereof. A shared appreciation agreement is not valid without the execution of a shared appreciation mortgage modification agreement.

(q) Shared appreciation mortgage modification agreement means an agreement by which a mortgage loan holder reduces the principal amount of the mortgage loan in order to assist a mortgagor at risk of foreclosure to avoid such foreclosure.

3 CRR-NY 83.3 Eligibility requirements for shared appreciation mortgage modification {#sec-3-crr-ny-83.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.3}

(a) Mortgage loans eligible for a shared appreciation mortgage modification.

A holder of a mortgage loan may enter into a shared appreciation agreement with a mortgagor if the following conditions are met:

(1) the mortgage loan is:

(i) a first lien mortgage loan with an unpaid principal balance (described below in section 83.4 of this Part) that exceeds the appraised value of the residential property based on an appraisal report prepared no more than 150 days before the execution of a shared appreciation mortgage modification and shared appreciation agreement;

(ii) a junior lien mortgage loan satisfying the same criteria set forth in subparagraph (i) of this paragraph; or

(iii) a combination of a first and junior lien mortgage loan, both held by the same holder, which satisfies the criteria set forth in subparagraph (i) of this paragraph.

(2) The mortgagor is 60 or more days past due on payments of the mortgage loan(s), or the mortgage loan(s) is the subject of an active foreclosure action;

(3) The mortgagor’s eligibility to enter into any of the following alternatives has been assessed and disclosed to the mortgagor by the holder in accordance with the disclosure requirements set forth in section 83.7(b)(10) of this Part, and the mortgagor has thereafter elected to enter into the shared appreciation agreement:

(i) a modification under the federal home affordable modification program (HAMP);

(ii) a modification offered under the government sponsored enterprises’ (GSE) HAMP programs or proprietary modification programs, if the loan is owned by the GSE;

(iii) a modification offered by the Federal Housing Administration;

(iv) a proprietary modification offered by the holder, including a proprietary mortgage that includes a principal reduction, principal forbearance and/or principal forgiveness feature without a shared appreciation component; or

(v) traditional refinance, streamlined refinance or refinance under the Home Affordable Refinance Program (HARP) and the Federal Housing Administration Refinance Program.

3 CRR-NY 83.4 Calculation of unpaid principal balance and principal reduction {#sec-3-crr-ny-83.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.4}

(a) Unpaid principal balance.

For the purpose of this Part, the unpaid principal balance, including the principal amount that would conditionally be reduced at the time of consummation of the shared appreciation mortgage modification, shall be calculated as follows:

(1) outstanding principal balance of the mortgage loan after application of the mortgagor’s most recent contractual payment;

(2) less:

(i) the sum of all partial payments received, including unapplied partial payments held by the holder in any suspense account;

(3) plus:

(i) interest arrears calculated at the note rate that would have been in effect if the loan was performing;

(ii) escrow advances for real estate taxes, insurance premiums and other assessments paid on the mortgagor’s behalf to any third party; and

(iii) reasonable and customary third-party attorney fees and other third-party expenses, including appraisals, broker price opinions incurred by the holder in connection with the mortgage loan. In order for the holder to include third-party fees in the calculation of unpaid principal balance, the holder must maintain proper documentation to demonstrate compliance with section 419.10(b) and (c) of this Title.

(a) Shared appreciation agreements may provide that the mortgagor shall share, in accordance with section 83.6 of this Part, in any appreciation in the value of the residential property with the holder in the event of a sale or transfer of the residential property or any interest therein, whether by deed, contract for deed or otherwise; including the following cases:

(1) sale or transfer for value that exceeds the outstanding principal balance of the modified mortgage loan;

(ii) taking of the residential property by eminent domain where payment is made for the full value of the property; or

(iii) casualty loss where the proceeds of the claim are used to repay the principal of the modified mortgage loan.

(b) The following cases do not necessitate a sharing, nor do they extinguish a holder’s claim to a share of the appreciation in value upon a subsequent sale or transfer:

(1) the creation of a lien or other encumbrance subordinate to the holder’s security instrument, which does not relate to a transfer of rights of occupancy in the residential property;

(2) the creation of a purchase money security interest for household appliances;

(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

(4) the granting of a leasehold interest; provided, however, the leasehold interest is not for a period longer than the period permitted to pay off the modified mortgage loan, and the lease does not provide the lessee with an option to purchase;

(5) a transfer to a relative resulting from the death of a mortgagor;

(6) a transfer where the spouse or children of the mortgagor become an owner of the residential property;

(7) a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse or former spouse of the mortgagor becomes an owner of the residential property;

(8) a transfer into an inter vivos trust in which the mortgagor is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the residential property; or

(9) any other transfer or disposition permissible by Federal regulation as not triggering a due-on-sale clause.

(c) The following cases do not prevent a holder from sharing in any appreciation; rather, each entitles the holder to collect the aggregate principal balance, including the principal reduction and interest thereon, calculated at the modified note rate from the date of the shared appreciation agreement to the date of consummation of the transaction:

(1) a refinancing or other satisfaction in full of the modified mortgage loan, which is not in connection with a sale or transfer of the residential property or any interest therein; or

(2) a sale or transfer of the residential property or any interest therein, which occurs within one year of the execution of the modified mortgage loan.

(a) Calculation of appreciation in value.

Appreciation in value of the residential property shall be:

(1) market value received from the sale or transfer of the residential property, or in the case of a sale or transfer that is not for market value, the appraised value of the residential property at or around the time of the disposition;

(2) less:

(i) reasonable real estate commission(s);

(ii) capital improvement(s) net of applicable depreciation; and

(iii) the appraised value of the residential property determined on a date no earlier than 90 days prior to the date the parties entered into the shared appreciation agreement.

(b) Limitation on holder’s share of appreciation.

The holder’s share of the appreciation in value shall be limited to the lesser of:

(1) the amount of the reduction in principal (deferred principal), plus interest on such amount calculated from the date of the shared appreciation agreement to the date of payment based on a rate that is applicable to the modified mortgage loan; or

(2) fifty percent of the amount of appreciation in value as determined by subdivision (a) of this section.

A real estate commission is considered reasonable if it is customary for the services performed in the market area of the property being sold or transferred and calculated at rates generally used to determine such fees within the market area or such fee is calculated in compliance with rates established by State or Federal laws and regulations for calculating such fees.

3 CRR-NY 83.7 Disclosures {#sec-3-crr-ny-83.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.7}

(a) Disclosures required prior to transactions.

Prior to entering into a shared appreciation agreement a holder must provide the mortgagor with a notice with a heading in bold, 14-point type stating that “IMPORTANT DISCLOSURES ABOUT THE CONTRACT IN WHICH YOU AGREE TO GIVE AWAY A PART OF ANY FUTURE INCREASE IN VALUE OF YOUR HOME. PLEASE READ CAREFULLY.” The notice must include the following disclosures:

(1) A statement that the holder will be entitled to receive a share of the appreciation in value of the residential property that occurs between the time of the loan modification and the time the property is sold or transferred.

(2) The limitation on the holder’s share of appreciation in accordance with section 83.6 of this Part.

(3) The methodology the holder is required to use in calculating the appreciation in the value of the residential property.

(4) At least three illustrations of how the appreciation will be shared at the time the mortgagor sells or transfers the property, or pays off the modified mortgage loan at maturity. Such examples to include:

(i) no appreciation in the value of the residential property;

(ii) appreciation of 20 percent; and

(iii) appreciation of 50 percent.

(5) A statement or notice to like effect: YOU SHOULD SEEK INDEPENDENT COUNSELING FROM A LAWYER, A HUD-CERTIFIED MORTGAGE COUNSELOR OR A TAX ADVISOR REGARDING:

(i) THE TRADE-OFF BETWEEN A CURRENT REDUCTION IN THE SIZE OF THE MORTGAGE AND THE PROMISE TO GIVE UP PART OF THE FUTURE INCREASE (APPRECIATION) IN THE VALUE OF YOUR HOME; and

(b) THE TAX CONSEQUENCES OF THE PRINCIPAL FORGIVENESS AND SHARED APPRECIATION AGREEMENT.

(6) A list of the names and contact information of at least five government approved housing counseling agencies in the county where the residential property is located; provided, however, that if there are fewer than five such counselors in that county, the list may include counselors in one or more neighboring counties.

(7) A statement on the potential effect of the shared appreciation agreement on any future refinancing of the modified mortgage loan and the potential effect of any prepayment or refinancing of the modified mortgage loan on the shared appreciation agreement.

(8) A notice to like effect that the mortgagor should consult with other lien holders of the subject residential property as to whether their liens contain clauses that could accelerate such lien holders’ loans as a result of the mortgagor’s execution of the shared appreciation agreement.

(9) A statement that the holder shall not secure a modified mortgage loan by any real or personal property, other than the residential property securing the modified mortgage loan, nor shall it seek a deficiency judgment in order to satisfy such modified mortgage loan.

(b) At or prior to accepting an application for a shared appreciation agreement, a holder must disclose in writing or via electronic media to each mortgagor, in one or more documents, and in plain language, the terms of the transaction sought by the mortgagor. disclosure statement(s) provided to a mortgagor shall include at a minimum the following information:

(1) amounts, if any, the mortgagor must pay to the holder prior to or simultaneously with the execution of the shared appreciation agreement or modified mortgage loan documents;

(2) the events that would terminate or accelerate the mortgagor’s obligations under the shared appreciation agreement and an explicit warning regarding the consequences of defaulting on the modified mortgage loan or breaching the shared appreciation agreement;

(3) a full explanation of how the unpaid principal balance on the pre-modified mortgage loan will be calculated, including a detailed breakdown and listing of all capitalized third-party fees and advances paid for taxes and insurance;

(4) the amount of the monthly payment, including if applicable, escrow amounts for property taxes and hazard insurance, the mortgagor will be required to pay on the modified mortgage loan, amortization period on which payments are calculated and an explanation of the holder’s amortization schedule for the modified mortgage loan, including how the holder determines both the amount of each payment and the proportion of each payment which will be credited to interest. If the monthly payment is expected to change at any time during the term of the loan, holder must also provide an illustrative example of the effects that the increase may have on such payments;

(5) a statement that the shared appreciation agreement requires the maintenance of an escrow account and an explanation of the purpose for requiring escrow payments and how such payments are calculated;

(6) the prevailing and initial interest rate and, if applicable, a statement of the intervals at which the holder may change the interest rate on the loan, including identification of the indexes/indices to be used and how the index values may be obtained by the mortgagor;

(7) a statement that the loan may be prepaid prior to final maturity without penalty. the holder must also specify the mortgagor’s repayment obligation under the shared appreciation agreement at prepayment of the loan;

(8) the holder’s toll-free number and the name of a person to whom a mortgagor may address questions, comments or complaints;

(9) a notice that the mortgagor can submit written complaints to the New York State Department of Financial Services online at (www.dfs.ny.gov/consumer); and

(10) where applicable, that the mortgagor is eligible to enter into a modification or refinance transaction(s) in accordance with section 83.3(a)(3) of this Part, which may also result in lower monthly payments than those currently paid, without having to share in the appreciation of the value of the residential property. such disclosure must also include the amount of such lower monthly payments as well as all other material terms.

(c) With regard to the electronic transmission of notices, a hard-copy of such notice shall be mailed to the mortgagor who indicates that he or she does not have the computer capacity to down-load and print such notice. in those instances in which a hard copy of the notice is not mailed to the mortgagor, the holder must be able to demonstrate that information was obtained as to the mortgagor’s computer capacity to down-load and print such notice.

3 CRR-NY 83.8 Statement on shared appreciation agreement {#sec-3-crr-ny-83.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.8}

Each shared appreciation agreement executed pursuant to the provisions of section 6-f of the Banking Law must contain a conspicuous legend at the top of the agreement printed in at least 14-point type, consisting of substantially the following language: “IN THIS AGREEMENT, YOU ARE GIVING AWAY SOME OF ANY FUTURE APPRECIATION IN THE VALUE OF YOUR HOME. PLEASE READ CAREFULLY.”

3 CRR-NY 83.9 Loss mitigation notification {#sec-3-crr-ny-83.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.9}

Every holder that engages in the business of offering modified mortgage loans shall adopt policies and procedures with respect to the notification process employed by such holder as are appropriate to inform mortgagors at risk of foreclosure about the existence of a modified mortgage loan.

3 CRR-NY 83.10 Fees, charges and interest rate {#sec-3-crr-ny-83.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.10}

(a) Holders may charge at closing, simultaneously with the execution of the shared appreciation agreement, the following fees, costs and amounts; provided, however, that the holder discloses same pursuant to section 83.7(b)(1) of this Part and provided further that the costs or payments are actually paid or will actually be paid by the holder to a third-party provider:

(1) the appraisal fee for the appraisal report of the residential property; provided, however that the holder only collects the cost actually paid for the appraisal report. If circumstances require the holder to obtain a second appraisal report on the residential property, the cost of the second appraisal report shall not be charged to the mortgagor;

(2) fees or charges relating to any transfer, mortgage recording or related tax associated with the shared appreciation mortgage modification and shared appreciation agreement;

(3) fees or premiums for title examination, abstract of title, title insurance or similar purposes;

(4) the cost of tax search for tax liens existing at the time of closing if such search is not included in the title examination;

(5) the cost of a credit report, flood zone search and purchasing mortgage insurance;

(6) attorney fees, which shall be reasonable and customary; and

(7) such other fees as may be specifically authorized by State or Federal laws and regulations governing the origination of mortgage loans or loan modifications.

(b) Interest rate determination.

The rate or rates of interest that a holder may charge or receive on a modified mortgage loan shall be the rate or rates agreed upon by the holder and the mortgagor, provided, however:

(1) that such rate or rates of interest do not exceed the rate or rates in the original pre-modified mortgage loan;

(2) the holder maintains documentation supporting the interest rate pricing, including rate sheets and pricing charts detailing the market rates and margin applied to determine the interest rate for modification purposes; and

(3) the rate or rates is/are permissible under applicable law.

3 CRR-NY 83.11 Prohibitions {#sec-3-crr-ny-83.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 83.11}

(a) No waiver of legal claims and defenses.

A holder shall not require that a mortgagor waive his/her legal claim and/or defense as a condition of obtaining a shared appreciation mortgage modification agreement, or entering into a shared appreciation agreement.

(b) No modification or deferral fees.

The holder may not charge a mortgagor any fees to modify, renew, extend, or amend a high-cost home loan (as defined by section 6-l of the Banking Law) or to defer any payment due under the terms of a high-cost home loan if, after the modification, renewal, extension or amendment, the loan is still a high-cost home loan or, if no longer a high-cost home loan, the annual percentage rate has not been decreased by at least two percentage points. For purposes of this subdivision, fees shall not include interest that is otherwise payable and consistent with the provisions of the loan documents.

The holder shall not engage in any unfair or deceptive business practices, or misrepresent or omit any material information in connection with negotiation, execution or consummation of a shared appreciation mortgage modification agreement or shared appreciation agreement. Such practices include, but are not limited to, misrepresenting the amount of appreciation to which the holder is legally entitled to receive, omitting material information on the upfront cost of the modified mortgage, or failing to adequately make any of the disclosures required under section 83.7 of this Part.

(d) Refusal to communicate with mortgagor’s representative.

The holder of the modified mortgage loan shall not refuse to communicate with an authorized representative of the mortgagor after such representative has provided written authorization signed by the mortgagor, provided that the holder may establish procedures to verify that the representative is in fact authorized to act on behalf of the mortgagor.

(e) Collection of appreciation in violation of the Law.

No shared appreciation agreement or shared appreciation mortgage modification agreement document shall contain any term that grants the holder of the modified mortgage loan the right to receive a share of the appreciation in value other than that provided for in section 83.6 of this Part.

(f) Consummation of a shared appreciation transaction without counseling.

No holder shall execute or consummate a shared appreciation mortgage modification agreement or shared appreciation agreement unless such holder has obtained documentation, in writing, that the terms of the shared appreciation mortgage modification and shared appreciation agreement have been explained to the mortgagor by an attorney representing such mortgagor or by a counselor from a government approved housing counseling agency.

(g) Prepayment penalty.

No shared appreciation agreement shall include terms that require a mortgagor to pay a penalty upon prepayment of the modified mortgage loan.

(h) Appraisal independence.

No holder shall engage in practices that unduly influence the independence of a licensed appraiser. For purposes of this subdivision, such prohibited practices include, but are not limited to:

(1) any action undertaken by the holder, or any other person with an interest in the underlying transaction, to directly or indirectly compensate, coerce, extort, collude, instruct, bribe or intimidate a person or other entity conducting or involved in an appraisal, or attempts to compensate, coerce, extort, collude, instruct, induce, bribe or intimidate such person, for the purpose of causing the appraised value assigned under the appraisal to the property to be based on any factor other than the independent judgment of the licensed appraiser;

(2) mischaracterizing or suborning any mischaracterization of the appraised value of the property securing the extension of the mortgage loan;

(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and

(4) withholding or threatening to withhold timely payment for an appraisal report when the appraisal report or services are provided for in accordance with the contract between the holder and the licensed appraiser and/or his employer.

(i) Principal balance after shared appreciation mortgage modification.

The principal balance of the mortgage loan after the shared appreciation mortgage modification shall be no greater than:

(1) an amount which when combined with other modification factors, such as lower interest rate or term extension, results in monthly payments that are 40% of the mortgagor’s DTI; and

(2) 100 percent of the appraised value.

(j) Capitalization of late fees.

The holder of the mortgage loan shall not capitalize any late fees, and shall waive any such fees assessed against the mortgagor for the period during when the mortgage loan was delinquent.

(k) Sole asset.

Notwithstanding any provisions of State law, regulation or interpretation to the contrary, a holder shall not secure a modified mortgage loan by any real or personal property, other than the residential property securing the modified mortgage loan, nor shall it seek a deficiency judgment in order to satisfy such modified mortgage loan.

Part 84 CERTAIN MORTGAGE LOANS

3 CRR-NY 84.1 Explanatory note {#sec-3-crr-ny-84.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 84.1}

Chapter 1 of the Laws of 1983 vested in the superintendent broad authority to prescribe regulations governing loans secured by real estate made by banks, trust companies, savings banks and savings and loan associations. At the same time, chapter 1 deleted from the Banking Law certain rigid technical requirements, principally in the area of maximum loan-to-appraised value limitations, which had applied to such loans. This Part establishes certain prudential requirements and applies to all loans secured by real estate or cooperative apartment units, and to which the provisions of sections 103(4), 235(5-a), 235(6), 380(1) and 380(3) apply. The provisions of this Part do not apply to any loan with respect to which the superintendent has adopted regulations pursuant to either section 6-f of the Banking Law (alternative mortgage instruments) or sections 103(4-a), 235(6-a) and 380(4-a) of such law (junior mortgage authority).

3 CRR-NY 84.2 Definitions {#sec-3-crr-ny-84.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 84.2}

For purposes of this Part:

(a) The term mortgage loan shall mean any loan made on the security of residential, nonresidential, improved or unimproved real estate where the lender relies upon such real estate as security for the loan, including a loan secured by a lien on an existing ownership interest in certificates of stock or other evidence of an ownership interest in, and for a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of real estate. The term mortgage loan shall not include any loan not considered to be a loan upon the security of real estate within the meaning of section 103(4)(b) of the Banking Law.

(b) The term lender shall mean a bank, trust company, savings bank or savings and loan association organized under the provisions of the Banking Law.

3 CRR-NY 84.3 Statement of policy {#sec-3-crr-ny-84.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 84.3}

Except as provided herein, the superintendent has determined not to reinstate specific loan limits for improved or unimproved real estate per se or lending limits relating to locational requirements (except to the extent that the same continue to be provided for in the Banking Law). At the same time, the superintendent expects lenders to make and purchase mortgage loans under specific internal guidelines which are consistent with safe and sound banking practices. Such guidelines shall, among other things, contain provisions which ensure that the lender will meet the credit needs of its entire community, including low- and moderate-income neighborhoods and establish limits on:

(a) credit concentrations to any single mortgagor (including affiliates);

(b) credit concentrations by loan type and location; and

These guidelines shall be available to the superintendent to review in the course of any examination or investigation which he may undertake.

3 CRR-NY 84.4 Maximum mortgage loan for certain mortgagees {#sec-3-crr-ny-84.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 84.4}

No bank or trust company shall make a mortgage loan in an amount in excess of 15 per centum of the capital stock, surplus fund and undivided profits of such bank or trust company.

3 CRR-NY 84.5 Appraisals {#sec-3-crr-ny-84.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 84.5}

Mortgage loans may be made by a bank, trust company, savings bank or savings and loan association upon a written and signed certificate by one person appointed by its board of directors or board of trustees which states that the real property described in the mortgage has been examined and which appraises the value of such property.

Part 85 INVESTMENT IN SERVICE CORPORATIONS BY SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 85.1 Scope {#sec-3-crr-ny-85.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.1}

The provisions of this Part apply to all savings banks and savings and loan associations which invest in the stock, capital notes and debentures of service corporations. The authority contained in this Part shall be in addition to any other lending or investment powers authorized by law or regulation.

3 CRR-NY 85.2 Permitted activities {#sec-3-crr-ny-85.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.2}

(a) Sections 235-d and 379-b of the Banking Law permit savings banks and savings and loan associations to invest in bank service corporations which may make such investments and render such services as are authorized for their parent savings banks or savings and loan associations, and which may engage in such other activities as may be prescribed by the superintendent by general regulation. Savings banks and savings and loan associations may make such investments to the extent and upon the conditions that have been authorized by the superintendent.

(b) A service corporation may engage in the following activities:

(1) originating, investing in, purchasing, selling, servicing or otherwise dealing in, directly or through participation, loans of any type which may be made by a thrift institution;

(2) providing services primarily for other financial institutions (e.g., accounting, auditing, clerical, consulting, data processing, investment dvisory, managerial);

(3) providing insurance brokerage or agency services;

(4) providing travel agency and tax preparation services;

(5) providing real estate services (e.g., brokerage, appraisal, inspection, property management);

(6) providing courier services;

(7) sponsoring, organizing and advising open-end mutual funds;

(8) providing securities services (e.g., brokerage, investment advice);

(9) leasing personal property to customers;

(10) engaging in factoring;

(11) acquiring investment securities;

(12) issuing letters of credit;

(13) issuing credit cards and engaging in credit card operations;

(14) acquiring improved or unimproved real property for the purpose of subdividing, developing, constructing improvements thereon, and reselling, leasing or operating such property for the production of income; and

(15) any other activity specifically approved by the superintendent.

3 CRR-NY 85.3 Investment procedures {#sec-3-crr-ny-85.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.3}

Any capital investment in either de novo or existing service corporations by savings banks or savings and loan associations shall be made in accordance with the procedures contained in this section.

(a) Prior notice.

Savings banks and savings and loan associations which seek to make a capital investment in a service corporation which will engage in any of the activities listed in section 85.2(b)(1)-(14) of this Part, shall notify the superintendent, in writing, of such intention not less than 45 days prior to making such investment. If the superintendent does not object, in writing, within 45 days after receipt of a completed notice, the savings bank or savings and loan association may make the contemplated investment.

(b) Application to superintendent.

Savings banks and savings and loan associations which seek to make a capital investment in a service corporation which will engage in any activity requiring the specific approval of the superintendent shall submit a written application therefor.

Savings banks and savings and loan associations which give the superintendent notice as specified in subdivision (a) of this section or make application to the Banking Board as specified in subdivision (b) of this section shall, together with such notice or application, as the case may be, submit the information required to be submitted by a bank or trust company in accordance with sections 113.2 and 113.3 of Supervisory Procedure CB 113 of this Title.

3 CRR-NY 85.4 Aggregate limitation {#sec-3-crr-ny-85.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.4}

The aggregate amount of a savings bank's or savings and loan association's investments in the stock, capital notes and debentures of its service corporations, together with the aggregate amount of loans to such service corporations, shall not exceed 10 percent of the assets of such savings bank or savings and loan association. This limitation shall not apply to loans made to service corporations whose activities are limited to those specified in section 85.2(b)(1) of this Part. For the purposes of this section, a loan shall include any loan or advance made directly or indirectly to a service corporation (excluding accounts payable incurred in the ordinary course of business and paid within 60 days) and guarantees, standby letters of credit or take-out commitments issued to or for the account of its service corporations or their subsidiaries. For example, a loan to a joint venture or other entity in which a service corporation has a direct or indirect equity interest shall be deemed to be a loan to a service corporation for the purposes of this section.

3 CRR-NY 85.5 Debt limitation for service corporations {#sec-3-crr-ny-85.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.5}

No service corporation shall have total outstanding consolidated debt (exclusive of accounts payable incurred in the ordinary course of business and paid within 60 days and capital notes and debentures) exceeding 20 times the total consolidated net worth of the service corporation (including capital notes and debentures). For the purposes of this section:

(a) consolidated debt shall include the entire amount of any obligation resulting from the sale of assets with recourse; and

(b) capital notes and debentures shall refer those obligations which are subordinated to the claims of unsecured general creditors and which have an original average weighted maturity of at least seven years.

3 CRR-NY 85.6 Separate existence of service corporation {#sec-3-crr-ny-85.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.6}

Every service corporation shall be operated in a manner which demonstrates to the public that the service corporation has separate corporate existence and is operationally distinct from its parent savings bank or savings and loan association. Every instrument which evidences a borrowing by a service corporation shall specifically indicate whether or not, and to what extent, its parent institution is liable for such borrowing.

3 CRR-NY 85.7 Examination of service corporation {#sec-3-crr-ny-85.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 85.7}

No savings bank or savings and loan association shall invest in or make loans to any service corporation or subsidiary thereof after the effective date of this Part, unless and until the parent institution has executed and filed with the superintendent a letter agreement which (a) states that the service corporation is subject to the general supervision of the department, (b) permits periodic examinations of the service corporation and/or any subsidiary thereof, as the superintendent deems necessary, and (c) states that the parent institution will reimburse the department for the total cost of such examinations.

Part 86 ORGANIZATION AND OPERATION OF STOCK-FORM SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 86.1 Scope {#sec-3-crr-ny-86.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.1}

This Part implements the superintendent’s authority under section 14-e of the Banking Law to facilitate the organization of stock-form savings banks and stock-form savings and loan associations and the conversion of mutual savings banks and savings and loan associations to stock form consistent with the declaration of policy of chapter one of the Laws of 1984.

3 CRR-NY 86.2 Definitions {#sec-3-crr-ny-86.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.2}

As used in this Part and in any forms promulgated hereunder, the following terms shall have the following meanings, unless the context clearly requires otherwise:

(a) The terms company and doing business shall have the same meaning ascribed to them in section 141 of the Banking Law.

(b) The term competing offeror shall mean any person other than a proposed acquiror who makes an offer to purchase control of a converting institution pursuant to section 86.6 of this Part.

(d) The term eligible account holder shall mean any depositor of a mutual savings bank who owned in such bank one or more accounts valued in the aggregate at $100 or more on the eligibility record date, or any shareholder of a mutual savings and loan association who owned shares in such association valued at $100 or more on the eligibility record date.

(e) The term eligibility record date shall mean the date established by the board of trustees of a saving bank or the board of directors of a savings and loan association as the date on which depositors of such savings bank or shareholders of such savings and loan association shall be deemed to be eligible account holders. The eligibility record date shall be no less than 30 days and no more than 120 days prior to the date on which the plan of conversion is adopted by such directors or trustees.

(f) The term person shall mean any corporation, partnership, trust, unincorporated association, any other entity or a natural person.

(g) The term preliminary offering circular shall mean the form of offering circular filed with the superintendent which has not been approved by the superintendent for use in connection with the sale of capital stock to be issued by the converting institution.

(h) The term preliminary proxy statement shall mean the form of proxy statement filed with the superintendent which has not been approved for public distribution by the superintendent.

(i) The term proposed acquiror shall mean any person who makes an offer to purchase control of a converting institution pursuant to section 86.6 of this Part, which offer is accepted by the board of directors or trustees of the converting institution and is submitted to the superintendent for approval as part of the plan of conversion adopted by such directors or trustees.

(j)

(1) The term proxy solicitation shall mean, whether made through the use of the mails, telephone, print media or otherwise:

(i) any request for a proxy whether or not accompanied by or included in a form of proxy;

(ii) any request to execute, not to execute, or to revoke a proxy;

(iii) the furnishing of a form of proxy or other communication to eligible account holders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy; or

(iv) any action or statement that is designed to influence or may reasonably be anticipated to have the effect of influencing the decision whether, or how, to vote by any eligible account holder.

(2) The term proxy solicitation shall not include:

(i) the furnishing of a form of proxy to an eligible account holder upon the unsolicited request of such eligible account holder;

(ii) the performance by any person of ministerial acts on behalf of a person soliciting a proxy;

(iii) statements or publications by any person which do no more than analyze the plan of conversion or specific portions thereof presented to eligible account holders by the board of trustees or board of directors; and

(iv) any proxy solicitation by or on behalf of any person who does not, at any time during such solicitation, seek directly or indirectly, either on his/her own or another's behalf, the power to act as proxy for an eligible account holder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent or authorization; provided that this subparagraph shall not apply to the thrift or any person acting on the thrift's behalf.

(k) The term subaccount shall mean, with respect to each eligible account holder, the portion of the liquidation account which such eligible account holder would be entitled to receive pursuant to this Part upon a complete liquidation of the converted institution.

(l) The term thrift shall mean any mutual savings bank or mutual savings and loan association organized under or subject to the provisions of article VI or X of the Banking Law.

3 CRR-NY 86.3 De novo chartering; conversions from Federal charter to State charter, followed by a simultaneous conversion to stock-form {#sec-3-crr-ny-86.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.3}

(a) Five or more persons may incorporate a stock-form thrift in accordance with the requirements of articles II and XV of the Banking Law governing the incorporation of a bank or trust company. If the shares of a de novo stock-form thrift will be offered in a public offering, an offering circular in the form prescribed in section 86.15 of this Part shall be submitted to the superintendent for his approval within such time as shall be prescribed in this Part as a condition precedent to the issuance of an authorization certificate to such thrift.

(b) Where an existing federally chartered mutual savings bank or mutual savings and loan association proposes to convert to State charter pursuant to the provisions of Part 87 of this Title and simultaneously therewith to convert from mutual form to stock-form, any vote taken by the depositors of the Federal mutual thrift which is in compliance with the provisions of this Part shall be deemed equivalent to a vote required of the depositors of State-chartered mutual thrifts for purposes of this Part.

3 CRR-NY 86.4 General provisions relating to the conversion (other than a conversion effected pursuant to any contrary provisions of section 86.12 of this Part) of a thrift from mutual to stock-form of organization {#sec-3-crr-ny-86.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.4}

(a)

(1) The board of trustees or the board of directors, as the case may be, of a thrift may determine to convert the institution to stock-form of ownership, and to seek the superintendent's approval therefor, by first securing the approval of its plan of conversion by a majority of the entire board of such trustees or directors, at a meeting duly held upon not less than 15 days' notice (or upon such shorter notice, or without notice, provided all the members of such board waive in writing such 15-day notice period), said notice to contain a copy of the plan of conversion proposed to be filed with the superintendent.

(2) Following the approval of the plan of conversion by the board of trustees or directors, the converting institution shall promptly provide public notice of its plan to convert to stock form. Such public notice shall be made by means of the posting of a notice in a conspicuous place in the principal and branch offices (which term shall not include separate electronic facilities) of the institution, the issuance of a press release containing all material details of the proposed conversion (and such other information required to make the press release not false or misleading) and the placing of an advertisement containing such material details (and such other information, if any) in a newspaper of general circulation in the communities where the principal offices and branches of the converting institution are located. Thereafter, such institution shall file with the superintendent for approval an application for conversion containing all of the information required by section 86.13 of this Part. The superintendent's approval or disapproval shall be given within 60 days after the superintendent shall have acknowledged to the applicant that the contents of the application and the required documents and exhibits are substantially complete and acceptable in the form submitted.

(3) If approved, such institution shall submit the plan of conversion to its eligible account holders, for approval at a meeting held upon written notice given no less than 20 days nor more than 45 days prior to the date of such meeting. Separate notices shall be sent to joint account holders at each address appearing on the records of the institution as the address of a joint account holder, except that only one notice need be sent to joint account holders residing at the same address. Such notice shall be sent by first class mail postage prepaid and shall consist of a notice of meeting and shall be accompanied by a proxy card and either a proxy statement or a short-form proxy statement, each to comply with the provisions of section 86.14 of this Part. The proxy card: shall indicate in boldface type whether the proxy is solicited on behalf of the management; shall provide specifically designated blank spaces for dating and signing such proxy card; shall identify clearly and impartially each matter or group of related matters intended to be acted upon at the meeting; shall be clearly labeled “revocable proxy” in boldface type; shall describe any charter or other requirement restricting or conditioning voting by proxy; shall contain an acknowledgment by the person giving the proxy that he has received a proxy statement prior to signing the form of proxy; shall contain the date, time and place of meeting, if practicable; shall provide by a box or otherwise, a means whereby the depositor or shareholder solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of each matter referred to therein as intended to be acted upon; and shall indicate in boldface type how the proxy shall be voted on each such matter as to which no choice is so specified. Only one joint account holder must sign a proxy card sent in connection with a joint account, if clearly stated on the proxy card. No such proxy shall confer authority to vote at any meeting other than the meeting (or any adjournment thereof) to vote on conversion. A proxy may be deemed to confer authority to vote with respect to matters incident to the conduct of such meeting. The proxy statement or form of proxy shall provide that the votes represented by the proxy will be voted; that, where the depositor or shareholder solicited specifies by means of a ballot a choice with respect to any matter to be acted upon, the votes will be voted in accordance with the specifications so made; and that if no choice is specified, the votes will be cast as indicated in boldface on the proxy card.

(4) A vote of 75 percent in amount of deposit liabilities or book value of outstanding shares, as the case may be, represented in person or by proxy at such meeting shall be required for approval of the plan. No specific minimum amount of deposits or shares shall be required to be present either in person or by proxy at such meeting in order to constitute a quorum for the transaction of business. No eligible account holder may cast more than 1,000 votes at such meeting. The board of trustees or board of directors, as the case may be, shall appoint an independent custodian and tabulator to receive and hold the proxy cards and to count the votes cast in favor of and in opposition to the plan of conversion. In the event provision is made for the receipt of proxies at offices of the converting institution, proxies must be deposited unopened in sealed containers that are maintained and delivered unopened in a sealed state to the custodian and tabulator. Such custodian and tabulator shall not be affiliated with any party with an interest in the transaction, including any financial advisor, underwriter, appraiser, law firm or proxy solicitation firm engaged by the board of trustees or directors in connection with the conversion.

(5) A depositor or shareholder shall be eligible to vote if he shall have met the requirements of section 9019 of the Banking Law as of the eligibility record date.

(6) Within five days after the meeting of shareholders or depositors (which is any event shall be before the amended organization certificate of the converting thrift is filed pursuant to subdivision [c] of this section), the president and secretary of the converting institution shall certify to the superintendent the result of the vote taken at such meeting.

(b) The application for conversion shall be in the form prescribed by section 86.13 of this Part and shall be accompanied by the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

(c) When the superintendent shall have determined to approve or disapprove the application for conversion, he or she shall so advise the converting institution in writing and, in the case of a determination of approval, and after the converting institution shall have completed arrangements to sell its shares and shall have taken such other steps as may be required hereunder, the superintendent, if satisfied that the requirements of this Part have been met, shall endorse his or her approval on the amended organization certificate and shall cause it to be filed in the office of the superintendent and with the clerk of the county in which the converting institution's principal office is located. At the time the conversion from mutual to stock form becomes effective, the converting institution shall cease to be a mutual institution and shall simultaneously become a stock-form institution, and all the property of the mutual institution shall remain as the property of the stock-form institution. All of the rights, powers, franchises, debts, liabilities, obligations and duties of the mutual institution shall continue as such in the stock-form institution and all share interests (in the case of savings and loan associations) and deposits (in the case of savings banks) therein shall remain as deposits of equal value and character of such stock-form institution. The corporate existence of the converting mutual institution shall not terminate, and such converted stock-form institution shall be a continuation of the mutual form institution which existed immediately before the filing of the amended organization certificate.

(d)

(1) To the extent consistent with applicable law, a converting institution will be required to make available a list of the names and addresses of all of its eligible account holders to any eligible account holder requesting such list. The eligible account holder requesting such list shall be required to pay the reasonable costs incurred by the converting institution in producing such list. Such list shall not contain any information regarding the amount of deposits or shares held in the accounts of the eligible account holders, except that the converting institution shall be required to disclose the aggregate book value of all such deposits or shares. Such list shall be made available with reasonable promptness so as to permit any eligible account holder to conduct a proxy solicitation of the other eligible account holders in advance of the meeting convened to approve the proposed conversion. Any eligible account holder who requests a list of eligible account holders pursuant to this subdivision shall submit with such request a declaration concerning his or her eligibility to vote on the conversion and a statement indicating the purposes for which the list will be used and shall submit a notarized affidavit, affirmation or similar document attesting that the eligible account holder:

(i) will not use the list for any purpose other than to solicit other eligible account holders with respect to the same solicitation commenced by the thrift;

(ii) will not disclose the information appearing on the list to any person other than an employee or agent of such eligible account holder to the extent necessary to effectuate the communication or solicitation; and

(iii) will return the list and all copies thereof in his or her possession to the converting institution no later than the date of the meeting of eligible account holders, as such date may be postponed or extended.

(2) Subject to the receipt of the items listed in paragraph (1) of this subdivision, the thrift shall respond to any bona fide request for a list of eligible account holders with reasonable promptness and such list shall be complete (unless the eligible account holder has requested a more limited list of eligible account holders) and accurate. The list shall be in the form requested to the extent that such form is available to the thrift without undue burden or expense.

(3) As an alternative to providing a list of eligible account holders, a thrift may at its discretion mail copies of any proxy materials, form of proxy or other solicitation materials furnished by the eligible account holder requesting such list to the other eligible account holders. If the thrift elects to mail these materials itself, it shall notify the eligible account holder requesting the list of such election and provide such eligible account holder with information as to the number of other eligible account holders, or any more limited group of eligible account holders designated by the eligible account holder requesting the list, if available under the thrift's data processing systems. The thrift shall also give the eligible account holder requesting the list the estimated cost of mailing his or her materials. The thrift shall mail such materials to the eligible account holders designated by the requesting eligible account holder with reasonable promptness, but in no event later than 48 hours after delivery of the material to be mailed together with envelopes or other reasonable containers therefor, postage or payment for postage and other reasonable expenses of effecting such mailing; provided, however, that such materials need not be mailed prior to the first day on which solicitation is made on behalf of management of the converting institution. Except for information incorporated by reference to management's own proxy statement, form of proxy or other solicitation materials, neither management of the converting institution nor the converting institution shall be responsible for the content of such materials.

(e) Any proxy solicitation in connection with approval of a plan of conversion pursuant to this Part shall be conducted in accordance with the following:

(1) Except as otherwise provided in section 86.6 of this Part, proxy solicitations subject to this Part may only be conducted by the thrift or an eligible account holder or any person acting on behalf of the foregoing. Notwithstanding the foregoing, any person may finance a proxy solicitation conducted by an eligible account holder; provided that such financing and the nature of the person's interest, if any, in the transaction is disclosed. No person providing financing may engage in any activity that would itself constitute a proxy solicitation or that would amount to a proxy solicitation by an eligible account holder on behalf of that person.

(2) No proxy solicitation subject to this Part shall be made unless each person solicited is concurrently furnished, or has previously been furnished, a written proxy statement on form 86-PS, the use of which has been approved by the department. Any eligible account holder submitting a proxy statement for review by the department shall do so no less than five business days prior to its intended use.

(3) All additional proxy solicitation materials, including press releases, advertisements, and radio and television scripts, shall be submitted to the department for review at least five business days before their intended use. Proxy solicitation materials approved for use by the department shall be distributed to eligible account holders within 10 days of such authorization unless extended in writing by the department.

(4) The fact that a proxy statement, form of proxy or other proxy solicitation material has been filed with or reviewed by the department and authorized for use shall not be deemed a finding by the department that such material is accurate or complete or not false or misleading, or that the department has passed upon the merits of or endorsed or recommended any proposal contained therein. No representation contrary to the foregoing shall be made by any person.

(5) All proxy solicitation materials used by or on behalf of an eligible account holder shall include, at a minimum, the name of the eligible account holder soliciting the proxy or on whose behalf the proxy is being solicited, the name of the person(s) soliciting proxies on behalf of such eligible account holder, the length of time he or she has been a depositor or shareholder, and the reasons he or she is making the solicitation. If a proxy solicitation by an eligible account holder is being financed by a third party, such party's identity and interest, if any, in the transaction shall be disclosed.

(6) All proxy solicitation materials used by or on behalf of an eligible account holder shall solicit proxies only for an affirmative or negative vote with respect to the plan of conversion approved by the board of trustees or directors for presentation to eligible account holders and may not confer discretionary authority.

(7) Eligible account holders shall not engage in proxy solicitations at offices of the thrift, except that, if the converting institution is making its proxy solicitation materials available at its offices, it shall give any eligible account holder conducting a proxy solicitation the opportunity to make his or her proxy solicitation materials available at such locations. The converting institution shall display such materials in clearly visible and accessible locations in its offices and shall post a prominent and conspicuous notice of their availability.

(f) A plan of conversion shall contain provisions to the effect that:

(1) The converting institution shall issue and sell its capital stock at a total price equal to the estimated pro forma market value of such stock in the converted institution (plus a control premium, if applicable) based on an independent valuation, as provided in this Part.

(2) An eligibility record date shall be established which date shall be no more than 120 days and no less than 30 days prior to the date on which the board of the converting institution adopts the plan of conversion.

(3) For a period of three years following the effective date of the conversion, no officer, director, trustee (or any person who was an officer, director or trustee at any time after the date on which the board adopts the plan of conversion), or associate of any of them shall, without the prior written approval of the superintendent, purchase or acquire direct or indirect beneficial ownership of the capital stock of the converted institution, except from a broker or dealer registered with the Securities and Exchange Commission.

(4) The sale price of the shares of capital stock to be sold in the conversion shall be a uniform price determined in accordance with section 86.5(c) of this Part.

(5) The conversion must be completed within a specified time period after the date on which the plan of conversion is approved by the superintendent. The time period shall be not more than 24 months from the date on which the plan of conversion is approved by the superintendent.

(6) Each time, savings or share account holder of the converting mutual institution shall become a withdrawable time or savings account in the converted stock-form institution equal in withdrawable amount to the withdrawal value of such account in the converting mutual institution.

(7) A liquidation account shall be established and maintained for the benefit of the eligible account holders in the event of a subsequent complete liquidation of the converted institution in accordance with the provisions of subdivision (g) of this section.

(8) The holders of the capital stock of the converted stock-form institution to be issued in connection with the conversion shall have exclusive voting rights, except as may be provided in the organization certificate as amended after the effective date of the conversion.

(9) The plan of conversion adopted by the converting institution's board of directors or trustees may be substantively amended by such board as a result of comments received from regulatory authorities or otherwise prior to the solicitation of proxies from depositors or shareholders to vote on the plan of conversion and at any time thereafter with the concurrence of the superintendent; and the conversion (except a conversion effected pursuant to section 86.6[b] of this Part) may be terminated by such board at any time prior to the meeting of depositors or shareholders called to consider the plan of conversion and at any time thereafter with the concurrence of the superintendent.

(10) All shares of capital stock of the converting institution purchased or acquired (either directly or indirectly) by directors, trustees or executive officers (as such form is defined by Part 70 of this Title) on original issue in the conversion either directly from the institution (by subscription or otherwise) or from an underwriter (or otherwise beneficially owned by such directors, trustees or executive officers immediately after such original issuance) shall be subject to the restriction that the shares shall not be sold for a period of not less than one year following the date of purchase, except in the event of death or judicial declaration of incompetency of the director, trustee or executive officer.

(11) In connection with shares of capital stock of the converted stock-form institution subject to restriction on resale:

(i) each certificate for such shares shall bear a legend giving appropriate notice of such restriction;

(ii) appropriate instructions shall be issued to the transfer agent for the converted institution's capital stock with respect to applicable restrictions on transfer of any such restricted stock; and

(iii) any shares issued as a stock dividend, stock split or otherwise with respect to any such restricted stock may not be sold until the restrictions respecting such originally restricted stock are terminated, and any certificate for such shares shall bear a legend advising of such restrictions.

(12) The converting institution, and in the case of a conversion calling for the formation of a holding company, such holding company, will restrict the repurchases of its stock and the implementation of stock option and management and employee stock benefit plans as provided in subdivision (h) of this section.

(13) The expenses incurred in the conversion shall be reasonable.

(14) No provision contained in such plan shall be determined by the superintendent to be inequitable or detrimental to the converting institution, its depositors or shareholders, or to be contrary to the public interest.

(15) The converting institution shall not loan funds or otherwise extend credit to any person for the purpose of purchasing the capital stock of such institution.

(g) Liquidation account.

(1) Each converted institution shall, at the time of conversion, establish a liquidation account in an amount equal to at least the amount of net worth (determined in accordance with generally accepted accounting principles) of the converting institution as set forth in its latest statement of financial condition contained in the proxy statement. The function of the liquidation account is to establish a priority on liquidation by providing to eligible account holders rights upon liquidation of the converted institution initially at least equal to the rights that they have to the net worth of the institution if the institution were to be liquidated immediately prior to conversion and, except as provided in paragraph (2) of this subdivision, the existence of the liquidation account shall not operate to restrict the use or application of any of the net worth accounts of the converted institution.

(2) The liquidation account shall be maintained by the converted institution for the benefit of eligible account holders who maintain their accounts in such institution. Each such eligible account holder shall, with respect to each account held, have a related inchoate interest in a portion of the liquidation account balance.

(3) In the event of a complete liquidation of the converted institution (and only in such event), each eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account in the amount of the then-current adjusted subaccount balance for each account of such holder then in the converted institution, before any liquidation distribution may be made with respect to capital stock, except with respect to any preferred stock issued in exchange for the surrender at the time of the conversion of mutual capital certificates or other net worth certificates which have been issued to its Federal deposit insurer by the institution prior to such conversion. Preferred stock issued in exchange for such certificates may receive distributions in liquidation prior to any distribution to an eligible account holder with respect to the liquidation account to the same extent that the holders of such certificates would have been entitled to priority over the residual rights of depositors or shareholders had the institution not been converted as of the date of liquidation.

(4) The initial subaccount balance for an account held by an eligible account holder shall be determined by multiplying the aggregate opening balance in the liquidation account by a fraction of which the numerator is the amount of deposits or shares in the account of such eligible account holder on the eligibility record date and the denominator is the total amount of deposits or shares owned by all eligible account holders in the converting institution on such date. Such initial subaccount balance shall not be increased, and it shall be subject to downward adjustment as provided in paragraph (e)(5) of this section.

(5) If the deposit or share balance in any account of an eligible account holder at the end of any period for which the converted institution has prepared audited financial statements subsequent to the eligibility record date is less than the lesser of:

(i) the deposit or share balance in such account at the end of any period for which the converted institution has prepared audited financial statements subsequent to the eligibility record date; or

(ii) the amount of the deposits or shares as of the eligibility record date, the subaccount balance for such account shall be adjusted by reducing such subaccount balance in an amount proportionate to the reduction in such deposit or share balance. In the event of such a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit or share balance of the related account. If any such account is closed, the related subaccount balance shall be reduced to zero.

(h) Restrictions on repurchase of stock; payment of dividends; and use of stock option and management or employee stock benefit plans.

Each institution that converts pursuant to this Part shall be subject to the following conditions:

(1) Except with the prior approval of the superintendent, no converted institution or holding company of a converted institution may repurchase any of its outstanding common stock prior to the first anniversary of the effective date of the conversion. Nor, during the second and third years following conversion, may there be a repurchase in excess of five percent of the holding company's or converted institution's outstanding common stock in any 12-month period without the prior approval of the superintendent. In determining whether to grant such approval, the superintendent shall consider:

(i) the financial condition and history of the holding company and/or the converted institution, as the case may be;

(ii) the adequacy of its capital structure;

(iii) its future earnings prospects;

(iv) the quality of its management;

(v) whether such repurchase shall result in fair treatment to the holding company or the converted institution, as the case may be; and

(vi) the public interest generally.

(2) No converted institution shall declare or pay a cash dividend on any of its capital stock if the effect thereof would cause the net worth of the converted institution to be reduced below the amount required to maintain the liquidation account.

(3) For a period of at least one year from the effective date of the conversion, no converted institution shall implement any non-tax-qualified management of employee stock benefit plan or stock option plan unless:

(i) each plan was fully disclosed in the proxy solicitation and stock offering materials;

(ii) the total number of shares of common stock for which options may be granted does not exceed 10 percent of the amount of shares issued in the conversion;

(iii) the aggregate number of shares in management and employee stock benefit plans does not exceed four percent of the amount of shares issued in the conversion;

(iv) no individual shall receive more than 25 percent of the shares of any plan and directors who are not employees of the institution shall not receive more than five percent of the stock individually, or 30 percent in the aggregate, of any plan;

(v) all plans are approved by a majority of the institution's stockholders, or in the case of a holding company formed in connection with the conversion, its stockholders, prior to implementation and no earlier than six months after the conversion;

(vi) the exercise price of options shall be the market price at which the stock is trading at the date of grant; and

(vii) no conversion stock is used to fund management or employee stock benefit plans.

(i) Manipulative and deceptive devices.

In connection with the conversion of a thrift to stock form, or the offer, sale or purchase of capital stock issued in connection with such conversion, no institution, any director, officer or trustee thereof, any person soliciting proxies or acting on behalf of any person soliciting proxies in connection with such conversion, or any person seeking to acquire control of such institution, shall:

(1) employ any device, scheme or artifice to defraud;

(2) make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

(3) engage in any act, transaction, practice, or course of business which operated or would operate as a fraud or deceit upon a purchaser or seller of such capital stock.

(j) No person may offer to distribute cash or other valuable consideration to eligible account holders in connection with any conversion other than, with the prior approval of the superintendent, a supervisory conversion pursuant to section 86.12 of this Part.

(k) Acquisition of the securities of converting and converted institutions.

(1) Prior to the completion of a conversion, no person shall offer to transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of the capital stock to be issued in connection with the conversion, except pursuant to or contemplated by the plan of conversion filed with the superintendent.

(2) Prior to the completion of a conversion, no person shall make any offer, or any announcement of an offer, for any security of the converting institution issued in connection with the conversion nor shall any person knowingly acquire securities of the converted institution issued in connection with the conversion in excess of the maximum purchase limitations established in the institution's approved plan of conversion.

(3) Except with the prior approval of the superintendent, no person for a period of one year following the date of the completion of the conversion shall directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10 percent of any class of capital stock of an institution converted in accordance with the provisions of this Part. In addition to the provisions of this section, the provisions of article III-A of the Banking Law shall apply to any such acquisition.

(l) Tax opinions and rulings.

The superintendent may refuse to approve any plan of conversion which may in the judgment of the superintendent result in a taxable reorganization of the converting institution under the Internal Revenue Code of 1954, as amended.

(m) Consents of experts.

If any accountant, attorney, investment banker, appraiser, or other person whose professions give authority to a statement made in any document filed under this Part is named as having prepared, reviewed, passed upon, or certified any part thereof, or any report or valuation for use in connection therewith, the written consent of such person shall be filed with the application for conversion. If any portion of a report of an expert is quoted or summarized as such in any filing, the written consent of the expert shall expressly state that the expert consents to such use. All written consents filed pursuant to this subdivision shall be dated and signed manually. A list of such consents shall be filed with the application for conversion. Where the consent of the expert is contained in his report, a reference shall be made in the list to the report containing such consent.

3 CRR-NY 86.5 Public offering of capital stock in connection with the conversion of mutual thrift institutions to stock-form {#sec-3-crr-ny-86.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.5}

(a) A plan of conversion (except to the extent governed by inconsistent provisions of section 86.6 or by section 86.12 of this Part) shall, in addition to the requirements of section 86.4 of this Part, contain provisions to the effect that:

(1) (i) Each eligible account holder shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converting institution in an amount no less than the maximum purchase limitation established for the public offering under paragraph (3) of this subdivision. In the event of an oversubscription for such shares, after shares have been allocated among subscribing eligible account holders so as to permit each such account holder, to the extent possible, to purchase 100 shares, shares shall be allocated among subscribing eligible account holders on such equitable basis, related to the amounts of their respective accounts, as may be provided in the plan of conversion.

(ii) Subscription rights to purchase capital stock received by officers, directors, trustees, and their associates, of the converting institution based on their increased deposits or shares in the converting institution in the one-year period preceding the eligibility record date shall be subordinated to all other subscription rights to purchase shares of capital stock granted pursuant to this Part.

(iii) The provisions of subparagraph (i) of this paragraph notwithstanding, a plan of conversion may contain a provision that gives the tax-qualified employee stock benefit plans of the converting institution (and, where applicable, a holding company formed in connection with its conversion to stock form) subscription rights to purchase up to 10 percent of the shares to be issued by the converting institution, and which subordinates the subscription rights of eligible account holders to those of such tax-qualified employee stock benefit plans.

(2) Management of the converting institution collectively shall not be entitled to purchase more than 25 percent of the capital stock issued by the converting institution in a public offering of such stock, and no person (alone, or acting together with any other person or in concert with any group of persons) shall be entitled to purchase more than five percent of such stock in such public offering. Any shares of capital stock purchased pursuant to the exercise of subscription rights shall be included with the shares purchased in a public offering for purposes of determining if the above-described 25 percent and 5 percent limitations have been violated. As used in this section, the term management shall refer to directors or trustees and executive officers; provided, however, that such persons shall not be deemed to be acting together or in concert solely as a result of their board membership or employment.

(3) Any shares of the converting institution not sold to depositors or shareholders with subscription rights shall be sold in a public offering through an underwriter, or otherwise in whole or in part to the public without an underwriter, subject to the converting institution demonstrating to the superintendent the feasibility of the method of sale and to such conditions as may be provided in the plan of conversion. Such conditions shall include, but not be limited to:

(i) a condition limiting purchases in the public offering by any person together with any associate or group of persons acting in concert to an aggregate of no more than five percent of the total amount of shares offered;

(ii) a condition requiring the stock to be offered and sold in the public offering to be offered and sold in a manner that will achieve a reasonably wide distribution of such stock.

(4) The converting institution shall:

(i) promptly following the conversion register the capital stock issued in connection therewith pursuant to the Securities Exchange Act of 1934 and undertake not to deregister such capital stock for a period of three years after such registration;

(ii) use its best efforts to encourage and assist a market maker to establish and maintain a market for the capital stock issued in connection with the conversion; and

(iii) use its best efforts to list the shares of capital stock issued in connection with the conversion on a national or regional securities exchange or on the NASDAQ quotation system.

(5) The notice of meeting, proxy card, and proxy statement or short-form proxy statement sent to each eligible account holder as required by section 86.4(a)(3) of this Part shall be accompanied by a subscription offering circular and subscription order form. Separate and readily distinguishable postage-paid envelopes shall be provided for the return of proxy cards and subscription order forms.

(b) A plan of conversion providing for the public offering of the capital stock of a converting institution may contain provisions to the effect that:

(1) Shares of the converting institution not sold in the subscription offering or in a public offering pursuant to this section not exceeding one percent of the aggregate shares issued, may be sold in such other manner as provided in the plan of conversion.

(2) Any person exercising subscription rights to purchase capital stock shall be required to purchase a minimum of 25 shares to the extent such shares are available for purchase. In no event shall the aggregate price for any minimum purchase of shares exceed $500.

(3) Instead of a separate subscription offering, all subscription rights issued in connection with the conversion shall be exercisable by delivery of properly completed and executed order forms to the underwriters or selling group for the public offering. Orders for stock in the public offering shall not be filled until after orders of persons exercising subscription rights have been filled.

(4) The converting institution shall not be required to issue subscription rights to, or accept orders for the purchase of shares of capital stock from, persons who are residents of a foreign country.

(1) No offer to sell capital stock of a converting institution pursuant to a plan of conversion providing for a public offering may be made prior to approval by the superintendent of the application for conversion and until the preliminary offering circular has been authorized for use by the superintendent. No sale of capital stock may be made except by means of a final offering circular which has been approved by the superintendent. The provisions of this paragraph shall not apply to preliminary negotiations or agreements between a converting institution and any underwriter or among underwriters who are to be in privity of contract with the converting institution.

(2) Any preliminary offering circular which has been authorized for use by the superintendent may be distributed in connection with the offering at the same time as, or after, the proxy statement is mailed to depositors or shareholders pursuant to this Part. No final offering circular shall be distributed until it has been approved by the superintendent. The approval of the final offering circular by the superintendent shall not extend beyond the maximum time period specified for the completion of the sale of all the capital stock in subdivision (e) of this section, or beyond such period of time as the superintendent shall establish upon a subsequent approval in the event of the granting of an extension of time under subdivision (g) of this section.

(3) If the subscription offering is to commence prior to the meeting of the depositors or shareholders held to vote on the plan of conversion, the proxy statement authorized for use by the superintendent shall set forth the estimated price range. Any preliminary offering circular shall set forth the estimated price range. The maximum of such price range should normally be no more than 15 percent above the average of the minimum and maximum of such price range and the minimum should normally be no more than 15 percent below such average. The maximum price used in the price range should be no more than $40 per share and the minimum no less than $5 per share.

(4) The materials relating to the pricing of the capital stock referred to in paragraph (6) of this subdivision shall be delivered to the superintendent before he approves the plan of conversion. The superintendent will review the price information in determining whether to approve an application for conversion when the offering is to commence prior to the meeting of depositors or shareholders, and will review such information in determining whether to approve the final offering circular.

(5) Underwriting commissions shall not exceed an amount or percentage per share acceptable to the superintendent. No underwriting commissions shall be allowed or paid with respect to shares of capital stock sold in the subscription offering, unless the plan of conversion contains the provision permitted by paragraph (b)(4) of this section; provided, however, that an underwriter may be reimbursed for reasonable expenses actually incurred in connection with the subscription offering where the public offering is so small that reasonable underwriting commissions thereon would not be sufficient to cover total expenses reasonably incurred by the underwriter.

(6) The pricing information required under paragraph (4) of this subdivision shall comply with the following guidelines:

(i) The materials shall be prepared by persons independent of the converting institution, experienced and expert in the area of corporate appraisal, and acceptable to the superintendent.

(ii) The materials shall contain a full appraisal, including a complete and detailed description of the elements that make up an appraisal report, justification for the methodology employed and sufficient support for the conclusions reached therein.

(iii) To the extent that the appraisal is based on a capitalization of the pro forma income of the converted institution, the materials must indicate the basis for determination of the income to be derived from the proceeds of the sale of stock and demonstrate the appropriateness of the earnings-multiple used, including assumptions made as to future earnings growth. To the extent that the appraisal is based on comparison of the capital stock of the converting institution with outstanding capital stock of existing stock-form thrift institutions, such existing stock institutions must be reasonably comparable to the converting institution in terms of such factors as size, market area, competitive conditions, profit history, and expected future earnings.

(7) In addition to the information required in paragraph (6) of this subdivision, the converting institution shall submit information demonstrating to the satisfaction of the superintendent the independence and expertise of any person preparing materials under this paragraph. However, a person will not be considered as lacking independence for the reason that such person will participate in effecting a sale of capital stock under the plan of conversion or will receive a fee from the converting institution for services rendered in connection with such appraisal.

(8) In addition to the information required in paragraphs (6) and (7) of this subdivision, the converting institution shall file with the superintendent such additional information with respect to the pricing of the capital stock of the institution as the superintendent may request, including, without limitation, a full appraisal.

(d) Order forms for subscriptions.

(1) After receiving the approval of the superintendent of its plan for conversion, a converting thrift shall submit said plan to its eligible account holders as provided in section 86.4 of this Part by mailing to each eligible account holder a notice, proxy card and proxy statement or short-form proxy statement conforming to the requirements of section 86.14 of this Part.

(2) Except as provided in paragraph (a)(5) of this section, subscriptions for shares shall be accepted from eligible account holders only to the extent that such holders have (i) executed and delivered in person or by mail a purchase order in such form as the converting institution shall prescribe, and (ii) accompanied such order with payment (either direct or by authorizing withdrawal from a share or deposit account). In the event that subscriptions are cancelled by the converting institution for any lawful reason, payments for the same shall be promptly refunded.

(3) Each order form shall be accompanied or preceded by an offering circular for the subscription offering or the public offering, as the case may be, and a set of detailed instructions explaining how to properly complete such order forms.

(4) The maximum subscription price stated on each order form shall be the amount to be paid when the order form is returned. The maximum subscription price and the actual subscription price shall be within the subscription price range stated in the offering circular. If either the maximum subscription price or the actual subscription price is not within the subscription price range stated in the offering circular, the converting institution must obtain specific approval as to such price from the superintendent. If appropriate, the superintendent will condition his approval by requiring a resolicitation of proxies and/or order forms. If the actual public offering price is less than the maximum subscription price stated on the order form, the actual subscription price shall be correspondingly reduced and the difference shall be refunded to those who have paid the maximum subscription price unless the subscribers affirmatively elect to have the difference applied to the purchase of additional shares of capital stock.

(5) Each order form shall be prepared so as to indicate to the person receiving it, in as simple, clear and intelligible a manner as possible, the actions which are required or available to him with respect to the form and the capital stock offered for purchase thereby. Specifically, each order form shall:

(i) indicate the maximum number of shares that may be purchased pursuant to the subscription rights;

(ii) indicate the period of time within which the subscription rights must be exercised, which period of time shall be no less than 20 days and no more than 45 days following the mailing of the subscription order form;

(iii) state the maximum subscription price per share of capital stock;

(iv) indicate any requirements as to the minimum number of shares of capital stock which may be purchased;

(v) provide a specifically designated blank space or spaces for indicating the number of shares of capital stock which the eligible account holder wishes to purchase;

(vi) indicate the manner of required payment and, if such payment may be made by withdrawal from a certificate of deposit, indicate whether such withdrawal may be made without penalty. If payment is to be made by withdrawal from an account or certificate of deposit, a box to check should be provided;

(vii) provide specifically designated blank spaces for dating and signing the order form;

(viii) contain an acknowledgment by the eligible account holder or other person signing the order form that he has received an offering circular prior to so signing; and

(ix) indicate the consequences of failing to properly complete and return the order form, including a statement that the subscription rights are nontransferable and will become void at the end of the subscription period. The order form may, and the instructions thereto shall, indicate the place or places to which the order forms are to be returned and when the order forms shall be deemed to be received by the converting institution.

(6) The order form may provide that it may not be modified without the converting institution's consent after its receipt as set forth in the order form. If payment is to be made by withdrawal from an account or certificate of deposit, the converting institution may, but need not, cause such withdrawal to be made upon receipt of the order form. If such withdrawal is made at any time prior to the closing date of the public offering, the converting institution shall pay interest to the eligible account holder on the amount withdrawn as if such amount had remained in the account from which it was withdrawn until such closing date.

(e) Period for completion of sale.

The sale of all shares of capital stock of the converting insured institution to be made under the plan of conversion shall be completed as promptly as possible and within 45 calendar days after the last day of the subscription period unless extended by the superintendent.

(f) Interest on subscriptions.

The converting institution shall pay interest at not less than the passbook rate on the amounts paid to the institution to purchase shares of capital stock in the subscription offering from the date payment is received by the institution until the conversion is completed or terminated.

(g) Extension of time to complete public offering.

(1) The superintendent may grant one or more extensions of the time required to complete the sale of all shares of capital stock under subdivision (e) of this section, provided that no single extension of time shall exceed 60 days.

(2) Immediately upon granting of an extension of time pursuant to paragraph (1) of this subdivision, the converting institution shall distribute to each subscriber in the offering a notice of the extension of time, and of the right of each subscriber to increase, decrease or rescind the subscription at any time prior to 20 days before the end of the extension period or at any time prior to the date of the commencement of the public offering.

(3) After the expiration of the subscription period, the converting institution shall file with the superintendent, for his approval, a notice to be delivered to subscribers upon the occurrence of any event, circumstance, or change of circumstance which would be material to the investment decision of a subscriber. Any such notice distributed to subscribers shall grant to each subscriber the right to increase, decrease or rescind his subscription for a period which shall be no less than the greater of 10 days from the date of the mailing of such notice or the period remaining in an extension of time granted by the superintendent pursuant to and subject to the provisions of this subdivision.

3 CRR-NY 86.6 Sale of control in connection with the conversion of mutual thrift institutions to stock-form {#sec-3-crr-ny-86.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.6}

(a) Pursuant to the provisions of this subdivision and of section 86.4 of this Part, a mutual thrift institution having net worth (determined in accordance with generally accepted accounting principles) of less than three percent of assets as of the end of the most recent period for which such institution has prepared audited financial statements, or which received net worth assistance from its Federal deposit insurer within the 12-month period ending on the date on which the application for conversion was filed with the superintendent, may seek approval to convert to stock form pursuant to a plan of conversion which provides for the sale of its capital stock to a person or persons who will be in control of such institution upon the purchase of such capital stock. Such institution shall be required to retain a reputable financial advisor of national standing with expertise in valuing financial institutions to advise it as to the fairness of the consideration to be paid by the proposed acquiror. The financial advisor shall furnish a written opinion specifically informing the converting thrift institution as to the fairness from a financial point of view to the converting institution of the proposed consideration. Such written opinion shall specifically disclose in reasonable detail:

(1) the professional standards employed by the financial advisor in arriving at its conclusions; and

(2) the factual basis upon which such conclusions were reached.

The opinion shall specifically state whether or not the financial advisor, in arriving at its conclusions as to the fairness of the proposed consideration has made efforts to determine whether, in its judgment, there is the reasonably significant probability that financially able purchasers of the character generally capable of securing regulatory approval other than the proposed acquiror, given an opportunity, might have made good faith offers to purchase control of the converting institution for a consideration materially greater than that proposed to be paid by the proposed acquiror, and has compared the consideration to be paid by the proposed acquiror with the consideration paid in the purchase of other thrift institutions of comparable size, market area, profit history, competitive conditions and projected future earnings. If the financial advisor has made any such efforts or any such comparisons, the nature and scope of such efforts and comparisons shall be discussed in detail. The written opinion shall state whether and on what basis the financial advisor believes that the consideration to be paid by the proposed acquiror exceeds the aggregate amount of net proceeds which the converting institution could have realized if the capital stock to be sold to the proposed acquiror had been sold in a subscription offering followed by an underwritten public offering. The written opinion shall be delivered to the department before any approval of the application for conversion will be granted by the superintendent.

(b) A mutual thrift institution which does not qualify for a conversion pursuant to subdivision (a) of this section may seek approval to convert to stock-form pursuant to a plan of conversion in which one or more persons will acquire control of such converting institution pursuant to the provisions of this subdivision and of section 86.4 of this Part. After such mutual institution has filed an application for conversion pursuant to the provisions of this Part, any competing offeror may file with the superintendent a plan of conversion providing for the purchase of control (wherein the same percentage of the aggregate capital stock of the converting institution proposed to be purchased pursuant to the plan of conversion adopted by the converting institution will be purchased by the competing offeror) as an alternative to the plan of conversion filed by the converting institution. If such plan is approved by the superintendent, and if the approval of the superintendent referred to in paragraph (c)(1) of this section is obtained, then such competing offeror may present its plan of conversion to a vote of the depositors or shareholders at any meeting thereof called by management of the converting institution to vote upon the plan of conversion proposed by the converting institution. Upon approval by at least 75 percent of the total votes of the converting institution's depositors or shareholders represented in person or by valid proxy at such meeting, a competing offeror's plan of conversion will be adopted by the converting institution, and shall be binding on the institution and the competing offeror.

(c) The provisions of section 86.4 of this Part shall apply to any application for conversion which a competing offeror proposes to submit to a meeting of depositors or shareholders, except that:

(1) No application for conversion of a competing offeror shall be accepted for filing by the superintendent unless it is filed with the superintendent within 10 days of the date that notice of approval of management's plan for conversion is approved by the superintendent is made public in the form referred to in section 42 of the Banking Law.

(2) As soon as practicable, on the date that the competing offer is delivered to the superintendent, the competing offeror shall hand-deliver a copy of such application, including all exhibits thereto, to the converting institution at its principal office, to the proposed acquiror, and to any other competing offeror which has filed an application for conversion pursuant to subdivision (b) of this section, at such competing offeror's principal executive offices.

(d) In the event that such converting institution shall receive notice of any competing offers to purchase control of such institution, within the 10-day period referred to in subdivision (c) of this section, such institution shall give notice of such competing offers to its depositors or shareholders as soon as possible.

(e) The acceptance for filing by the superintendent of an application for conversion of a competing offeror shall, without further action on the part of the converting institution, extend the date for the holding of the meeting of depositors or shareholders called to approve the plan of conversion approved by management of the converting institution to a date 70 days following the date on which notice of such meeting is or was first given, unless such date falls on a weekend or legal holiday, in which case such meeting shall be held on the next business day. The notice to depositors or shareholders referred to in subdivision (d) of this section shall inform such depositors or shareholders of the revised date (and if applicable, the revised time and location) of such meeting.

(f) Upon filing with the superintendent of an application for conversion by a competing offeror, management of the converting institution shall not, without the prior written approval of the superintendent, further extend or cancel or otherwise terminate the meeting of depositors or shareholders called to vote upon any plan of conversion.

(g) If any competing offeror notifies the converting institution of such competing offeror's intention to present an alternative plan of conversion at the meeting of depositors or shareholders called to vote on the plan of conversion approved by management of the institution, the converting institution shall identify and provide the information required by a short-form proxy statement with respect to the competing offeror's plan of conversion in management's form of proxy and the converting institution's proxy statement. Notwithstanding the foregoing, the converting institution shall not be required to include such information regarding the competing offeror's proposal in the management's form of proxy and proxy statement unless the competing offeror has compiled with the following requirements of this subdivision:

(1) The competing offeror shall submit its proposal in writing to the converting institution within 20 days of the date on which the converting institution files its application for conversion with the superintendent.

(2) Prior to the date on which a competing offeror's submission is made to the converting institution, the competing offeror shall have (i) filed with the superintendent all of the materials required to be filed by this section and section 86.4 of this Part, and (ii) delivered copies of all of such materials to the converting institution. The converting institution shall not be required to present the competing offeror's plan of conversion at the meeting of depositors or shareholders unless the superintendent has given his prior written approval of such plan of conversion.

(h) The competing offeror's plan of conversion may be presented at the meeting of depositors or shareholders of the converting institution either by the competing offeror or its representative who is qualified under applicable law to make such presentation on the competing offeror's behalf at the meeting. In the event that the competing offeror or its representative fails to present the competing offeror's proposal for action at the meeting, the converting institution shall not be required to make such presentation.

(i) If the management of the converting institution has adopted a plan of conversion pursuant to subdivision (b) of this section, the converting institution shall perform such of the following acts as may be duly requested in writing with respect to a competing offeror's plan of conversion by a competing offeror who will defray the reasonable expenses to be incurred by the converting institution in the performance of the act or acts requested:

(1) The converting institution shall mail or otherwise furnish to such competing offeror the following information as promptly as practicable after receipt of such request:

(i) a statement of the approximate number of depositors or shareholders of the converting institution who have been or are to be solicited on behalf of the management, or any group of such depositors or shareholders which the competing offeror shall designate;

(ii) if the converting institution has made or intends to make, through brokers or nominees or other persons, any solicitation of beneficial owners of deposits, a statement of the approximate number of such beneficial owners, or any group of such owners which the competing offeror shall designate; and

(iii) an estimate of the cost of mailing a specified proxy statement, form of proxy, or other communications to such depositors or shareholders of the converting institution.

(2) Copies of any proxy statement, form of proxy, or other communication furnished by the competing offeror and approved by the superintendent shall be mailed by the converting institution to such of the depositors or shareholders specified in subparagraph (1)(i) of this subdivision as the competing offeror shall designate. The converting institution shall also mail to each broker, nominee, or other person specified in subparagraph (1)(ii) of this subdivision a sufficient number of copies of such proxy statement, form of proxy, or other communications as will enable the broker, nominee, or other person to furnish a copy thereof to each beneficial owner solicited or to be solicited through him. The competing offeror shall pay the estimated costs of mailing the above-described materials before such materials are mailed, and the converting institution shall promptly repay to the competing offeror any estimated amounts paid in excess of the actual costs of such mailing.

(3) Any such material which is furnished to the converting institution by the competing offeror shall be mailed with reasonable promptness by the converting institution after receipt of the material to be mailed, envelopes, or other containers therefor, and postage or payment for postage; provided, however, that such material need not be mailed prior to the first day on which solicitation is made on behalf of management of the converting institution. Except for information incorporated by reference to management's own proxy statement, form of proxy or other communication, neither management of the converting institution nor the converting institution shall be responsible for the proxy statement, form of proxy or any other communication mailed on behalf of a competing offeror.

(j) In lieu of performing the acts specified in subdivision (i) of this section, the converting institution may, at its option, if not prohibited by applicable law, furnish promptly to the competing offeror a reasonably current list of the names and addresses of the depositors or shareholders of the converting institution specified in subparagraph (i)(1)(i) of this section as the competing offeror shall designate, and a list of the names and addresses of such of the brokers, nominees or other persons specified in subparagraph (i)(1)(ii) of this section as the competing offeror shall designate together with a statement of the approximate number of beneficial owners solicited or to be solicited through each such broker, nominee or other person, and a schedule of the handling and mailing costs of each such broker, nominee, or other person, if such schedule has been supplied to the converting institution. The foregoing information shall be furnished promptly upon the request of the competing offeror or at reasonable intervals as it becomes available to the converting institution.

(k) No solicitation of proxies in connection with a conversion pursuant to this section shall be made unless the person so solicited is concurrently furnished with or has been previously furnished with a proxy statement or a short-form proxy statement complying with section 86.14 of this Part. In the event that the persons to whom capital stock is offered or sold pursuant to a conversion effected in compliance with this section shall exceed 20 in number, each of such persons shall be furnished with an offering circular complying with section 86.15 of this Part prior to the consummation of any such sale.

(l) In the case of a proposed conversion pursuant to this section, the converting institution, together with the proposed acquiror, shall file with the superintendent an application containing the information applicable to acquisitions of control of banks and trust companies under Supervisory Procedure CB 105 or CB 117 of this Title, as applicable. Such application, together with the superintendent's recommendation thereon, shall be submitted to the superintendent, who shall grant or deny the application in accordance with the applicable provisions of article III-A of the Banking Law, except that the superintendent shall grant or deny such application within 60 days of the date on which the application for conversion is filed with the superintendent.

(m) In any conversion effected pursuant to the terms of this section the eligible account holders of such converting mutual institution shall receive the subscription rights discussed in section 86.5 of this Part to purchase any shares of capital stock issued in connection with the conversion not purchased by the proposed acquiror or the competing offeror. Any such shares not purchased by the proposed acquiror and not subscribed for by the depositors or shareholders of the converting institution shall be sold pursuant to the provisions of section 86.5 of this Part.

(n) Any conversion in which a mutual institution merges into an existing stock-form institution or becomes a subsidiary of an existing holding company, and in which eligible account holders receive the right to purchase shares of the acquiror, shall be governed by the provisions of this section.

3 CRR-NY 86.7 Applicability of certain provisions of the Banking Law to stock-form savings banks {#sec-3-crr-ny-86.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.7}

(a) The provisions of the following sections of the Banking Law shall have no applicability to stock-form savings banks:

(1) Section 23—Acceptance or rejection of certificate; investigation fees (to the extent that it shall require the payment of an investigation fee other than the fee payable under Banking Law, section 14-e[2]).

(2) Section 230—Incorporation; organization certificate.

(3) [Reserved]

(4) Section 232—Organization certificate to be submitted to superintendent; proof of publication and service of notice of intention.

(5) Section 233—When corporate existence begins; conditions precedent to commencing business.

(6) Section 234(1)—General powers (only insofar as said provision authorizes the payment of “dividends” on deposit accounts).

(7) Section 234(2)—General powers (only relative to contributions of mutual incorporators or trustees).

(8) Section 243—Surplus fund.

(9) Section 244—Earnings; how and when to be computed; transfers to surplus fund; undivided profits available for dividends (excluding definition of “net worth”).

(10) Section 245—Interest payments.

(11) Section 246—Board of trustees; number; vacancies; qualifications; oath and declaration.

(12) Section 246-a—Executive committee and other committees.

(13) Section 247—Restrictions upon trustees and officers.

(14) Section 248—Removal and forfeiture of office of trustee.

(15) Section 249—Compensation of trustees and officers.

(16) Section 250—Pensions; insurance.

(17) Section 251—Meetings; quorum; bylaws; officers.

(b) In addition to such other requirements of law and regulations imposed upon savings banks, stock-form savings banks shall be subject to the following sections of the Banking Law, to the same extent as banks and trust companies referred to therein, and any reference in such sections to a bank or trust company shall be deemed to refer also to a stock-form savings bank:

(1) Section 103(8)—Restrictions on loans, purchases of securities and total liabilities to bank or trust company of any one person.

(2) Section 109—Closing of books; profits; how to be computed.

(3) Section 110—Surplus fund; of what composed; and for what purpose used.

(4) Section 111—Profits; credits to surplus fund and to undivided profits.

(5) Section 112—Dividends; payable from net profits; restrictions.

(6) Section 130—Restrictions on officers, directors and employees.

(7) Section 140-a—Stock option plans.

3 CRR-NY 86.8 Applicability of certain provisions of the Banking Law to stock-form savings and loan associations {#sec-3-crr-ny-86.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.8}

(a) The provisions of the following sections of the Banking Law shall have no applicability to stock-form savings and loan associations:

(2) Section 375—Incorporation; organization certificate.

(3) Section 376—Proposed bylaws.

(4) Section 377—When corporate existence begins.

(5) Section 378—Power to issue shares; dues thereon (only to the extent that deposit accounts are denominated therein as share accounts).

(6) Section 385—Surplus account.

(7) Section 386—Profits; how and when to be computed.

(8) Section 387—Credits to surplus account and undivided profits; dividends to shareholders.

(9) Section 388—Fines and penalties for failure to make payments on installment shares.

(10) Section 389—Matured shares; conversion into shares of another class upon notice.

(11) Section 390(1, 2, 3, 4, 6)—Withdrawal of unpledged shares, provisions for dividends.

(12) Section 392—Retirement of shares; suspension; transfer.

(13) Section 397—Number, qualifications and disqualifications of directors; oath; quorum; meeting of directors.

(14) Section 398—Filling of vacancies in board of directors; change in number of directors.

(15) Section 398-a—Forfeiture of office of director.

(16) Section 398-b—Duties of directors and officers.

(17) Section 398-c—Executive committee and other committees.

(18) Section 399—Restrictions on directors and officers.

(19) Section 400—Pensions; insurance.

(20) Section 402—Amendment of articles of association and by-laws; application to supreme court.

(21) Section 405—Annual report to shareholders; delivery and publication.

(22) Section 406—Charters conformed to this article; obligations and rights unimpaired; saving clause.

(b) In addition to such other requirements of law and regulations imposed upon savings and loan associations, stock-form savings and loan associations shall be subject to the following sections of the Banking Law, to the same extent as banks and trust companies referred to therein and any reference in such sections to a bank or trust company shall be deemed to refer also to a stock-form savings and loan association:

(1) Section 103(8)—Restrictions on loans, purchases of securities and total liabilities to bank or trust company of any one person.

(2) Section 109—Closing of books; profits; how to be computed.

(3) Section 110—Surplus fund; of what composed; and for what purposes raised.

(4) Section 111—Profits; credits to surplus fund and to undivided profits.

(5) Section 112—Dividends; payable from net profits; restrictions.

(6) Section 130—Restrictions on officers, directors and employees.

(7) Section 140-a—Stock option plans.

3 CRR-NY 86.9 Formation of a holding company in connection with the conversion of a mutual institution to stock form {#sec-3-crr-ny-86.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.9}

The board of trustees or directors, as the case may be, of a thrift seeking to convert to stock form may cause a company to be formed to acquire all the stock of such converting institution. In such case, the converting institution shall file with its application for conversion detailed information as to the formation of such holding company (including specific details as to the rights of depositors or shareholders of such mutual institution to subscribe for stock of such holding company) as well as the proxy statement or short-form proxy statement complying with the provisions of section 86.14 of this Part. In addition, the thrift institution shall, as a condition of the superintendent's approval of the institution's conversion from mutual to stock form, file with the superintendent a copy of (a) any prospectus of such holding company as it shall be required to prepare under applicable State and Federal securities laws, and (b) any application for approval to become a bank holding company or savings and loan holding company as it shall be required to file under applicable Federal law. Unless clearly inapplicable, all of the requirements of this Part shall apply to a conversion under this section.

3 CRR-NY 86.10 Limitations on certain acquisitions of control of stock-form thrift institutions {#sec-3-crr-ny-86.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.10}

An organization certificate of a converting thrift may contain provisions, the effect of which would be to prohibit the acquisition of control of the converted stock-form thrift institution for a period not exceeding three years from the effective date of the conversion from mutual to stock-form.

3 CRR-NY 86.11 Conflict between State and Federal law and regulation {#sec-3-crr-ny-86.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.11}

In the event that any converting institution or other person subject to the provisions of this Part shall find that it cannot either absolutely or without undue hardship comply with the provisions of this Part and at the same time satisfy the requirements of any State or Federal law or any regulation promulgated by the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation, Securities and Exchange Commission or any other regulatory agency as may have jurisdiction over any person or transaction referred to herein, such converting institution or other person may request a waiver of such conflicting provision from the superintendent, which the superintendent may grant for good cause after considering the declaration of policy in section one of chapter one of the Laws of 1984.

3 CRR-NY 86.12 Supervisory stock conversions {#sec-3-crr-ny-86.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.12}

Notwithstanding any other provision of this Part, where the superintendent has determined that grounds exist for him to take possession of the business and property of a mutual thrift institution, in that such institution:

(a) is or will in the immediate future be unable to meet its obligations;

(b) is or otherwise would be in an unsafe and unsound condition;

he may authorize the institution to convert to stock-form and to effect a sale or other transfer of its capital stock to a third party or parties in a transaction in which the converting institution's depositors or shareholders have no right of approval or right to subscribe for shares to be issued by the converting institution. In determining whether to authorize such a transaction, the superintendent shall take into consideration the declarations of policy contained in section 10 of the Banking Law and section 1 of chapter 1 of the Laws of 1984. Upon approval of such a transaction, the superintendent shall file the converted institution's amended organization certificate with the same force and effect as provided in section 86.4(c) of this Part.

3 CRR-NY 86.13 Application for conversion {#sec-3-crr-ny-86.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.13}

A converting institution shall be required to file with the superintendent an application for conversion which complies with form 86-AC, which reads in its entirety as follows:

FORM 86-AC

[Facing Sheet]

NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

One State Street

New York, New York 10004

Application for Conversion

(Exact name of Converting Institution as specified in charter)

(Street address of Converting Institution)

(City, State and ZIP Code)

Date of Application

General Instructions

A. Rules as to Use of Form 86-AC

Form 86-AC shall be used by any thrift institution seeking New York State Department of Financial Services approval to convert from mutual to the stock-form pursuant to Part 86 of the General Regulations of the Banking Board.

Item 1. Form of Application.

Set forth an application for approval of the plan of conversion in the following form with the names and titles of the officers and directors or trustees signing the application indicated below their signatures:

The undersigned hereby makes application for approval to convert from a mutual thrift institution into a stock-form thrift institution, and submits herewith a statement of its proposed plan of conversion and other information and exhibits as required by Part 86 of the General Regulations of Banking Board.

This application has been approved by at least a majority of the board of directors or trustees of the converting institution. The undersigned officers and members of the board of directors or trustees severally represent (i) that each such person has read this application, (ii) that in the opinion of each such person, he or she has made such examination and investigation as is necessary to enable him or her to express an informed opinion that this application complies to the best of his or her knowledge and belief with the applicable requirements of this Part, and (iii) that each such person holds such informed opinion.

ATTEST:

Name of Converting Institution Secretary

By President

(Principal Executive Officer)

(Signatures of at least a majority of the Board of Directors or Trustees)

(Director or Trustee)

Item 2. Plan of Conversion.

Furnish the complete formal written plan adopted by the board of directors or trustees for conversion of the mutual institution to the stock-form of organization. The terms of the plan submitted pursuant to this Item will be a basis for the Superintendent's approval and the plan as approved will be distributed as an attachment to the proxy statement and the offering circular as provided in Part 86.

Item 3. Proxy Statement and Offering Circular.

Furnish copies of the proxy statement and offering circular. The proxy statement and offering circular should be prepared in accordance with Forms 86-PS and 86-OC, respectively.

Item 4. Form of Proxy.

Furnish preliminary copies of the form of proxy to be distributed to Eligible Account Holders by the management.

Item 5. Sequence and Timing of the Plan.

Set forth the expected chronological order of the events connected with the plan of conversion beginning with the filing of this application through completion of the sale of all the capital stock to be issued pursuant to the plan. Indicate the expected timing of any requisite approvals of Federal authorities. Indicate the proposed timing of all aspects of the subscription offering. If there will be an underwritten public offering of the capital stock as part of the plan of conversion, indicate the proposed timing of all aspects of such offering.

Item 6. Record Dates.

If the converting institution's plan of conversion contains an eligibility record date earlier than 90 days prior to the date of adoption of the plan of conversion by the board of directors or trustees, state the reason for the selection of such earlier date.

Item 7. Expenses Incident to the Conversion.

Provide in substantially the tabular form indicated below the estimated expenses of the conversion to be incurred by the converting institution.

Legal $

Postage and Mailing

Printing

Escrow or Agent Fees

Underwriting Fees

Appraisal Fees

Transfer Agent Fees

Auditing and Accounting

Proxy Solicitation Fees

Advertising

Other Expenses

Total $

Instructions: 1. The converting institution may exclude costs represented by salaries and wages of regular employees and officers, if a statement to that effect is made. The cost of solicitation by specially engaged employees or paid solicitors under paragraph (b) of Item 3 of Form 86-PS shall be stated under “Proxy Solicitation Fees” in this Item.

If the converting institution has any category of expense exceeding $10,000 which is not specified in this Item, such expenses shall be itemized rather than including it under the category “Other Expenses”.
If the solicitation is conducted other than by management of the converting institution, the information required in this Item shall be provided with respect to the cost of such solicitation.

Item 8. Indemnification.

State the general effect of any charter provision, bylaw, contract, arrangement, statute or regulation to be in effect during or after the conversion under which any underwriter, appraiser, lawyer, accountant or expert, or director, officer, or trustee of the converting institution will be insured or indemnified in any manner against any liability which he may incur in his capacity as such.

EXHIBITS

The following exhibits shall be attached to this Form.

Exhibit 1. Resolution of Board of Directors or Trustees.

Set forth a certified copy or copies of a resolution or resolutions of the board of directors or trustees (1) adopting the plan of conversion filed with this application; (2) authorizing the filing of this application; and (3) applying for continued insurance of accounts by its Federal deposit insuror. The action adopting the plan of conversion and authorizing the filing of this application must be approved by a majority of the board of directors or trustees.

Exhibit 2. Copies of Documents, Contracts and Agreements.

Furnish the following documents, contract and agreements: (a) proposed certificates for capital stock to be issued; (b) proposed order forms with respect to the subscription rights; (c) any proposed management employment contracts; (d) any contract described in response to Item 6(e) of Form 86-PS; (e) contracts or agreements with paid solicitors described in response to Item 3(b) of Form 86-PS; (f) any material loan agreements relating to borrowings by the converting institution other than subordinated debt securities approved by the Superintendent; (g) any appraisal agreement or proposed agreement, underwriting contract or agreements among underwriters; (h) any required undertakings or affidavits by officers, trustees or directors purchasing shares in the conversion that they are acting independently; and (i) any agreements for the making of markets or the listing on exchanges of the stock of the converted institution. Documents, contracts and agreements which are furnished in proposed form under this exhibit shall be furnished in final form immediately after the meeting of depositors or shareholders to consider the plan of conversion, except for documents which by their nature cannot be in final form until a later time, in which case they shall be furnished in substantially final form.

Exhibit 3. Opinion of Counsel.

Furnish an opinion of counsel for the converting institution regarding each of the following matters: (a) the legal sufficiency of the converting institution's proposed certificates and order forms for shares of capital stock; (b) the conformance with the Banking Law and any regulations promulgated thereunder of the plan of conversion; (c) the compliance with the Banking Law and any regulations promulgated thereunder of the converting institution's bylaws; (d) the type and extent of voting rights in the converting institution after conversion; and (e) the valid authorization and issuance of the capital stock and the nonassessability of such stock.

Exhibit 4. Federal and State Tax Opinions and Rulings.

(a) Furnish an opinion of the converting institution's tax advisor or an Internal Revenue Service ruling as to the Federal income tax consequences of the plan of conversion to the converting institution and to the depositors or shareholders who receive nontransferable subscription rights to purchase capital stock.

Instruction: The superintendent may require that such an Internal Revenue Service ruling be obtained if the converting institution's plan of conversion is not substantially similar to plans of conversion which have received favorable rulings. The superintendent may also require that such a ruling be obtained if the converting institution's plan of conversion contains novel provisions or there is otherwise a question as to the Federal income tax consequences of the plan.

(b) Furnish an opinion of the converting institution's tax advisor or if applicable, a ruling from the appropriate State taxing authority, as to any tax consequences of the plan of conversion to the converting institution and to its depositors and shareholders under the laws of the State of New York.

Exhibit 5. Valuation Materials.

Furnish any materials required to be filed by section 86.5(c)(4) of Part 86 regarding the valuation of the converting institution's capital stock. A converting institution is not required to file such materials if the offering of capital stock will not commence before the meeting of depositors or shareholders to vote on the plan of conversion.

Exhibit 6. Notice to Depositors or Shareholders.

Furnish the notice to the converting institution's depositors or shareholders required by section 86.4 of Part 86.

Exhibit 7. Organization Certificate and Bylaws.

Furnish a copy of the converting institution's proposed amended organization certificate and bylaws which shall be effective upon the conversion of the institution to stock form. If a holding company is being formed in connection with the conversion, also furnish a copy of the proposed organization and bylaws of the holding company.

Exhibit 8. Business Plans.

Furnish a consolidated business plan. The converting institution shall provide, as part of the business plan, a detailed discussion of how the capital acquired in the conversion will be utilized, including, among other things, any proposed stock repurchases.

Exhibit 9. Other Materials.

(a) If information required by an appropriate form is not provided because such information is unknown or unavailable, furnish a detailed statement as to the reasons for each such omission.

(b) Furnish all consents of experts required to be filed by section 86.4(1) of this Part.

(c) If applicable, furnish the statement required by the Instruction to Item 5(e) of Form 86-PS regarding events which occurred within the last 10 years to directors or trustees or the converting institution.

(d) If information required by Item 14(h) of Form 86-PS relating to historical financial information is omitted, furnish the statement required by Item 14(h)(1) of Form 86-PS.

(e) Furnish any powers of attorney employed pursuant to Part 86.

(f) A converting institution shall also submit a copy of an opinion from an independent executive compensation expert stating whether or not the total compensation for the executive officers, directors or trustees, viewed as a whole and on an individual basis, is reasonable and proper in comparison to the compensation provided to executive officers, directors or trustees of similar publicly traded financial institutions. The opinion shall address any stock option and employee or director stock benefit plans disclosed in the proxy solicitation and stock offering materials that are intended to be presented to stockholders for a vote in the year following the effective date of the conversion. A detailed discussion of the basis of such opinion shall be included in the opinion.

(g) Furnish copies of any written offers or written expressions of interest to acquire the converting institution submitted by any person to the board of trustees or directors any time after the date one year prior to the publication of approval of the plan of conversion by the board of trustees or directors.

3 CRR-NY 86.14 Proxy statement {#sec-3-crr-ny-86.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.14}

The proxy statement required by this Part shall comply with Form 86-PS, except that a converting institution may combine the proxy statement and offering circular in one document. A short-form proxy statement shall contain the information required by Items 1, 2, 3, 4 and 5 of Form 86-PS. A short-form proxy statement shall also include cross references to the sections of the offering circular containing the information required by Form 86-PS, which reads in its entirety as follows:

FORM 86-PS

[Facing Sheet]

NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

One State Street

New York, New York 10004

Proxy Statement

(Exact name of converting institution as specified in charter)

(Street address of converting institution)

(City, State and ZIP Code)

Proxy Statement Form — Index to Items

Item 1. Notice of Meeting

Item 2. Revocability of Proxy

Item 3. Persons Making Solicitation

Item 4. Voting Rights and Vote Required for Approval

Item 5. Directors and Executive Officers

Item 6. Remuneration and Other Transactions with Management and Others

Item 7. Business of the Converting Institution

Item 8. Description of the Plan of Conversion

Item 9. Description of Capital Stock

Item 10. Capitalization

Item 11. Use of New Capital

Item 12. New Charter, Bylaws or Other Documents

Item 13. Other Matters

Item 14. Financial Statements

Item 15. Consents of Experts and Reports

Item 16. Attachments

FORM 86-PS

Information Required in Conversion Proxy Statement

Note: 1. Except as otherwise specifically provided, where any item calls for information for a specified period in regard to directors, officers, trustees or other persons holding specified positions or relationships, the information shall be given in regard to any person who held any of the specified positions or relationships at any time during the period. However, information need not be included for any portion of the period during which such person did not hold any such position or relationship provided a statement to that effect is made.

The proxy statement shall include such information which the superintendent by interpretative release or otherwise has deemed necessary to comply with items of this Form 87-PS.

Item 1. Notice of Meeting. The cover page of the proxy statement shall give notice of the meeting of the depositors or shareholders called by the board of directors or trustees to act upon the conversion. The cover page shall include the date, time, and place of the meeting, a brief description of each matter to be acted upon at the meeting, the date of record for depositors or shareholders entitled to vote at the meeting, the date of the statement, and the full address, zip code and telephone number of the converting institution.

Item 2. Revocability of Proxy. State that the person giving the proxy has the power to revoke it before the proxy is exercised at the meeting. If the right of revocation is subject to compliance with any formal procedure, briefly describe such procedure. Briefly describe any charter, bylaw or applicable Federal or State law requirements otherwise restricting voting by proxy. State that the proxy is solicited for the meeting called to consider the conversion, and any adjournment thereof, and will not be used for any other meeting.

Item 3. Persons Making the Solicitation. (a) State whether the solicitation is made by the management of the converting institution. Give the name of any director or trustee of the converting institution who has informed the management in writing that he intends to oppose any action intended to be taken by the management and indicate the action which he intends to oppose.

(b) If the solicitation is to be made otherwise than by the use of the mails, describe the methods to be employed. If the solicitations is to be made by specially engaged employees or paid solicitors, state the material features of any contract or arrangement for such solicitation and identify the parties.

(c) If the solicitation is made otherwise than by the management of the converting institution, so state and give the names of the eligible account holder by whom or on whose behalf it is made, the name of any person soliciting proxies on behalf of such eligible account holder, the length of time he or she has been a depositor, and the reasons he or she is making the solicitation. Any such solicitation normally need not respond to Items 5 through 16, but must include such information as to make such solicitation comply with section 86.4(h) of this Part. All proxy solicitation materials used by or on behalf of an eligible account holder shall solicit proxies only for an affirmative or negative vote with respect to the plan of conversion approved by the board of trustees or directors for presentation to eligible account holders and may not confer discretionary authority. If the depositor's proxy solicitation is being financed by a third party, such party's identity and any interest of such person in the transaction must be disclosed.

Item 4. Voting Rights and Vote Required for Approval.

(a) Describe briefly the voting rights of the depositors or shareholders. State the approximate total number of votes entitled to be cast at the meeting.

(b) As part of the description give the date of record for the depositors or shareholders entitled to vote at the meeting.

(c) As to each matter which will be submitted to a vote of the depositors or shareholders, state the vote required for its approval.

Item 5. Directors, Trustees and Executive Officers.

(a) Furnish the information regarding directors, trustees and executive officers and certain relationships and related transactions required to be disclosed under Item 5 of 12 CFR 563b.101.1 Unless the context otherwise requires, the words registrant and issuer in those regulations shall refer to the converting institution and the word Commission shall refer to the department.

(b) State whether control of the converting institution has been exercised through the use of proxies and the nature of such control.

Item 6. Management Remuneration.

(a) Furnish the information regarding management remuneration required to be disclosed under Item 6 of 12 CFR 563b.101.1 Unless the context otherwise requires, the words registrant and issuer in those regulations shall refer to the converting institution and the word Commission shall refer to the department.

(b) A statement shall be included in this Item indicating that an independent executive compensation expert (the name of such expert shall be given) has reviewed the total compensation package for executive officers, directors or trustees for the purpose of determining whether or not such compensation package, viewed as a whole and on an individual basis, is reasonable and proper in comparison to compensation provided to executive officers, directors or trustees of similar publicly traded financial institutions.

Item 7. Business of the Converting Institution.

(a) Narrative Description of Business. (1) Discuss briefly the organizational history of the converting institution, including the year or the organization, the identity of the chartering authority, and any material charter conversion.

(2) Describe the business conducted and intended to be conducted by the converting institution and its subsidiaries. This should include a description of the general development of the business of the converting institution and any predecessor(s) during the past five years, or such shorter period as the applicant may have been engaged in business. Information shall be disclosed for earlier periods if material to an understanding of the general development of the business. Any material changes in the mode of conducting the business should be discussed.

(3) Consideration should be given to inclusion of a description of the converting institution's historical practices, including the average remaining term of maturity of its portfolio of mortgage loans, and present intention regarding the making of loans, whether real estate or other, the nature of security received, the terms of loans, whether carrying fixed or variable interest rates, and the retention of loans or their resale in secondary mortgage markets. Historical description might require a general identification of the magnitude of various activities.

(4) Also explain any significant impact to the thrift institution as a result of any material acquisitions.

(b) Selected Financial Data. Furnish in comparative columnar form a summary of selected financial data for the converting institution for: (1) each of the last five fiscal years of the converting institution (or for the life of the converting institution and its predecessors, if less); and (2) any additional fiscal years necessary to keep the summary from being misleading.

Instructions. 1. The purpose of the summary of selected financial data shall be to supply in convenient and readable format selected data which highlight significant trends in the converting institution's financial condition and results of operations.

Subject to appropriate variation to conform to the nature of the converting institution's business, the following items, as a minimum, shall be included in the summary: total interest income; total interest expense; income (loss) from continuing operations; net income; total loans; total investments; total assets; total savings; total borrowings; total regulatory capital; and total number of offices indicating the number which provide full service. Converting institutions may include additional items which they believe would enhance understanding and highlight trends in their financial and results of operations. Briefly describe, or cross reference to a discussion of, factors such as accounting changes, business combinations, or dispositions of business operations that materially affect the comparability of the information reflected in selected financial data. Discussion of, or reference to, any material uncertainties should also be included where those matters might cause the data reflected not be indicative of the converting institution's future financial condition or results of operations.
Those converting institutions which elect to provide five-year summary information in accordance with the standards identified in Instruction 3 to Item 7(b) of 12 CFR 563b.101 (see footnote #1)1, may combine such information with the selected financial data appearing pursuant to this Item.
All references to the converting institution in the summary and in these instructions shall mean the converting institution and its consolidated subsidiaries.
If interim-period financial statements are included, or are required to be included by Item 14, converting institutions should update the selected financial data for the interim period to reflect any material change in the trends indicated, where such updating information is necessary, converting institutions shall provide the information on a comparative basis unless not necessary to an understanding of the updating information.

(c) Management's Discussion and Analysis of Financial Condition and Results of Operations. (1) Discuss the converting institution's financial condition, changes in financial condition, and results of operations. The discussion shall provide information as specified in subparagraphs (i), (ii) and (iii) of this paragraph with respect to liquidity, capital resources, and results of operations and also should provide all other information which the converting institution believes to be necessary to an understanding of its financial condition, changes in financial condition, and results of operations. Significant business combinations should be discussed. Discussion of liquidity and capital resources may be combined whenever the two topics are interrelated. Where in the converting institution's judgment a discussion of subdivisions of the converting institution's business would be appropriate to an understanding of the business, the discussion should focus on each relevant, reportable segment or other subdivision of the business and on the converting institution as a whole.

(i) Liquidity. Identify any known trends or any known demands, commitments, events, or uncertainties which will result in or which are reasonably likely to result in the converting institution's liquidity increasing or decreasing in any material way. If a material deficiency is identified, indicate the course of action which the converting institution has taken or proposes to take to remedy the deficiency. Identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets. Comment on maturity imbalances between assets and liabilities and planned activities in the secondary mortgage market.

(ii) Committed Resources. (a) Describe the converting institution's material commitments for loan fundings or other expenditures as of the end of the last fiscal period and indicate the general purpose of the commitments and the anticipated source of funds needed to fulfill the commitments.

(b) Describe any known material trends, favorable or unfavorable, in the converting institution's committed resources. Indicate any expected material changes in the mix and the relative cost of the resources. This discussion should consider changes between savings, equity, debt, and any off-balance-sheet financing arrangements.

(iii) Results of Operations. (a) Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount or reported income from continuing operations and, in each case, indicate the extent to which income was affected. In addition, describe any other significant components of revenues or expenses which, in the converting institution's judgment should be described in order to understand the converting institution's results of operations.

(b) Describe any known trends or uncertainties which have had, or which the converting institution reasonably expects will have, a materially favorable or unfavorable impact on net sales or revenues or income from continuing operations. If the converting institution knows of events which will cause a material change in the relationship between costs and revenues (such as known future increases in costs of money or interest rates) the change in the relationship should be disclosed.

(c) To the extent that the financial statements disclose material increases in interest expense, provide a narrative discussion of the extent to which the increases are attributable to increases in rates or to increases in volume.

(d) For the three most recent fiscal years of the converting institution, or for those fiscal years in which the converting institution has been engaged in business, whichever period is shorter, discuss the impact of inflation and changing prices on the converting institution's revenues and on income from continuing operations.

(e) For the most recent financial statement presented, discuss any unusual risk characteristics in the assets of the converting institution. This would include real estate development, significant amounts of commercial real estate as loan collateral, and any other significant risk factors inherent in the converting institution's lending or investment portfolios, including significant increases in amounts of nonaccrual, past due, restructured, and potential problem loans.

Instructions. 1. The converting institution's discussion and analysis shall be of the financial statements and of other statistical data which the converting institution believes will enhance a reader's understanding of its financial condition, changes in financial condition, and results of operations. Generally, the discussion should cover the three-year period covered by the financial statements and should utilize year-to-year comparisons or other formats which in the converting institution's judgment enhance a reader's understanding. However, where trend information is relevant, reference to the five-year selected financial data appearing in Item 7(b) above may be necessary.

The purpose of the discussion and analysis should be to provide to investors and other users information relevant to an assessment of the financial condition and results of operations of the converting institution as determined by evaluating the amounts and certainty of cash flows from operations and from outside sources. The information provided in this Item 7(c) need only include that which is available to the converting institution without undue effort or expense and which does not clearly appear in the converting institution's financial statements.
The discussion and analysis should specifically focus on material events and uncertainties known to management which would cause reported financial information not to be necessarily indicative of future operating results or future financial condition. This would include description and amounts of (a) matters which would have an impact on future operations and have not had an impact in the past, and (b) matters which would have an impact on reported operations and are not expected to have an impact upon future operations.
Where the consolidated financial statements reveal material changes from year to year in one or more line items, the causes for the changes should be described to the extent necessary to an understanding of the converting institution's business as a whole; provided, however, if the causes for a change in one line item also relate to other line items, no repetition is required and a line-by-line analysis of the financial statements as a whole is not required or generally appropriate. Converting institutions need not recite the amounts of changes from year to year which are readily computable from the financial statements. The discussion should not merely repeat numerical data contained in the consolidated financial statements.
The term liquidity as used in paragraph (c)(1)(i) of this Item 7 refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprise's needs for cash. Except where it is otherwise clear from the discussion, the converting institution should indicate those balance sheet conditions or income or cash flow items which the converting institution believes may be indicators of its liquidity condition. Liquidity generally should be discussed on both a long-term and short-term basis. The issue of liquidity should be discussed in the context of the converting institution's own business or businesses.
Converting institutions are encouraged, but not required, to supply forward-looking information. This is to be distinguished from presently known data which will have an impact upon future operating results, such as known future increases in rates or other costs. This latter data is required to be disclosed.
Converting institutions which elect to provide narrative explanations of supplementary information disclosed in accordance with Instruction 7 to Item 7(c)(1) of 12 CFR 563b.101 (see footnote #1), may combine the explanations with their discussion and analysis required pursuant to this provision or they may supply the information separately.
Converting institutions which elect not to provide explanations of supplementary information disclosed in accordance with Instruction 8 to Item 7(c)(1) of 12 CFR 563b.101 (see footnote #1).
All references to the converting institution in the discussion and in these instructions shall mean the converting institution and its consolidated subsidiaries.

(2) If interim-period financial statements are included or are required to be included by Item 14, a management's discussion and analysis of the financial condition and results of operations shall be provided to enable the reader to assess material changes in financial condition and results of operations between the periods specified in (i) and (ii) below. The discussion and analysis shall include a discussion of material changes in those items specifically listed in paragraph (c)(1) of this Item 7, except that the impact of inflation and changing prices on operations for interim period needs not be addressed.

(i) Material Changes in Financial Condition. Discuss any material changes in financial condition from the end of the preceding fiscal year to the date of the most recent interim balance sheet provided. If the interim financial statements include an interim balance sheet as of the corresponding interim date of the preceding fiscal year, any material change in financial condition from that date to the date of the most recent interim balance sheet provided shall also be discussed. If discussions of changes from both the end and the corresponding interim date of the preceding fiscal year are required, the discussions may be combined at the discretion of the converting institution.

(ii) Material Changes in Results of Operations. Discuss any material changes in the converting institution's results of operations with respect to the most recent fiscal year-to-date period for which an income statement is provided and the corresponding year-to-date period of the preceding fiscal year. If the converting institution is required to or has elected to provide an income statement for the most recent fiscal year quarter, the discussion also shall cover material changes with respect to that fiscal quarter and the corresponding fiscal quarter in the preceding fiscal year. In addition, if the converting institution has elected to provide an income statement for the 12-month period ended as of the date of the most recent interim balance sheet provided, the discussion shall also cover material changes with respect to that 12-month period and the 12-month period ended as of the corresponding interim balance sheet date of the preceding fiscal year.

Instructions. 1. If interim financial statements are presented together with financial statements for full fiscal years, the discussion of the interim financial information shall be prepared pursuant to paragraph (c)(2) and the discussion of the full fiscal year information shall be prepared pursuant to paragraph (c)(1) of this Item 7. Such discussions may be combined.

The discussion and analysis required by this paragraph (c)(2) is required to focus only on material changes. Where the interim financial statements reveal material changes from period to period in one or more significant line items, the causes for the changes should be described if they have not already been disclosed; however, if the causes for a change in one line item also relate to other line items, no repetition is required. Converting institutions need not recite the amounts of changes from period to period which are readily computable from the financial statements. This discussion should not merely repeat numerical data contained in the financial statements. The information provided should include that which is available to the converting institution without undue effort or expense and which does not clearly appear in the converting institution's interim financial statements.
The converting institution's discussion of material changes in results of operations should identify any significant elements of the converting institution's income or loss from continuing operations which do not arise from or are not necessarily representative of the converting institution's ongoing business.
Converting institutions are encouraged but are not required to discuss forward-looking information.

(d) Lending Activities. (1) Briefly describe the applicable Federal and State restrictions on the lending activities of the converting institution, including applicable laws affecting mortgage loan interest rates. Also briefly describe the converting institution's general policy concerning loan-to-value ratios; customary methods of obtaining loan originations, such as the use of loan consultants; approval of properties as security for loans; the use of a loan committee, if any; and policies as to requiring title, fire, and casualty insurance on security properties. Indicate the converting institution's general future intentions with respect to activities in secondary mortgage markets, including transactions with the Federal Home Loan Mortgage Corporation or mortgage bankers. If significant, indicate loan service fee income as a percentage of net interest income for the years required by Item 14(b).

(2) As to the lending area of the converting institution, describe briefly (i) the lending area restrictions, if any, applicable to the converting institution, (ii) the areas in which the converting institution normally lends, and (iii) any material loan concentration areas of the converting institution.

The descriptions may include maps illustrating one or more of these areas. Furnish an estimate of the housing vacancy rates in areas where the converting institution' s loan concentrations are located, if practicable.

(3) Describe briefly the general long-term nature of investment in mortgage loans and the consequent effect upon the earnings spread of thrift institutions. State the normal maturity of loans made by the converting institution on the security of single-family dwellings and furnish an estimate as to the average length of time the loans are outstanding.

(4) For each of the periods required by Item 14(b), set forth in tabular form, excluding fees which are not considered adjustments of yield, the following:

(i) Average yield during the period on: (a) loan portfolio, (b) investment portfolio, (c) other interest-earning assets, and (d) all interest-earning assets. Average yield should be computed on no greater than a monthly basis.

(ii) Average rate paid during the period on: (a) deposits, (b) borrowings and Federal Home Loan Bank advances, (c) other interest-bearing liabilities, (d) all interest-bearing liabilities ([a], [b], and [c]). Average rate paid should be computed on no greater than a monthly basis.

(iii) Weighted-average yield at end of the latest required period for the items in (i) and (ii) above.

(iv) The net yield on average interest-earning assets (net interest earnings divided by average interest-earning assets, with net interest earnings equaling the difference between the dollar amount of interest earned and paid). Average interest-earning assets should be determined on an interval no more frequent than monthly.

(v) For each of the periods required by Item 14(b), set forth in tabular form: (a) the dollar amount of change in interest income and (b) the dollar amount of change in interest expense. The changes should be segregated for each major category of interest-earning asset and interest-bearing liability (as stated in [i] and [ii] above) into amounts attributable to (1) changes in volume (change in volume multiplied by old rate), (2) changes in rates (change in rate multiplied by old volume), and (3) changes in rate-volume (change in rate multiplied by the change in volume). The rate/volume variances should be allocated on a consistent basis between rate and volume variance and the basis of allocation disclosed in a note the table.

(5) For each of the periods required by Item 14(b), present the following: (i) return on assets (net income divided by average total assets); (ii) return on equity (net income divided by average equity); (iii) equity-to-assets ratio (average equity divided by average total assets).

Instructions. Converting institutions should supply any additional ratios which they deem necessary to explain their operations.

(6) As of the end of the last fiscal year reported on, with respect to (i) real estate mortgage loans, (ii) real estate construction loans, (iii) instalment loans, and (iv) commercial, financial, and agricultural loans, present separately the amounts of loans in each category which are due: (i) in each of the three years following the balance sheet, (ii) after three through five years, (iii) after five through ten years, (iv) after ten through fifteen years, and (v) after fifteen years.

In addition, present separately the total amount of all such loans due after one year which have predetermined interest rates and floating or adjustable interest rates.

Instructions: 1. Scheduled principal repayments should be reported in the maturity category in which the payment is due.

Demand loans, loans having no stated schedule of repayments and no stated maturity, and over-drafts should be reported as due in one year or less.
Determinations of maturities should be based upon contract terms. However, such terms may vary due to the converting institution's “rollover policy,” in which case the maturity should be revised as appropriate and the rollover policy should be briefly discussed.

(7) Describe briefly the risk elements within the loan and investment portfolios including the converting institution's customary procedures regarding delinquent loans. As of the end of each of the periods covered by the statements of operation required by Item 14(b)(1) and as of the date of the latest statement of financial condition required by Item 14(a), set forth in tabular form the amounts and categories of nonaccrual, past due, restructured, and potential problem loans and the ratio of such loans to total assets. Where the amount of real estate that has been in substance foreclosed, acquired by foreclosure, or by deed in lieu thereof is significant, include a brief description of the major properties and a statement as to the converting institution's probable losses, if any, upon disposition of such properties.

(e) Savings Activities. (1) State whether the maximum rate of interest which the converting institution may pay is established by regulatory authorities. State that, in the event of liquidation of the converting institution after conversion, savings account holders will be entitled to full payment of their accounts prior to payment to holders of the capital stock of the institution. Also indicate the percentage of total savings accounts which are from out-of-state sources, if such total is significant.

(2) Set forth in tabular form the amounts of time deposit accounts by categories of interest rates as of the dates of each balance sheet filed. Each interest-rate category should not be more than 200 basis points. As of the date of the latest balance sheet, set forth, in tabular form for each interest-rate category, the amounts of savings maturing during each of the three years following the balance sheet date and the total maturing thereafter.

(3) Disclose the weighted-average rate and general terms (as well as formal provisions for the extension of the maturity) of each category of short-term borrowings, along with the maximum amount of borrowings in each category outstanding at any month-end during each period for which an end-of-period balance sheet is required. In addition, disclose the approximate average short-term borrowings outstanding during the period and the approximate weighted-average interest rate (and a brief description of the means used to compute such average) for such aggregate short-term borrowings. The disclosure required by this paragraph (3) need not be furnished as regards borrowings in each particular category when the aggregate amount of such borrowings at the balance sheet date does not exceed one percent of assets at that date. Notwithstanding this reporting threshold, if the weighted average of such borrowings outstanding during the year exceeds one percent of assets at year-end and significantly exceeds the amount of such borrowings at year-end, the disclosure called for by this paragraph (3) should be furnished. This information is not required to be given for any category of short-term borrowings for which the average balance outstanding during the period was less than 30 percent of stockholders’ equity at the end of the period.

(f) Federal Regulation. Describe briefly, to the extent not otherwise covered by other items, Federal regulation of the converting institution and the conduct of its operations. In particular, describe briefly the Federal Home Loan Bank System, the Federal Deposit Insurance Corporation, and/or the Federal Reserve System, as applicable and state that the converting institution is a member or is otherwise subject to the jurisdiction thereof. Such description shall include (i) the insurance of accounts and the general regulatory authority of the Federal Deposit Insurance Corporation, (ii) Federal regulatory capital requirements and the converting institution's regulatory capital position in relation to those requirements, (iii) limitations on borrowings, (iv) recent loan policies of the converting institution's Federal Home Loan Bank or other applicable regulator and current interest rates, and (v) Federal Home Loan Bank or other applicable regulator's stock purchase requirements and the converting institution's position with respect to those requirements. Also describe the assessment authority and requirements of the Federal Deposit Insurance Corporation. In addition, describe briefly applicable liquidity requirements and state the converting institution's position with respect to those requirements.

(g) State Law. Describe briefly provisions of State law which have a material effect on the business of the converting institution.

(h) Federal and State Taxation. Describe briefly the Federal income tax laws applicable to the converting institution including: (1) permissible bad debt reserves; (2) the converting institution's position with respect to the maximum bad debt reserve limitations as of the date of the latest statement of financial condition required under Item 14(a); (3) future increases in the effective income tax rate; (4) the date through which the converting institution's Federal income tax returns have been audited by the Internal Revenue Service; and (5) the tax effect to the converting institution of the payment of cash dividends on capital stock of the applicant after conversion. Also describe briefly the State taxation of the converting institution.

(i) Competition. Describe the material sources of competition for thrift institutions generally and indicate to the extent practicable the converting institution's position in its principal lending and savings markets.

Instruction. In answering Item 7(j) give to the extent known the converting institution's savings and mortgage product market shares by county in its geographic market. Also indicate its rank and any material changes or trends in its competitive standing.

(j) Offices and Other Material Properties. (1) Furnish the location of the converting institution's principal office and each existing and approved branch office and other office facilities. State the total net book value of all such offices as of the date of the latest statement of financial condition required by Item 14(a). If any such office is leased, state the expiration dates of such leases.

(2) Describe briefly undeveloped land owned by the converting institution, including location, net book value, and prospective use and holding period. If the converting institution or a subsidiary own or leases electronic data processing equipment principally for its own use, describe briefly such equipment indicating net book value if owned or the principal lease terms if leased.

(k) Employees. State the number of persons employed full-time by the converting institution including executive officers listed under Item 5. State whether employees are represented by a collective bargaining group and whether the converting institution's relations with its employees is satisfactory. Summarize briefly any loans, profit sharing, retirement, medical, hospitalization or other remuneration plans provided for employees not already included pursuant to Item 6.

(l) Service Corporations, Operations Subsidiaries and Leeway Subsidiaries. Describe briefly the converting institution's investment in any subsidiary and the major lines of business (including any joint ventures) of the subsidiary which are material to its operations.

(m) Legal Proceedings. Furnish the information regarding legal proceedings required to be disclosed by Item 7(n) of 12 CFR 563b.101 (see footnote #1).1 Unless the context otherwise requires, the word registrant in that regulation shall refer to the converting institution.

(n) Additional Information. The Superintendent may upon the request of converting institution, and where consistent with the protection of account holders and others, permit the omission of any of the information required by this Item or the furnishing in substitution therefor of appropriate information of comparable character. The Superintendent may also require the furnishing of other information in addition to, or in substitution for, the information required by this Item in any case where such information is necessary or appropriate for an adequate description of the converting institution's business done or intended to be done.

Item 8. Description of the Plan of Conversion.

(a) A statement to the following effect shall be inserted in the proxy statement immediately preceding the information required by this Item: The Banking Department has given approval to the Plan of Conversion, subject to its approval by depositors or shareholders, as applicable, and the satisfaction of certain other conditions. However, such Department approval does not constitute a recommendation or endorsement of the Plan of Conversion by the Department.

(b) The proxy statement shall contain a description of the plan of conversion. Such description shall contain the information required by paragraphs (c) through (j) of this Item and such additional information as may be necessary to accurately describe the material provisions of the plan.

(c) Describe the effects of conversion from a mutual institution to a stock institution including the following information: (1) state that share and deposit accounts of the converting institution will not be affected by the conversion with respect to such matters as balances in the accounts and the extent of insurance of such accounts by the federal deposit insuror; (2) state whether shareholders or borrowers of the converting institution will continue to have voting rights in the converting institution after conversion, and describe any voting rights they will have; (3) state the present liquidation rights of account holders and describe the liquidation account to be established and maintained by the converting institution, including the conditions under which such account will be paid, the interest of Eligible Account Holders in such account and the formula by which such account will be adjusted; (4) state that the rights and obligations of borrowers from the applicant will not be changed in any manner; (5) state that capital stock to be sold by the converting institution will not be insured; (6) state that none of the assets of the converting institution will be distributed in order to effect the conversion other than to pay expenses incident thereto; (7) state the reasons why management is recommending the conversion, including any advantages to the community served by the converting institution; and (8) state any reasons why management believes that such conversion would be detrimental to the interests of the depositors or shareholders.

(d) Describe any contacts which have occurred during the period beginning one year prior to publication of approval of the plan of conversion by the board of trustees or directors with the converting institution, or any of its trustees, directors, or executive officers, concerning: a merger conversion, the acquisition of securities of any class of the converting institution, or a sale or other transfer of a material amount of assets of the converting institution or any of its subsidiaries; provided, however, that no disclosure shall be required under this paragraph unless the proposed transaction is: (1) communicated in writing; (2) definitive by its terms; and (3) not subject to significant conditions which, if considered at the time of such proposed transaction, would make consummation of the transaction unlikely. In determining the significance of any condition the converting institution shall consult with the superintendent as to all such proposed transactions occurring within the applicable time period which were communicated in writing and definitive by their terms. Describe the factors considered by the board of trustees or directors in rejecting any such proposed transaction.

(e) With respect to the subscription rights of depositors or shareholders, furnish the following information: (1) the formula to be used for determining the subscription rights of depositors or shareholders to purchase shares; (2) any optional provisions included in the plan of conversion for the purchase of shares of capital stock, including the purchase priorities, limitations on total purchases, the total number of shares which may be purchased, and the formula for the allocation; (3) the allocation formulas to be used in the event that there is an oversubscription of shares at any time during the sale of stock under the plan of conversion; and (4) the use and timing of the order forms with respect to the exercise of subscription rights.

(f) (1) Set forth on a per-share basis the estimated public offering price range of the shares of capital stock to be sold pursuant to the plan of conversion, except that an estimated price range is not required to be stated if the offering of stock is not to commence until after the meeting of depositors or shareholders to vote on the plan of conversion; (2) state that the offering price will be the pro forma market value of such shares as determined by the institution's management and the underwriters, as the case may be; and (3) state that all of the shares are required to be sold.

(g) Unless the offering of stock is not to commence until after the meeting of depositors or shareholders to vote on the plan of conversion, discuss (1) the earnings per share on a pro forma basis of the capital stock to be sold as of the end of the most recent period covered by the statements of operation required by Item 14(b)(1); and (2) the book value per share on a pro forma basis as of the date of the latest statement of financial condition required by Item 14(a).

Instructions: 1. Earnings and book value per share shall be furnished, without giving effect to the estimated net proceeds from the sale of the capital stock, and then after giving effect to such proceeds with all assumptions used clearly stated.

In computing pro forma earnings, the applicant shall use the arithmetic average of the (i) average yield on all interest-earning assets (Item 7[d][4][i][D]) and (ii) average rate paid of deposits (Item 7[d][4][ii][A]).
If significant changes in interest rates occur during the periods presented, the Superintendent will consider permitting alternative computations proposed by a converting institution that are properly supported.
An appropriate statement should be included which explains that the pro forma data should not be relied upon as indicative of the actual financial position or results of continuing operations that will be experienced by the converting institution after its conversion.

(h) State the proposed commencement and expiration dates of the subscription period and describe any provisions in the plan of conversion related to the timing or extension of the subscription period. Also, state (1) that a maximum subscription price will be set forth in the offering circular used for offering of subscription rights; (2) that the actual subscription price will be the public offering price; (3) that the actual subscription price will not exceed the maximum subscription price shown on the order form; and (4) that any difference between the maximum and actual subscription prices will be refunded unless the subscribers affirmatively elect to have the difference applied to the purchase of additional shares of capital stock.

(i) Furnish the following information: (1) describe to the extent practicable the converting institution's present intentions with respect to listing the capital stock on an exchange or otherwise providing a market for the purchase and sale of the capital stock in the future; (2) describe the tax effect of the conversion both to the converting institution and to the depositors or shareholders receiving nontransferable subscription rights to purchase capital stock in the conversion; (3) state that the plan of conversion is attached as an exhibit to the proxy statement (or will be made available on request in the case where a short-form proxy statement is used) and should be consulted for further information.

(j) (1) State whether the plan of conversion provides for unsubscribed capital stock to be offered to the public through underwriters or directly by the converting institution. If such is the case, provide the information to the extent known required by Item 6 of Form 86-OC and indicate the estimated timing of the proposed offering.

(2) State whether the plan of conversion provides for the purchase by any person or group of any insignificant residue of shares remaining at the conclusion of the offering.

(k) Furnish the following information in tabular form regarding proposed purchases of capital stock involving directors, officers and trustees of the converting institution:

(1) State the total number of shares proposed to be purchased by all directors, officers and trustees as a group without naming them.

(2) As to each officer, director or trustee named in Item 6(a)(1)(i), name him, state his position, and the number of shares proposed to be purchased by him.

(3) As to any officer, director, trustee or associate thereof who proposes to purchase one percent or more of the total number of shares of capital stock of the converting institution to be outstanding, name him, state his position, and the number of shares proposed to be purchased by him.

(4) With respect to the information required by (1), (2), and (3) above, indicate separately the number of shares proposed to be purchased in each offering category.

Instructions: With respect to the information requested as to associates of officers, directors and trustees, such information is required only to the extent known. In a case where such information is not obtainable, only the number of shares which the associate is given subscription rights to purchase need to be disclosed.

(l) With respect to the appraisal required by section 86.4(e) of this Part:

(1) Briefly describe the qualifications of the appraisers and the method of selecting the appraiser.

(2) Describe any material relationship between the appraiser and the converting institution or any underwriter.

(3) Furnish a summary concerning such appraisal which shall include, but not be limited to, the procedures followed, the findings and recommendations, the bases and assumptions for and methods of arriving at such findings and recommendations, instructions received from the converting institution or any underwriter, and any limitation imposed by the converting institution or underwriters on the scope of the investigation.

(4) Furnish a statement to the effect that such appraisal shall be made available for inspection and copying at the principal executive offices of the converting institution during its regular business hours by any interested eligible account holder of the converting institution or his or her representative who has been so designated in writing. This statement may also provide that a copy of such appraisal will be transmitted by the converting institution to any interested eligible account holder of the converting institution or his or her representative who has been so designated in writing upon written request and at the expense of the requesting eligible account holder.

Item 9. Description of Capital Stock.

(a) Furnish the information regarding capital stock of the converting institution required to be disclosed under Item 9(a) of 12 CFR 563b.101 (see footnote # 1). Unless the context otherwise requires, the term registrant in that regulation shall refer to the converting institution.

(b) An undertaking should be included in the proxy statement that the converting institution where practical will use its best efforts to encourage and assist a professional market maker in establishing and maintaining a market for the capital stock of the converting institution.

(c) Outline briefly the trading market that is expected to exist for the capital stock following the conversion including the estimated number of market makers and stockholders, and the anticipated success of the converting institution in listing the stock.

Instructions: Any discussion of the listing of the converting institution's stock should include the basic requirements that must be satisfied in order to accomplish such listing.

(d) If the rights evidenced by the capital stock will be materially limited or qualified by the rights of savings account holders or borrowers, include the information regarding the limitations or qualifications necessary to enable investors to understand the rights evidenced by the capital stock.

Item 10. Capitalization.

Set forth in substantially the tabular form indicated below the dollar amounts of the capitalization of the converting institution:

| | (A) | (B) | (C) | | --- | --- | --- | --- | | | Capitalization as of Latest Statement of Condition Date | Adjustments as a Result of Conversion | Pro forma Capitalization After Giving Effect to the Conversion | | 1. Share and Deposit Accounts | $ | $ | $ | | 2. FHL Bank Advances | | | | | 3. Subordinated Debt Securities | | | | | 4. Other Borrowings | | | | | 5. Capital Stock | | | | | 6. Paid in Capital | | | | | 7. Undivided Profits | | | | | 8. Other Net Worth | | | | | 9. Federal Insurance Reserve, if applicable | | | | | 10. Other Reserves | | | | | 11. Total | $ | $ | $ | | Instructions: 1. With respect to capital stock, indicate in the table or in a footnote the total number of shares to be authorized, the par or stated value of such shares, and the number of shares to be sold as part of the conversion. | | | |

(2) With respect to the funds to be received by the converting institution from the sale to its capital stock, indicate in the table the estimated total amount of funds to be obtained and in a footnote state the price per share used in making such estimate. Such total amount and price per share shall be clearly identified as being estimates.

Item 11. Use of New Capital.

State the principal purposes for which the net proceeds to the converting institution from the capital stock to be sold are intended to be invested or otherwise used, and the approximate amount intended for each such purpose.

Instructions: Details of proposed investments are not to be given. There need be furnished, for example, only a brief statement of any investment or other activity of the converting institution which will be affected materially by the availability of the proceeds. Examples of such activities may include expanded secondary market activities, larger scale lending projects, loan portfolio diversification, increased liquidity investments, repayment of debt, additional branch offices and other facilities, service corporation investments, and acquisitions.

Item 12. New Charter, Bylaws or Other Documents.

Describe briefly any material differences between the provisions of existing charter, bylaws and any similar documents of the converting institution and those which will take effect after conversion, including, if applicable, optional charter provisions provided for in Section 86.10 of Part 86.

Instruction: This Item requires only a brief summary of the provisions which are pertinent from both an investment and a voting point of view. A complete legal description of the provisions referred to is not required and should not be given. Do not set forth the provisions verbatim; only a succinct summary is required.

Item 13. Other Matters.

State that the converting institution will register its capital stock under section 12(g) of the Securities Exchange Act of 1934, as amended, and that it will not deregister such stock for a period of three years. State that upon such registration the proxy rules, insider trading reporting and restrictions, annual and periodic reporting and other requirements of that Act will be applicable.

Item 14. Financial Statements.

Notes: 1. The following instructions specify the consolidated balance sheets, the consolidated statements of income, the consolidated statements of cash flows, and stockholders' equity required to be included in the proxy statement.

If the converting institution has previously used an audit period in connection with its certified financial statements which does not coincide with its fiscal year, such audit period may be used in place of any fiscal year requirement provided it covers a full 12 months' operations and is used consistently.

(a) Consolidated Balance Sheets. (1) There shall be furnished for the applicant and its subsidiaries consolidated, audited balance sheets as of the end of each of the two most recent fiscal years.

(2) If the latest balance sheets furnished under (1) of this paragraph are in excess of 135 days prior to the date of the superintendent's approval of the conversion, there shall be furnished an interim balance sheet as of date within 135 days of such approval. This interim balance sheet need not be audited.

(b) Consolidated statements of income and cash flow. (1) There shall be furnished for the converting institution and its subsidiaries and predecessors consolidated, audited statements of income and cash flows for each of the three fiscal years preceding the date of the most recent balance sheet furnished.

(2) In addition, for any interim period between the latest audited balance sheet and the date of the most recent interim balance sheet being filed, and for the corresponding period of the preceding fiscal year, statements of income and cash flows shall be furnished. The interim statements may be unaudited.

(c) Changes in stockholders' equity. An analysis of the changes in each caption of stockholders’ equity presented in the balance sheets shall be given in a note or separate statement. This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be furnished with all significant reconciling items described by appropriate captions.

(d) Financial statements of business acquired or to be acquired. There shall be furnished the information required under Item 14(d) of 12 CFR* 563b.101 regarding business acquired or to be acquired.

(e) Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons. There shall be furnished the information required under Item 14(e) of 12 CFR 563b.101 (see footnote #1)1 regarding separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons.

(f) Filing of other statements in other cases. The superintendent may, upon the request of the converting institution, and where consistent with the protection of eligible account holders and others, permit the omission of one or more of the statements herein required or the filing in substitution therefor of appropriate statements of comparable character. The superintendent may also require the inclusion of other statements in addition to, or in substitution for, the statements herein required in any case where such statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise necessary for the protection of eligible account holders and others.

Item 15. Consents of Experts and Reports.

(a) The proxy statement shall briefly describe all consents of experts filed pursuant to Part 86.

(b) The statement shall contain a report of the independent public accountants who have certified the financial statements and other matters in the statement.

Item 16. Attachments.

There shall be attached to the proxy statement distributed to depositors or shareholders and others a copy of the converting institution's plan of conversion as approved by the Superintendent unless the following procedure is observed. The converting institution may in the alternative set forth in the proxy statement that the plan of conversion will not be provided unless the recipient so requests by returning within a specified period a postage-paid or other written communication.

3 CRR-NY 86.15 Offering circular {#sec-3-crr-ny-86.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 86.15}

A converting institution (as applicable) shall be required to file with the superintendent and distribute to its eligible account holders and to the public an offering circular which complies with Form 86-OC, which reads in its entirety as follows:

FORM 86-OC

[Facing Sheet]

NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

One State Street

New York, New York 10004

Offering Circular

(Exact name of converting institution as specified in charter)

(Street address of converting institution)

(City, State and ZIP Code)

Offering Circular Form

Item 1. Information Required by and Use of Form 86-OC.

The offering circular shall be dated as of the date of its issuance. The offering circular shall contain substantially the same information required to be included in the proxy statement of the converting institution distributed to depositors or shareholders to vote upon the plan of conversion. Information of the type required to be included in the proxy statement may be omitted from the offering circular only to the extent that it is clearly inapplicable. The offering circular may be in “wrap around” form with the proxy statement attached.

Instructions: 1. The term offering circular refers to both the offering circular for the subscription offering and the offering circular for the public offering through a underwriter, unless otherwise indicated.

The offering circular shall include such information which the Superintendent by interpretive release or otherwise, has deemed necessary to comply with this Form 86-OC.
An offering circular for the subscription offering in “wrap around” form distributed to depositors or shareholders and other persons who have previously been furnished a copy of the proxy statement need not contain the proxy statement as an attachment provided such offering circular states that a copy of the proxy statement has previously been furnished to such persons and that an additional copy thereof will be furnished promptly upon request to the converting institution (with the telephone number and mailing address of the converting institution stated).

Item 2. Additional Current Information Required.

Each offering circular shall, as of its respective date of issuance, include to the extent available, the following additional current information to the extent that such information is not already included in the proxy statement:

(a) Information with respect to the vote of depositors or shareholders upon the plan of conversion and any other proposals considered at the meeting of depositors or shareholders.

(b) Information with respect to any recent material developments in the business affairs of the converting institution.

(c) Information with respect to the trading market that is expected to exist for the capital stock following the conversion.

(d) Information, on the outside front cover page, summarizing the results of any separate subscription offering including the number of shares sold to Eligible Account Holders, the price at which the shares were sold, and the number of unsubscribed shares to be sold in the public offering.

(e) The information required by Items 8(e)(1) and (f) of Form 86-PS.

(f) Any other information necessary to make such offering circular current, including full financial statements of the converting institution within six months prior to the date of issuance of such offering circular.

Item 3. Statement Required in Offering Circulars.

There shall be set forth on the outside cover page of every offering circular the following statement in capital letters printed in boldface Roman type at least as large as 10-point modern type and at least two points leaded:

THESE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION NOR HAVE SUCH DEPARTMENT OR CORPORATIONS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Item 4. Preliminary Offering Circular.

The outside front cover page of any preliminary offering circular shall bear, in red ink, the caption “Preliminary Offering Circular,” the date of its issuance, and the following statement printed in type as large as that used generally in the body of such offering circular:

“This offering circular has been filed with the New York State Department of Financial Services, but has not been authorized for use in the final form. Information contained herein is subject to completion or amendment. The shares covered hereby may not be sold nor may offers to buy be accepted prior to the time the offering circular is approved for use by the New York State Department of Financial Services. This offering circular shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of these shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.”

Item 5. Information with Respect to Exercise of Subscription Rights.

Any offering circular which is required to be delivered to subscribers shall describe all material terms of the offering relating to the exercise of subscription rights to the extent that such description is not already in the proxy statement. Such terms include the expiration date, any subscription agent, method of exercising subscription rights, payment for shares, delivery of stock certificates for shares purchased, maximum subscription price, possible reduction of subscription price, relationship of subscription price to public offering price, requirements that all unsubscribed shares be sold, and any other material conditions relating to the exercise of subscription rights.

Item 6. Information with Respect to Public Offering.

Each offering circular shall describe the material terms of the plan or plans of distribution for all unsubscribed shares of capital stock to the extent such description is not already in the proxy statement, including the following:

(a) The outside front cover page of the offering circular shall give the information called for by this paragraph. Such information shall be given in substantially the tabular form set forth below. If the information is not known at the time of the subscription offering, so state and estimate.

| | | Underwriting | Proceeds to | | --- | --- | --- | --- | | | | Discounts and | Converting | | | Price to Public | Commissions | Institution | | Per Share | $ | $ | $ | | Total | $ | $ | $ |

(b) An offering circular for a public offering, where the plan of conversion does not contain the optional provision permitted by section 86.5(b)(4) of this Part, may omit the description relating to the exercise of subscription rights required by Item 5.

(c) If any shares are to be offered through underwriters, the offering circular for the public offering shall state the names of the principal underwriters and the respective amounts underwritten by each. The names of the principal underwriters other than the managing underwriters and the respective amounts to be underwritten may be omitted from the offering circular for the subscription offering, unless the plan of conversion contains the optional provision permitted by section 86.5(b)(4) of this Part. Each offering circular shall identify each principal underwriter having a material relationship to the converting institution and state the nature of the relationship. Each offering circular shall state briefly the nature of the underwriter's obligation to take the unsubscribed shares.

(d) The offering circular for the public offering shall state briefly the discounts and commissions to be allowed or paid to dealers in connection with the sale of the unsubscribed shares. Such information may be omitted from the offering circular for any subscription offering, unless the plan of conversion contains the optional provision permitted by section 86.5(b)(4) of Part 86.

(e) If any shares are to be offered through underwriters, the offering circular for the public offering shall identify any principal underwriter that intends to confirm sales to any accounts over which it exercises discretionary authority and include an estimate of the number of shares so intended to be confirmed. Such information may be omitted from the offering circular for any subscription offering.

Instructions: 1. Commissions include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of, or understandings made with or for the benefit of any persons in which any underwriter or dealer is interested, in connection with the sale of the shares.

Only commissions paid by the converting institution in cash are to be included in the table. Any other consideration to the underwriters shall be set forth following the table with a reference thereto in the second column of the table. Any finder's fees or similar payments shall be appropriately disclosed.
All that is required as to the nature of the underwriters' obligation is whether the underwriters are or will be committed to take and to pay for all of the shares if any are taken, or whether it is merely an agency or “best efforts” arrangement under which the underwriters are required to take and pay for only such shares as they may sell to the public. Conditions precedent to the underwriters' taking the shares, including customary “market outs,” need not be described. If a “best efforts” arrangement is used, describe any standby commitments for shares not sold.

Part 87 CONVERSION OF MUTUAL AND STOCK-FORM FEDERAL SAVINGS BANKS AND STOCK-FORM FEDERAL SAVINGS AND LOAN ASSOCIATIONS TO STATE CHARTER

3 CRR-NY 87.1 General information {#sec-3-crr-ny-87.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 87.1}

(a) The instructions set forth in this Part shall apply to the conversion of a mutual-form or stock-form Federal savings bank and stock-form Federal savings and loan association, having its principal place of business in this State, into a State-chartered savings institution pursuant to Banking Law, section 412.

(b) Six copies of a letter of application and each document referred to in section 87.2 of this Part, including two executed copies of the documents referred to in section 87.2(a)-(c), shall be filed with the superintendent at the department at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The letter of application shall set forth the name and address of the officer to whom all communications from the department should be addressed, and the date or proposed date of filing of any required applications or other documents with any Federal agency, and shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Inquiries concerning the preparation of the application should be addressed to the superintendent.

(c) Before submission of the application, the plan of conversion shall be approved by a majority of the board of directors or trustees. After such approval, in the case of a stock-form Federal savings and loan association, the plan shall then be approved at a meeting held upon not less than 10 days' written notice to each stockholder of such Federal savings and loan association, by the vote, in person or by proxy, of the holders of at least 66 2/3 percent of each class of capital stock of such institution. Notice of such meeting, together with any proxy material, shall be served personally upon or mailed to each stockholder at his or her last known address, and shall contain a statement of the time, place and purpose of the meeting.

(d) Within 60 days after the date the application is filed, the applicant shall take the action prescribed or authorized by Federal law to effect such conversion.

(e) Approval by the superintendent will be conditional in all cases upon the continued insurance of the applicant's deposit accounts to the extent permitted by Federal law.

(f) Following submission of the application, the superintendent may require a full examination of the applicant by State bank examiners before action is taken upon the application.

3 CRR-NY 87.2 Documents required {#sec-3-crr-ny-87.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 87.2}

The following documents shall be filed as part of the application:

(a) plan of conversion, signed by the applicant's president and attested by its secretary, setting forth the terms and conditions of the conversion and the manner in which it is to be accomplished, including the names of the principal executive and administrative officers and directors or trustees;

(b) organization certificate, as required by Banking Law, section 230 or 4001, whichever may be applicable, executed by a majority of the applicant's directors or trustees;

(c) minutes of the meeting of stockholders of the stock-form savings and loan association at which the plan of conversion was approved, including the notice of meeting, proxy material, and plan of conversion in the form submitted, certified by the presiding officer and by the secretary of the meeting. The presiding officer and the secretary of the meeting shall certify that (1) the notice of meeting and proxy material were served personally or by mail, and (2) the plan of conversion in the form attached was the plan submitted at the meeting and was approved as specified in section 87.1(c) of this Part. Such certificate shall also indicate the actual vote for and against the plan of conversion; and

(d) proposed bylaws of the converting institution as required by Banking Law, section 251 or 6001, whichever may be applicable.

3 CRR-NY 87.3 Additional documents {#sec-3-crr-ny-87.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 87.3}

The following additional documents shall be submitted to the superintendent as they become available to the applicant:

(a) copies of all notices, consents and authorizations required by Federal Law and regulations in connection with the conversion; and

(b) opinion of counsel for the applicant as to compliance with all requirements of Federal and State law in connection with the conversion.

Part 89 ALTERNATIVE INVESTMENTS IN DEBT AND EQUITY SECURITIES BY SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 89.1 Scope {#sec-3-crr-ny-89.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.1}

The provisions of this Part shall apply to all investments in debt and equity securities made by any savings bank pursuant to section 235.30 of the Banking Law, or by any savings and loan association pursuant to section 379.5 of the Banking Law. The provisions of this Part shall not apply to debt or equity securities acquired by a thrift institution in good faith in full or partial settlement, modification or readjustment of any investment made, pursuant to the Banking Law, by such thrift institution where the acquisition of such securities was necessary in order for the thrift institution to minimize or avoid loss in connection with such investment. Any thrift institution which makes an election (and notifies the department in writing of such election) to purchase securities pursuant to section 235.30 of the Banking Law and this Part shall not be authorized to purchase any securities pursuant to sections 235.1, 235.2, 235.3, 235.4, 235.5, 235.7, 235.7-a, 235.10, 235.11, 235.13, 235.14, 235.15, 235.19, 235.21(a)(2), 235.21(b), 235.21-a, 235.24, 235.24-a, 235.24-b, 235.24-c, 235.25, 235.26, 235.27 and 235.28-a of the Banking Law. No thrift institution which has purchased any security pursuant to section 235.30 of the Banking Law and this Part shall purchase any additional amount of such security pursuant to any other provision of the Banking Law. Any security which is not authorized for purchase by section 235.30 of the Banking Law may be purchased pursuant to the provisions of section 235.31 of the Banking Law. No thrift institution shall acquire any security pursuant to section 235.31 of the Banking Law if such acquisition would cause such institution to violate section 89.4 (excluding subdivisions [b] and [f] thereof) of this Part. The authority of a savings bank to make investments pursuant to sections 235.9(a)(6) and 235-d of the Banking Law, and the authority of a savings and loan association to make investments pursuant to sections 379-b and 381.1(e) of the Banking Law, is not affected by the enactment of this Part. Notwithstanding the foregoing, any security purchased by a thrift institution may be retained by such institution, provided that such security was legally acquired in compliance with the Banking Law.

3 CRR-NY 89.2 Definitions {#sec-3-crr-ny-89.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.2}

The following terms, as used in this Part, shall have the following meanings:

(a) The term security shall mean any stock, or any bond, note, debenture or other evidence of indebtedness. The term security does not include a futures contract or an option or warrant to purchase a security, except that an option or warrant acquired by the thrift institution as part of a unit which includes a debt or equity security shall constitute a security.

(b) The term qualified debt security shall mean any debt security which is not in default as to either principal or interest when acquired.

(c) The term qualified equity security shall mean any equity security which is, at the time of acquisition, listed on the New York Stock Exchange or the American Stock Exchange, or any equity security for which, at the time of acquisition, representative high and low bid prices are regularly quoted on the National Association of Securities Dealers Automated Quotation System.

(d) The term thrift institution shall mean a savings bank or savings and loan association organized under, or subject to the provisions of, the Banking Law.

3 CRR-NY 89.3 Permitted investments {#sec-3-crr-ny-89.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.3}

A thrift institution may invest in, purchase or otherwise acquire any qualified equity security or any qualified debt security in accordance with the provisions of this Part.

3 CRR-NY 89.4 Prohibited investments {#sec-3-crr-ny-89.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.4}

No thrift institution shall, pursuant to the provisions of section 235.30 or 379.5 of the Banking Law:

(a) invest in or otherwise acquire any equity security (or any security convertible into an equity security) issued by any bank, trust company, savings bank, savings and loan association, bank holding company, banking organization, life insurance company or corporation engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through participation of any type of security;

(b) invest in any security, other than a qualified debt or qualified equity security, in which a prudent person of discretion and intelligence in such matters seeking a reasonable income and preservation of capital would invest;

(d) own or acquire any equity security if such ownership or acquisition would cause (1) more than 10 percent of the thrift institution's assets to be invested in equity securities, or (2) more than one percent of the thrift institution's assets to be invested in the equity securities of any single issuer;

(e) acquire any securities other than for investment purposes, or acquire any securities with a view to the public distribution thereof;

(f) acquire securities on margin;

(g) purchase or sell, or offer to purchase or sell, any qualified debt security or qualified equity security in violation of any applicable State or Federal securities laws; or

(h) acquire any qualified debt security, other than one described in Banking Law, section 235.1, 235.2, 235.3, 235.4, 235.5, 235.11, 235.15, 235.24, 235.24-a, 235.24-b, 235.24-c or 235.27, if the amount of consideration paid for such debt security, when added to the aggregate amount of loans outstanding to the issuer of such debt security, would cause the thrift institution to be in violation of the provisions of the Banking Law (and the rules and regulations promulgated thereunder) which limit the aggregate amount of loans which a thrift institution may make to one borrower.

3 CRR-NY 89.5 Investment committee {#sec-3-crr-ny-89.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.5}

No thrift institution shall make any investment, pursuant to the provisions of section 235.30 or 379.5 of the Banking Law and the provisions of this Part, without the prior establishment of a securities investment committee of its board of trustees or directors, a majority of the members of which committee shall not be officers or employees of the thrift institution.

3 CRR-NY 89.6 No presumption of prudence created {#sec-3-crr-ny-89.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 89.6}

The fact that an investment is not prohibited by this Part shall not (a) create any presumption as to the prudence of such investment, or (b) constitute any evidence as to the Banking Department's position regarding the prudence of such investment.

Part 90 VARIABLE RATE OPEN-END ACCOUNTS ESTABLISHED BY LENDING INSTITUTIONS

3 CRR-NY 90.1 Definitions {#sec-3-crr-ny-90.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.1}

For purposes of this Part:

(a) The term banking institution shall mean a bank, trust company, savings bank, savings and loan association, credit union or branch of a foreign banking corporation.

(b) The term credit account shall mean an account which is established under a retail instalment credit agreement, as defined under section 401 of the Personal Property Law and as provided by section 413 of the Personal Property Law, which permits the customer of the banking institution to make purchases from time to time by use of a credit card or as otherwise provided.

(c) The term lending institution shall mean a banking institution as defined by subdivision (a) of this section or a licensed lender licensed pursuant to article IX of the Banking Law, which maintains loan accounts with customers and/or which is a financing agency, as defined under section 401 of the Personal Property Law, for the purpose of maintaining credit accounts with customers as provided in subdivision 11 of section 413 of the Personal Property Law.

(d) The term loan account shall mean an account established according to the provisions of subdivision 5 of section 108 of the Banking Law, or section 401.2(c)(2) of this Title, which permits the customer of the banking institution or licensed lender, respectively, to receive one or more loans or advances from time to time by use of a credit card, check or other written order or request of the customer.

(e) The term open-end account shall mean an account established by a lending institution pursuant to an agreement, which account may be comprised of either a loan account, a credit account or both a loan account and a credit account.

(f) The term rate shall mean, depending on the context, the rate of interest charged on a loan account or the rate of service charge charged on a credit account.

3 CRR-NY 90.2 Scope {#sec-3-crr-ny-90.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.2}

This Part applies to open-end accounts which are established by lending institutions and which provide for changes in the rate charged on the account from time to time but not more often than once within any three-month period. The use of indices for such open-end accounts must comply with the provisions of Part 333 of this Title.

3 CRR-NY 90.3 Disclosures {#sec-3-crr-ny-90.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.3}

All disclosures required by this Part are to be made in a single, separate document, in plain language and with captioned subdivisions for the information to be disclosed. Such disclosures shall be provided by the lending institution to a customer who is to be primarily liable on the open-end account prior to the date of the first transaction on the account in the case of a new account, or, in the case where an existing open-end account is being amended to provide for the variable rate feature, at least 30 days prior to the effective date of the variable rate amendment. Disclosure shall be made, in any reasonable order, of the following information:

(a) an identification of the index to be used by the lending institution in connection with changing the rate on the open-end account or, if applicable, in connection with changing the individual rates on the loan account and credit account comprising the open-end account, and information where the index figures will be available;

(b) disclosure of the intervals at which the lending institution may change the rate on the open-end account (or, if applicable, the individual rates on the loan account and the credit account), the time(s) or date(s) at which the lending institution will calculate the rate or rates with respect to the index, and any conditions or events on which the changes in the rate or rates are contingent;

(d) a hypothetical example, illustrative of the type of credit being offered, of the effect of a rate increase on monthly payments (e.g., an example showing such effect or combination of effects for the loan account and the credit account of an open-end account which is comprised of both);

(e) a history of the movements in the index selected for the open-end account, as further provided under section 90.4 of this Part; and

(f) the fact that the customer will receive prior notifications from the lending institution of increases in the rate or rates for the open-end account, and the time periods within which the notifications will be sent.

3 CRR-NY 90.4 Index {#sec-3-crr-ny-90.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.4}

(a) General provisions.

A single index for the open-end account shall be chosen from among the indices approved by the superintendent pursuant to Part 333 of this Title. The rate or rates for the open-end account may be based directly on the index values or on the index values plus or minus additional percentage points; provided, however, that variations in the rate or rates shall correspond directly to movements in the index. This Part imposes no requirement on lending institutions to place limitations on the adjustment in the rate or rates for the open-end account, as such adjustment would otherwise be allowed by movements in the index. However, any lending institution which adopts limitations of any kind on changes in the rate shall provide for equal limitations on both increases and decreases. Similarly, rate adjustments may be rounded to the nearest percentage point or fraction thereof as determined by the lending institution, provided that rounding applies equally to decreases and increases in rates. Subject to the rounding provisions, increases in the index need not be used at each rate calculation date but may be accumulated once to the next rate calculation date, but decreases in the index must be reflected at each rate calculation date.

(b) Changes in the index.

A lending institution may provide for a substitute index similar to the chosen index only in the event that the initial index becomes unavailable. In any other case, if the lending institution proposes to change the index used for the open-end account, application in letter form for permission to do so must be made to the superintendent, and, in the case of approval for such change, a notification of the change must be sent to customers at least 30 days prior to the change.

The disclosure shall identify the index and shall contain a statement that past changes in the index are not necessarily predictive of future changes in the index. The lending institution shall provide the high and low figures for the index and the dates at which these levels were reached, for each of the three calendar years preceding the calendar year in which the open-end account is opened or when a variable rate provision is added to an existing account. In addition, if an open-end account is opened after August 31st of any calendar year or a variable rate provision is added to become effective after August 31st of any calendar year, the disclosure shall include the high and low figures for the index's performance through June 30th of that year, and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding that calendar year in which the open-end account is opened or a variable-rate provision becomes effective, prior to March 1st of that year.

3 CRR-NY 90.5 Notifications {#sec-3-crr-ny-90.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.5}

The notification of a rate increase and of the new rate, referred to in section 90.3(f) of this Part, shall be delivered or mailed by the lending institution to a customer who is primarily liable on the open-end account no less than 25 and not more than 60 days prior to the effective date of a rate increase; provided, however, that if the open-end account provides for a monthly billing cycle, the notification may be delivered or mailed with the periodic statement for a monthly billing cycle, to become effective after the close of the next monthly billing cycle. In the case of new customers who apply for an existing variable rate open-end account within 30 days of the time that the lending institution will increase the rate on the account but where the lending institution will not be able to provide the required written notification, the increase in the rate and the new rate shall be disclosed to the applicant prior to opening the account.

3 CRR-NY 90.6 Compliance with federal regulation {#sec-3-crr-ny-90.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 90.6}

Effective November 7, 1989, lenders which comply with section 226.5b of Regulation Z (12 CFR part 226) will be deemed to be in compliance with section 90.3 of this Part to the extent that section 90.3 pertains to home equity plans subject to section 226.5b; provided that lenders supply a copy of the disclosures required by section 226.5b for retention by the consumer.

Part 91 VARIABLE RATE RETAIL INSTALMENT CREDIT AGREEMENTS ESTABLISHED BY RETAIL SELLERS

3 CRR-NY 91.1 Definitions {#sec-3-crr-ny-91.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 91.1}

For purposes of this Part:

(a) The term credit account shall mean an account which is established by a retail seller under a retail instalment credit agreement as defined under subdivision 8 of section 401 of the Personal Property Law and as provided by section 413 of the Personal Property Law.

(b) The term creditor shall mean a retail seller, except that the term shall also mean a sales finance company which has purchased or acquired the credit accounts of a retail seller in the case where, by contractual agreement between the retail seller and the sales finance company, the sales finance company undertakes on behalf of the retail seller to meet the specific requirements imposed by this Part on a “creditor.”

(d) The term retail seller shall have the meaning assigned to it under subdivision 3 of section 401 of the Personal Property Law.

(e) The term sales finance company shall have the meaning assigned to it under sections 491 and 492(1) of the Banking Law, and applies to a person or company which purchases or acquires credit accounts established by retail sellers, provided that for purposes of this Part the term also includes a bank, trust company, savings bank or savings and loan association which purchases credit accounts established by retail sellers.

3 CRR-NY 91.2 Scope {#sec-3-crr-ny-91.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 91.2}

This Part governs credit accounts which provide for changes in the rate charged on the account from time to time but not more often than once within any three-month period, and which are established by retail sellers or which are purchased or acquired by sales finance companies from retail sellers. The use of indices for such credit accounts must comply with Part 334 of this Title.

3 CRR-NY 91.3 Disclosures {#sec-3-crr-ny-91.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 91.3}

All disclosures required by this Part are to be made in a single, separate document, in plain language and with captioned subdivisions for the information to be disclosed. Such disclosures shall be provided by the retail seller to a customer who is to be primarily liable on the credit account prior to the date of the first transaction on the account in the case of a new account, or, in the case where an existing credit account is being amended to provide for the variable rate feature, at least 30 days prior to the effective date of the variable rate amendment. Disclosure shall be made, in any reasonable order, of the following information:

(a) an identification of the index to be used by the creditor in connection with changing the rate on the credit account, and information where the index figures will be available;

(b) disclosure of the intervals at which the creditor may change the rate on the credit account, the time(s) or date(s) at which the creditor will calculate the rate with respect to the index, and any conditions or events on which the changes in the rate are contingent;

(d) a hypothetical example, illustrative of the type of credit being offered, of the effect of a rate increase on monthly payments;

(e) a history of the movements in the index selected for the credit account, as further provided under section 91.4 of this Part; and

(f) the fact that the customer will receive prior notifications from the creditor of increases in the rate for the credit account, and the time periods within which the notifications will be sent.

3 CRR-NY 91.4 Index {#sec-3-crr-ny-91.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 91.4}

(a) General provisions.

A single index for the credit account shall be chosen from among the indices approved by the superintendent pursuant to Part 334 of this Title. The rate for the credit account may be based directly on the index values or on the index values plus or minus additional percentage points; provided, however, that variations in the rate shall correspond directly to movements in the index. This Part imposes no requirement on creditors to place limitations on the adjustment in the rates for the credit account, as such adjustment would otherwise be allowed by movements in the index. However, any creditor which adopts limitations of any kind on changes in the rate shall provide for equal limitations on both increases and decreases. Similarly, rate adjustments may be rounded to the nearest percentage point or fraction thereof as determined by the creditor, provided that rounding applies equally to decreases and increases in rates. Subject to the rounding provisions, increases in the index need not be used at each rate calculation date but may be accumulated once to the next rate calculation date, but decreases in the index must be reflected at each rate calculation date.

(b) Changes in the index or changes in the spread between the index values and the actual rate charged.

A creditor may provide for a substitute index similar to the chosen index only in the event that the initial index becomes unavailable. In any other case, if the creditor proposes to change the index used for the credit account or to change the percentage spread between the index values and the rate charged on the account, application in letter form for permission to do so must be made to the superintendent, and, in the case of approval for such change, a notification of the change must be sent to customers at least 30 days prior to the change. In the case of a change in the percentage spread between the index values and the actual rate charged, superintendent’s permission need only be obtained where the change would be adverse to the account customer.

The disclosure shall identify the index and shall contain a statement that past changes in the index are not necessarily predictive of future changes in the index. The retail seller shall provide the high and low figures for the index and the dates at which these levels were reached, for each of the three calendar years preceding the calendar year in which the credit account is opened or when a variable rate provision is added to an existing account. In addition, if a credit account is opened after August 31st of any calendar year or a variable rate provision is added to become effective after August 31st of any calendar year, the disclosure shall include the high and low figures for the index's performance through June 30th of that year, and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding the calendar year in which the credit account is opened or a variable rate provision becomes effective, prior to March 1st of that year.

3 CRR-NY 91.5 Notifications {#sec-3-crr-ny-91.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 91.5}

The notification of a rate increase and of the new rate, referred to in section 91.3(f) of this Part, shall be delivered or mailed by the creditor to a customer who is primarily liable on the credit account no less than 25 and more than 60 days prior to the effective date of a rate increase; provided, however, that if the credit account provides for a monthly billing cycle, the notification may be delivered or mailed with the periodic statement for a monthly billing cycle, to become effective after the close of the next monthly billing cycle. In the case of new customers who apply for a variable rate credit account within 30 days of the time that the creditor will increase the rate on the account but where the creditor will not be able to provide the required written notification, the increase in the rate and the new rate shall be disclosed to the applicant prior to opening the account.

Part 92 VARIABLE RATE CLOSED-END RETAIL INSTALMENT CONTRACTS AND OBLIGATIONS ENTERED INTO BY RETAIL SELLERS

3 CRR-NY 92.1 Definitions {#sec-3-crr-ny-92.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.1}

For purposes of this Part:

(a) The term contract or obligation shall mean a retail instalment contract as defined under subdivision 5 of section 301 of the Personal Property Law, or a retail instalment contract or a retail instalment obligation as defined under subdivisions 6 and 7 of section 401 of the Personal Property Law.

(b) The term credit service charge shall have the meaning assigned to it under subdivision 8 of section 301 of the Personal Property Law or under subdivision 11 of section 401 of the Personal Property Law.

(c) The term holder shall have the meaning assigned to it under subdivision 10 of section 301 of the Personal Property Law or under subdivision 15 of section 401 of the Personal Property Law.

(d) The term rate shall mean the rate of credit service charge on the contract or obligation.

(e) The term retail seller shall have the meaning assigned to it under subdivision 3 of section 301 of the Personal Property Law or subdivision 3 of section 401 of the Personal Property Law.

(f) The term retail seller or holder or the retail seller or the holder shall mean the retail seller, except that the term shall mean a holder other than the retail seller in the case where, by contractual agreement between the retail seller and such holder, the holder undertakes on behalf of the retail seller to meet the specific requirements imposed by this Part or establishes certain terms and conditions for the contract or obligation.

3 CRR-NY 92.2 Scope {#sec-3-crr-ny-92.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.2}

This Part governs contracts or obligations which provide for changes, from time to time but not more often than once within any three-month period, in the rate of credit service charge charged with respect to a contract or obligation entered into by a retail seller or a contract or obligation purchased or acquired by a holder from a retail seller. The use of indices for such variable rate contracts or obligations must comply with Part 334 of this Title.

3 CRR-NY 92.3 Disclosures {#sec-3-crr-ny-92.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.3}

All disclosures required under this Part are to be made in a single, separate document, in plain language and with captioned subdivisions for the information to be disclosed. Such disclosures shall be provided by the retail seller to a buyer who is to be primarily liable on the contract or obligation prior to the consummation of the contract or obligation. Disclosure shall be made, in any reasonable order, of the following information:

(a) the identification of the index to be used by the retail seller or the holder in connection with varying the rate on the contract or obligation, and where the index figures are available;

(b) the circumstances under which the rate on the contract or obligation may vary, including disclosures of the intervals at which the retail seller or the holder may change the rate, the time(s) or date(s) at which the retail seller or the holder calculates the rate with respect to the index, and any conditions or events on which the changes in rate are contingent;

(c) the effect or the combination of effects that an increase in the rate on the contract or obligation may have on the amount of the monthly payment, or the number of monthly payments or the amount of the final payment;

(e) the history of the movements in the index selected for the contract or obligation, as further provided under section 92.4 of this Part; and

(f) the fact that the buyer will receive prior notification from the retail seller or the holder of increases in the rate or changes in the terms of payment, and the time periods within which such notifications will be sent.

3 CRR-NY 92.4 Index {#sec-3-crr-ny-92.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.4}

(a) General provisions.

Retail sellers or holders may use any single index from among the indices approved by the superintendent pursuant to Part 334 of this Title. The rate on the contract or obligation may be based directly on the index values or upon the index values plus or minus additional percentage points; provided, however, that variations in the rates shall correspond directly to the movements of the index. While only a single index shall be used for the term of a contract or obligation, the retail seller or the holder may provide for the use of a substitute index similar to the initial index in the event that the initial index should become unavailable during the term of the contract or obligation. This Part imposes no requirement on retail sellers or holders to place limitations on the adjustment in the rate, as such adjustment would otherwise be allowed by movements in the index. Rate adjustments may be rounded, as determined by the retail seller or the holder, to the nearest percentage point or fraction thereof, provided that rounding applies equally to decreases and increases in rates. Subject to the rounding provisions, increases in the index need not be used at each rate calculation date but may be accumulated once to the next rate calculation date, but decreases in the index must be reflected at each rate calculation date.

(b) Information and disclosures with respect to the history of the index.

The disclosure shall identify the index and shall contain a statement that past changes in the index are not necessarily predictive of future changes in the index. The retail seller shall provide the high and low figures for the index and the dates at which these levels were reached, for each of the three calendar years preceding the calendar year in which the contract or obligation is entered into. In addition, if the contract or obligation is entered into after August 31st of any calendar year, the disclosure shall include the high and low figures for the index's performance through June 30th of that year, and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding that calendar year in which the contract or obligation is entered into, for any contract or obligation entered into prior to March 1st of that year.

3 CRR-NY 92.5 Generally accepted actuarial methods {#sec-3-crr-ny-92.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.5}

The term generally accepted actuarial method, as such term is used in sections 4 and 9 of chapter 641 of the Laws of 1984 shall not include any method which results or may result in the addition of unpaid credit service charge amounts to the outstanding principal indebtedness under the contract or obligation.

3 CRR-NY 92.6 Notifications {#sec-3-crr-ny-92.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.6}

The notification referred to in section 92.3(f) of this Part shall be delivered or mailed by the retail seller or the holder to the buyer who is primarily liable on the contract or obligation no less than 25 days nor more than 60 days prior to the effective date of the rate increase or change in payment terms. The notice shall indicate the new rate and, if applicable, the new payment amount.

3 CRR-NY 92.7 Grouping of contracts or obligations {#sec-3-crr-ny-92.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.7}

If a retail seller or a holder adjusts the rate charged on contracts or obligations on common adjustment dates (such as the first day of January, April, July or October, or less frequently) rather than adjusting the rate of the credit service charge on an individual quarterly (or less frequent) interval measured from the date of the contract or obligation, the retail seller or the holder may on any common adjustment date increase the rate for a contract or obligation entered into within 25 days before that common adjustment date only if prior to the consummation of the contract or obligation the retail seller provides notice of the increase and of the new rate to the buyer.

3 CRR-NY 92.8 [Repealed] {#sec-3-crr-ny-92.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 92.8}

Part 93 BORROWINGS BY SAVINGS BANKS

3 CRR-NY 93.1 Borrowings for purposes other than repaying depositors {#sec-3-crr-ny-93.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 93.1}

A savings bank may borrow money for purposes other than repaying depositors, and pledge or hypothecate its assets as collateral for any such loans, in an amount not exceeding 50 percent of its assets.

Part 94 BORROWINGS BY SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 94.1 Borrowings for the purpose of repaying shareholders and depositors {#sec-3-crr-ny-94.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 94.1}

A savings and loan association may borrow money for the purpose of repaying shareholders and depositors, and pledge its assets as security for the repayment thereof, in any amount.

3 CRR-NY 94.2 Borrowings for purposes other than repaying shareholders and depositors {#sec-3-crr-ny-94.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 94.2}

A savings and loan association may borrow money for purposes other than repaying shareholders and depositors, and pledge its assets as security for the repayment thereof, in amounts not exceeding 50 percent of its assets.

Part 95 BORROWINGS BY CREDIT UNIONS

3 CRR-NY 95.1 Borrowings for the purpose of repaying shareholders {#sec-3-crr-ny-95.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 95.1}

A credit union may borrow money for the purpose of repaying shareholders, and pledge its assets to secure any such borrowing, in any amount.

3 CRR-NY 95.2 [Repealed] {#sec-3-crr-ny-95.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 95.2}

Part 96 LENDING LIMITS FOR CREDIT UNIONS

3 CRR-NY 96.1 Definitions {#sec-3-crr-ny-96.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.1}

For purposes of this Part:

(a) The term net worth shall have the same meaning as set forth in section 702.2 of part 702 of the Regulations of the National Credit Union Administration.

(b) The term loan shall mean any loan made to or guaranteed or endorsed by a member of a credit union.

3 CRR-NY 96.2 Scope {#sec-3-crr-ny-96.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.2}

This Part applies to loans made by a credit union to its members. All such loans shall be made in compliance with this Part.

3 CRR-NY 96.3 Fully secured loans {#sec-3-crr-ny-96.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.3}

A credit union may make loans to a member which are secured by the borrower's unhypothecated shares or by shares pledged by another member or members subject to the limitations contained in sections 454(6) and 456(2) of the Banking Law.

3 CRR-NY 96.4 Unsecured loans {#sec-3-crr-ny-96.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.4}

A credit union may make loans to a member which are not secured by a member's unhypothecated shares or by shares pledged by other members in an amount not exceeding 15 percent of the net worth of the credit union, provided that any credit union may make unsecured loans to a member in an amount of at least $5,000.

3 CRR-NY 96.5 Loans secured by collateral other than shares of the credit union {#sec-3-crr-ny-96.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.5}

(a) A credit union may make loans to a member which are secured by collateral other than that specified in section 96.3 of this Part in an amount not exceeding 25 percent of the net worth of the credit union or $15,000, whichever is greater, provided that the amount exceeding the greater of 15 percent of such net worth or $5,000, as the case may be, is secured by:

(1) the assignment of the cash surrender value of a life insurance policy issued by a life insurance company chartered by this State or any other state;

(2) a deposit or share account in any federally insured banking institution which does not exceed the amount of insurance coverage;

(3) common or preferred stocks listed on either the New York or American Stock Exchange, provided that only 80 percent of the market value of such stocks shall be considered as collateral;

(4) securities in which a credit union may invest pursuant to section 453(14) of the Banking Law, provided that the lower of par or market value shall be considered in evaluating such securities;

(5) a lien on tangible property appraised in good faith by the credit committee of a credit union, provided that only 80 percent of the fair market value of such property shall be considered as collateral.

(b) A credit union may make a loan to a member which is secured by a mortgage on a one- to six-family owner-occupied residence in an amount not exceeding 25 percent of the net worth of the credit union, provided that the fair market value of the residence is determined by a certified independent appraiser appointed by the board of directors or credit committee and shown in a written and signed certificate, provided that, in making any such mortgage which is a first lien, only 90 percent of the fair market value of the residence shall be considered as collateral, and provided further that any such mortgage which is not a first lien shall be made in compliance with the provisions of Part 80 of this Chapter. For the purpose of this subdivision, the term mortgage shall include a lien on an existing ownership interest in certificates of stock or other evidence of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of real estate.

(c) A credit union may make loans to a member in an amount not exceeding 25 percent of the net worth of the credit union, provided that the amount exceeding 15 percent of such net worth is a loan which the United States, or any state thereof, or any city, county, town, village or school district of this State, any Federal intermediate credit bank, Federal National Mortgage Association, any Federal land bank, any national mortgage association, any Federal home loan bank, the Small Business Administration or any department, agency or instrumentality of the United States or any state thereof, has agreed to pay the principal or interest thereof, or has guaranteed payment (by guaranty or commitment to purchase or otherwise) of such principal and interest, or is committed to supply, by loan, subsidy or otherwise, funds sufficient to pay such principal and interest, or has otherwise pledged its faith and credit for the payment of such principal and interest.

3 CRR-NY 96.6 Maximum amount of loan {#sec-3-crr-ny-96.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 96.6}

(a) No credit union shall make a loan to a member in accordance with the provisions of section 96.4 of this Part, if upon the making of that loan, the member would be indebted to the credit union upon loans directly or indirectly made to such member under such section in an aggregate amount exceeding $1,000,000 unless it has made a prior written (including electronic) request to, and received the prior written approval of, the superintendent.

(b) No credit union shall make a loan to a member in accordance with the provisions of section 96.4 or 96.5 of this Part if, upon making of that loan, the member would be indebted to the credit union upon loans directly or indirectly made to such member under such sections in an aggregate amount exceeding 25 percent of the net worth of the credit union; provided, however, that a credit union may, in any event, make a loan to a member for the minimum amounts specified in such sections.

Part 97 INVESTMENT IN CREDIT UNION ORGANIZATIONS

3 CRR-NY 97.1 Scope {#sec-3-crr-ny-97.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.1}

The provisions of this Part apply to all credit unions which invest in the stock, capital notes and debentures of credit union organizations.

3 CRR-NY 97.2 Definitions {#sec-3-crr-ny-97.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.2}

For purposes of this Part, a credit union organization shall be defined as any organization established primarily to serve the needs of its member State and Federal credit unions and whose business relates to the daily operations of the credit unions it serves.

3 CRR-NY 97.3 Permitted activities {#sec-3-crr-ny-97.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.3}

A credit union organization may engage in the following activities:

(a) originating, investing in, purchasing, selling, servicing or otherwise dealing in, directly or through participation, loans of any type which may be made by a credit union;

(b) providing services primarily for other credit unions (e.g., accounting, auditing, clerical, consulting, data processing, investment advisory, managerial);

(d) financing leases of personal property to members;

(e) issuing credit cards and engaging in credit card operations;

(f) opening and maintaining shared service centers in accordance with the provisions of section 97.8 of this Part; and

(g) any other activity specifically approved by the superintendent.

3 CRR-NY 97.4 Investment procedures {#sec-3-crr-ny-97.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.4}

Any capital investment in credit union organizations shall be made in accordance with the procedures contained in this section.

(a) Prior notice.

Credit unions which seek to make a capital investment in a credit union organization which will engage in any of the activities listed in section 97.3(a) to (e) of this Part shall notify the superintendent, in writing, of such intention not less than 45 days prior to making such investment. If the superintendent does not object, in writing, within 45 days after receipt of a completed notice, the credit union may make the contemplated investment. The superintendent may object to such investment if it is found that it is not consistent with the purposes and intent of article 11 of the Banking Law.

(b) Application to superintendent.

Credit unions which seek to make a capital investment in a credit union organization which will engage in any activity requiring the specific approval of the superintendent under section 97.3(f) of this Part shall submit a written application therefor. This application shall include a full explanation and complete documentation of the activity and how that activity is associated with the daily operations of the credit union. The superintendent shall approve such application if it is found that the activity is consistent with the purposes and intent of article 11 of the Banking Law and such approval may contain any restrictions and limitations as are deemed necessary. If written approval of the application is not given within 45 days of receipt of all of the information required by this Part, such application shall be deemed denied.

Credit unions which give the superintendent notice as specified in subdivision (a) of this section or make application to the superintendent as specified in subdivision (b) of this section shall, together with such notice or application, as the case may be, submit the information required to be submitted by a bank or trust company in accordance with sections 113.2 and 113.3 of Supervisory Procedure CB 113 of this Title.

3 CRR-NY 97.5 Aggregate limitation {#sec-3-crr-ny-97.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.5}

The aggregate amount of a credit union's investments in the stock, capital notes and debentures of credit union organizations, together with the aggregate amount of loans to such organizations, shall not exceed three percent of the amount due to the members of the credit union on shares and deposits. For the purposes of this section, a loan shall include any loan or advance made directly or indirectly to a credit union organization (excluding accounts payable incurred in the ordinary course of business and paid within 60 days).

3 CRR-NY 97.6 Separate existence of credit union organization {#sec-3-crr-ny-97.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.6}

Every credit union organization shall be operated in a manner which demonstrates to the public that the organization has separate corporate existence and is operationally distinct from its member credit unions. Every instrument which evidences a borrowing by a credit union organization shall specifically indicate whether or not, and to what extent, its member credit unions are liable for such borrowing.

3 CRR-NY 97.7 Examination of credit union organizations {#sec-3-crr-ny-97.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.7}

No credit union shall invest in or make loans to any credit union organization after the effective date of this Part, unless and until it has filed with the superintendent a letter agreement from the credit union organization which:

(a) states that the credit union organization is subject to the general supervision of the department;

(b) permits periodic examinations of the credit union organization, as the superintendent deems necessary; and

3 CRR-NY 97.8 Shared service centers {#sec-3-crr-ny-97.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 97.8}

(a) Definition.

A shared service center is a facility staffed by employees of the credit union organization which facility uses an electronic network to provide credit union banking services to members of participating credit unions and at which a principal portion of the services provided are performed by automated teller machines or similar facilities.

(b) Permitted services.

A credit union organization may offer credit union members the types of banking services authorized for electronic facilities established or shared by banking institutions pursuant to Part 73 of the General Superintendent’s Regulations.

In addition to the notice required by section 97.4(a) of this Part, a credit union shall advise the superintendent in writing of the location of all shared service centers (whether within or outside New York) prior to offering its members any services at such centers.

Part 100 PERSONAL PROPERTY LEASING ACTIVITIES OF BANKS AND TRUST COMPANIES

3 CRR-NY 100.1 Explanatory note {#sec-3-crr-ny-100.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 100.1}

Section 96(12) of the Banking Law authorizes banks and trust companies to acquire and lease personal property or acquire personal property subject to an existing lease together with the lessor's interest therein, subject to such regulations as may be imposed by the superintendent.

3 CRR-NY 100.2 Definitions {#sec-3-crr-ny-100.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 100.2}

For the purposes of this Part:

(a) The term net-lease means a lease under which the bank or trust company will not, directly or indirectly, provide or be obligated to provide for:

(1) the servicing, repair or maintenance of the leased property during the lease term;

(2) the purchasing of parts and accessories for the leased property;

(3) the loan of replacement or substitute property while the leased property is being serviced;

(4) the purchasing of insurance for the lessee, except where the lessee has failed in its contractual obligation to purchase or maintain the required insurance; and

(5) the renewal of any license or registration for the property unless such action by the bank or trust company is clearly necessary to protect its interest as an owner or financier of the property.

(b) A full-payout lease is one from which the lessor can reasonably expect to realize a return of its full investment in the leased property plus the estimated cost of financing the property over the term of the lease from:

(1) rentals;

(2) estimated tax benefits; and

(3) the reasonable estimated residual value of the property at the expiration of the initial term of the lease, so long as the unguaranteed portion of such residual value does not exceed 25 percent of the original cost of the property.

3 CRR-NY 100.3 Limitations {#sec-3-crr-ny-100.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 100.3}

(a) All personal property leasing performed by banks or trust companies shall be on a net-lease basis.

(b) The aggregate investment by a bank or trust company in personal property subject to leases other than full-payout leases shall not exceed 10 percent of the assets of the bank or trust company.

(c) All amounts owned by lessees under leases shall be deemed a loan to the lessee and the personal property subject to a lease shall be considered to be collateral securing such loan for the purposes of Banking Law, section 103(1).

Part 111 MUTUAL HOLDING COMPANIES

3 CRR-NY 111.1 Scope; introduction {#sec-3-crr-ny-111.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.1}

(a) This Part implements the superintendent's authority under article VI-C of the Banking Law to regulate the establishment of and the operations of mutual holding companies. It addresses only those features of mutual holding companies that are not governed by other provisions of the Banking Law and regulations.

(b) The definitions contained in section 86.3 of this Title shall apply to any transaction under this Part, unless the context requires otherwise and except as provided below. The reorganization of a mutual savings bank into mutual holding company form (hereafter sometimes referred to as the ‘reorganization’) and the conversion of a mutual holding company into a stock holding company (hereafter sometimes referred to as the ‘conversion’) shall be governed by the rules prescribed in section 86.4 of this Title and, if in conjunction with a stock offering, section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any stock offering by a mutual holding company or by a savings bank subsidiary of a mutual holding company, subsequent to the reorganization but after which the mutual holding company would retain at least 51 percent of the issued and outstanding shares of the stock savings bank (a ‘subsequent offering’), shall be governed by the rules prescribed in section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any stock offering by a mutual holding company or by a savings bank subsidiary of a mutual holding company, subsequent to the reorganization but after which the mutual holding company would retain at least 51 percent of the issued and outstanding shares of the stock savings bank (a ‘subsequent offering’), shall be governed by the rules prescribed in section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any ‘stock offering’ make pursuant to this Part shall be a public offering, and ‘stock’ or ‘shares’ includes common stock, any securities convertible into common stock, and any other security with voting power or convertible into a security with voting power. Any savings bank or mutual holding company may apply to the superintendent, in connection with a transaction authorized by this Part, for such variations from the rules prescribed by this Part or Part 86 of this Title as are necessary and proper to effectuate the transaction.

3 CRR-NY 111.2 Subscription rights {#sec-3-crr-ny-111.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.2}

(a) Except for shares issued to a mutual holding company, and except for shares issued to the employee stock benefit plans of the stock savings bank or reserved to satisfy the stock option plans of the stock savings bank, whether adopted in connection with the reorganization, a subsequent offering or the conversion, all shares of stock issued in connection with a reorganization shall be subject to subscription rights granted to eligible account holders. As used in this Part, “shares of stock issued in connection with the reorganization of a mutual savings bank” include shares issued upon the reorganization, shares sold by a mutual holding company or a savings bank subsidiary in any subsequent offering (whether shares held by the mutual holding company or shares newly issued by the stock savings bank), shares reserved to satisfy any stock option plan, and shares sold in connection with the conversion.

(b) An eligible account holder for the purposes of this section is any depositor of a savings bank who owned in such bank one or more accounts having an aggregate balance of $100 or more on the pertinent record date. In the case of the reorganization, the record date shall be the date established by the board of trustees, which date shall be no less than 30 and no more than 120 days prior to the date on which the plan of reorganization is adopted by the trustees; in the case of any subsequent offering, the record date shall be the date established by the board of directors of the stock-form savings bank issuing new shares or board of trustees of the mutual holding company selling shares, as the case may be, which date shall be no less than 30 and no more than 120 days prior to the date on which the shares are offered; in the case of the conversion, the record date shall be the date established by the mutual holding company's board of trustees, which date shall be no less than 30 and no more than 120 days prior to the date on which the plan of conversion is adopted by the trustees.

(c) Subscription rights shall not be granted to any eligible account holder in connection with a reorganization, subsequent offering, or conversion to acquire more than five percent of the total issued and outstanding shares of the stock-form savings bank or holding company, after taking the offering into account.

3 CRR-NY 111.3 Stock options and stock grants {#sec-3-crr-ny-111.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.3}

(a) Shares of stock issued in connection with the reorganization of a mutual savings bank may be reserved, in an amount not to exceed 10 percent of the number of shares held by persons other than the mutual holding company, to satisfy stock option plans approved by the savings bank's stockholders and issued, in an amount not to exceed three percent of the number of shares held by persons other than the mutual holding company, pursuant to restricted stock plans approved by the savings bank's stockholders.

(b) Members of the board of trustees of the mutual holding company, whether at the time of the reorganization or thereafter, shall be ineligible to participate in any stock option plan or restricted stock plan unless such plan has been approved by the holders of a majority of the shares held by the savings bank's disinterested stockholders. For the purposes of this section, shares held by the savings bank's disinterested stockholders shall mean the issued and outstanding shares of stock of the savings bank other than shares held by the mutual holding company. Nothing contained herein shall limit the ability of a trustee of a mutual savings bank to exercise subscription rights granted pursuant to section 111.2 of this Part or to limit the ability of a trustee of a mutual holding company to make subsequent purchases of shares of stock of a subsidiary savings bank subject to section 111.6(c) of this Part.

3 CRR-NY 111.4 Limitations on the disposition by a mutual holding company of stock of a subsidiary savings bank {#sec-3-crr-ny-111.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.4}

No mutual holding company may dispose of any interest in stock of a subsidiary savings bank except as provided in this section.

(a) A mutual holding company may sell stock of a subsidiary savings bank in a subsequent offering.

(b) A mutual holding company may pledge stock of a subsidiary savings bank to secure borrowings upon the receipt of the written approval of the superintendent so long as the terms of the pledge do not have the effect of causing a change of control of the stock savings bank.

3 CRR-NY 111.5 Liquidation account {#sec-3-crr-ny-111.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.5}

(a) Each stock-form savings bank formed in connection with a reorganization shall establish and maintain a liquidation account in accordance with the provisions of section 86.4(f) of this Title.

3 CRR-NY 111.6 Reorganization into mutual holding company form {#sec-3-crr-ny-111.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.6}

(a) The mutual holding company may retain or acquire assets of the mutual savings bank only to the extent permitted by the superintendent consistent with the safe and sound operation of the stock savings bank.

(b) A stock savings bank established in connection with a reorganization shall reserve no authorized but unissued shares, except as necessary to satisfy a stock option plan or issued securities convertible into stock.

(c) A plan of reorganization shall contain the provisions set out in section 86.4(e) of this Title except that it need not provide for the sale of any stock and the aggregate price of any stock sold shall bear the same proportion to total estimated pro forma market value of the savings bank determined by an independent appraisal that the shares sold bear to the total issued and outstanding shares of the savings bank. The limitation contained in section 86.4(e)(3) of this Title shall continue until three years after conversion into a stock holding company.

3 CRR-NY 111.7 Subsequent offerings {#sec-3-crr-ny-111.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.7}

(a) Any subsequent offering shall be made pursuant to an offering circular in the form prescribed in section 86.15 of this Title that has been approved by the superintendent, whether the offering consists of newly issued shares being offered by the stock savings bank or previously issued shares being sold by the mutual holding company.

(b) The procedures to be followed in conducting a subsequent offering may, with the approval of the superintendent, differ from those set out in section 86.5 of this Title so long as eligible account holders' subscription rights are not abrogated. Such differences may include, but need not be limited to, the distribution of offering circulars only to those eligible account holders who have requested them and combining a subscription offering with a public offering.

3 CRR-NY 111.8 Conversion into a stock holding company {#sec-3-crr-ny-111.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 111.8}

(a) A mutual holding company may convert into a stock holding company by any method feasible under the applicable corporate laws and approved by the superintendent. It must convert in the event a transaction will result in its ownership of any savings bank subsidiary declining to less than 51 percent of the total voting power of all outstanding shares.

(b) A plan of conversion must include a provision requiring the exchange of shares of a subsidiary savings bank for shares of the resulting stock holding company in a proportion established by independent appraisals of the mutual holding company and the subsidiary savings bank.

Part 112 INVESTMENTS OF SAVINGS BANKS IN THE FEDERAL HOME LOAN BANK OF NEW YORK

3 CRR-NY 112.1 Authorized investment {#sec-3-crr-ny-112.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 112.1}

Any savings bank is permitted to purchase such additional shares of common stock of the Federal Home Loan Bank of New York as may be required for such savings bank to obtain a loan from the Federal Home Loan Bank of New York.

Part 114 SUPERVISION AND REGULATION OF ARTICLE XII INVESTMENT COMPANY HOLDING COMPANIES AND THEIR SUBSIDIARIES FOR PURPOSES OF THE EUROPEAN UNION FINANCIAL CONGLOMERATES DIRECTIVE

3 CRR-NY 114.1 Purpose and scope {#sec-3-crr-ny-114.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 114.1}

Article XV of the Banking Law authorizes the formation of investment companies and article XII of the Banking Law sets forth the rights and obligations of such investment companies. The purpose of this Part is to clarify the superintendent's examination, supervision, regulation, and enforcement authority over certain financial conglomerates for purposes of carrying out equivalent supervision under the European Union Financial Conglomerates Directive.

3 CRR-NY 114.2 Definitions {#sec-3-crr-ny-114.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 114.2}

For purposes of this Part:

(a) Banking Law means the New York Banking Law.

(b) Banking organization means all banks, trust companies, private bankers, savings banks, safe deposit companies, savings and loan associations, credit unions and investment companies organized under the Banking Law.

(c) Company means a corporation, partnership, unincorporated association, limited liability company, or any other entity.

(d) Control means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a company, whether by means of the ownership of the voting stock or equity interests of such company or of one or more persons controlling such company, by means of a contractual arrangement or otherwise. Control shall be presumed to exist if any company, directly or indirectly, owns, controls or holds with the power to vote 10 per centum or more of the voting stock or other equity interests of any company or of any company which owns, controls or holds with power to vote 10 per centum or more of the voting stock or other equity interests of such company.

(e) Equivalent supervision means a supervisory and regulatory regime meeting the standards required under the Financial Conglomerates Directive.

(f) Financial conglomerate means a group meeting the definition of financial conglomerate under the Financial Conglomerates Directive and having an investment company within its structure.

(g) Financial Conglomerates Directive means the European Union Financial Conglomerates Directive 2002/87/EC, as it may be amended from time to time.

(h) Investment company means a banking organization organized pursuant to the Banking Law and subject to the provisions of article XII of the Banking Law.

(i) Investment company holding company means the top tier corporation or other entity that controls an investment company.

(j) Subsidiary means a company at least 10 per centum of the voting stock or other equity interests of which is controlled directly or indirectly by an investment company holding company.

(k) Supervision agreement means an individual agreement entered into between a financial conglomerate and the superintendent which provides for a detailed plan of supervision by the superintendent over the financial conglomerate, including specific regulatory requirements applicable to the investment company holding company and its subsidiaries.

3 CRR-NY 114.3 Examination, supervision, regulation, and enforcement authority of the superintendent over investment company holding companies and their subsidiaries for purposes of the European Union Financial Conglomerates Directive {#sec-3-crr-ny-114.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 114.3}

To assist the department in carrying out equivalent supervision of a financial conglomerate for purposes of carrying out the requirements of the Financial Conglomerates Directive, the superintendent shall have examination, supervision, regulation, and enforcement authority over an investment company holding company and any of its subsidiaries to the same extent as he or she has examination, supervision, regulation, and enforcement authority over any banking organization under the Banking Law. This authority includes, but is not limited to, the authority to:

(a) apply Banking Law, section 36 relating to examinations and confidentiality of information to an investment company holding company and its subsidiaries, as if such entities were banking organizations;

(b) issue orders to an investment company holding company and its subsidiaries as provided in Banking Law, section 39, as if such entities were banking organizations;

(c) impose monetary penalties for violation of law or regulation, as provided in Banking Law, section 44, as if such entities were banking organizations;

(d) impose capital requirements on an investment company holding company and its subsidiaries, as appropriate or required in the judgment of the superintendent;

(e) prescribe requirements for the keeping of books and records by the investment company holding company and its subsidiaries;

(f) require filing by the investment company holding company and its subsidiaries with the superintendent of periodic reports of condition, reports of income, risk profiles, large exposures and such other reports as may be required by the superintendent;

(g) levy assessments on the investment company holding company and its subsidiaries, as provided in Banking Law, section 17, as if such entities were banking organizations;

(h) issue such general or specific rules or regulations as may be necessary to effectuate the examination, supervision, regulation, and enforcement authority over investment company holding companies and their subsidiaries for purposes of meeting the requirements of equivalent supervision under the Financial Conglomerates Directive.

3 CRR-NY 114.4 Supervision agreements with financial conglomerates {#sec-3-crr-ny-114.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 114.4}

The superintendent may enter into one or more supervision agreements with each financial conglomerate. Such supervision agreements will set forth the specific plan of supervision and detailed regulatory requirements applicable to an investment company holding company and its subsidiaries (e.g., capital requirements, reporting requirements, transactional limitations, etc.). The superintendent may exercise enforcement authority under Banking Law, sections 39 and 44 for breaches or violations of such supervision agreements. Such supervision agreements shall be in addition to, and shall not serve as a limitation on, the superintendent's examination, supervision, regulation and enforcement authority provided under this Part over investment company holding companies and their subsidiaries to the same extent as the superintendent has examination, supervision, regulation, and enforcement authority over any banking organization under the Banking Law.

3 CRR-NY 114.5 Limitations {#sec-3-crr-ny-114.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 114.5}

The superintendent's examination, supervision, regulation, and enforcement authority over investment company holding companies and their subsidiaries as provided in this Part is limited to those cases in which the department needs to provide equivalent supervision for a specific financial conglomerate under the Financial Conglomerates Directive. The provisions of Banking Law, article XIII governing voluntary and involuntary liquidations of banking organizations shall not be applicable to investment company holding companies, although they are applicable to investment companies.

Part 115 ANTI-MONEY LAUNDERING PROGRAMS FOR APPLICATIONS FOR CHARTERS, ACQUISITIONS AND MERGERS AND CHANGES OF CONTROL

3 CRR-NY 115.1 Anti-money laundering programs {#sec-3-crr-ny-115.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 115.1}

This Part is issued to assure ongoing compliance with the existing practice of the superintendent to require each applicant for a charter, or for approval of an acquisition, merger or change of control to demonstrate an anti-money laundering program that complies with applicable Federal anti-money laundering laws, including a required customer identification program (31 U.S.C. chapter 53, subchapter ll and 31 U.S.C. 5318[l])and regulations promulgated by the United States Department of Treasury (31 CFR part 103.120), and, as appropriate, regulations of the Board of Governors of the Federal Reserve System (12 CFR parts 208.63 and 211.24), regulations of the Federal Deposit Insurance Corporation (12 CFR 326.8), and regulations of the National Credit Union Administration (12 CFR part 748.2). In addition, the department seeks to assure compliance with applicable regulations issued by the Office of Foreign Asset Control of the United States Department of the Treasury (“OFAC”) (31 CFR part 500 et seq. ).

(a) Each applicant shall demonstrate that it has, or on the effective date of the transaction that is the subject of the application, will have, an anti-money laundering program that complies with the applicable Federal anti-money laundering laws and regulations referred to in this section.

(b) For purposes of this Part, the required anti-money laundering program shall, at a minimum:

(1) provide for a system of internal controls to assure ongoing compliance;

(2) provide for independent testing for compliance to be conducted by bank personnel or by an outside party;

(3) designate an individual or individuals responsible for coordinating and monitoring day-to-day compliance; and

(4) provide training for appropriate personnel.

(c) The anti-money laundering program shall be in writing, approved by the institution's board of directors or equivalent body, and such approval shall be noted in the minutes of the board of directors or equivalent body.

(d) Each applicant shall also maintain, as part of its anti-money laundering program, a customer identification program that complies with the applicable Federal anti-money laundering laws and regulations referred to in this section.

(e) Each applicant also shall demonstrate that it has, or on the effective date of the transaction, will have, risk-based policies, procedures and practices to ensure, to the maximum extent practicable, that its transactions comply with OFAC requirements.

(f) Compliance with the applicable Federal requirements shall constitute compliance with this Part.

3 CRR-NY 115.2 Charter and license applications {#sec-3-crr-ny-115.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 115.2}

All applications submitted for approval by the department to establish a bank or trust company, private banker, savings bank, savings and loan association, safe deposit company, investment company, credit union, to establish a branch or agency in New York State of a foreign banking corporation or to establish a representative office of a foreign banking corporation shall be accompanied by information demonstrating that the applicant maintains or will maintain an anti-money laundering program that satisfies the requirements set forth in section 115.1 of this Part.

3 CRR-NY 115.3 Merger, purchase and assumption, acquisition and change of control applications {#sec-3-crr-ny-115.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 115.3}

All applications for approval by the department to merge with, purchase and/or assume, or acquire control (as defined in the applicable provisions of the Banking Law) of, any bank or trust company, savings bank, savings and loan association, investment company, safe deposit company or credit union shall be accompanied by information demonstrating that the applicant has or will have an anti-money laundering program that satisfies the requirements set forth in section 115.1 of this Part.

3 CRR-NY 115.4 Waivers {#sec-3-crr-ny-115.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 115.4}

In considering an application, the department may determine, for good cause shown, that lack of compliance with any of the requirements of this Part does not necessarily preclude approval of the application.

Part 116 MAINTENANCE OF ANTI-MONEY LAUNDERING COMPLIANCE PROGRAMS BY BANKING ORGANIZATIONS AND FOREIGN BANKING CORPORATIONS LICENSED TO MAINTAIN A BRANCH OR AGENCY

3 CRR-NY 116.1 Covered entities {#sec-3-crr-ny-116.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 116.1}

(a) This Part shall apply to all “banking organizations” and “foreign banking corporations.”

(b) The term banking organization shall have the meaning ascribed to it in section 2 of the New York Banking Law.

(c) The term foreign banking corporation shall mean any branch, agency or representative office located in New York State of a foreign banking corporation licensed to maintain such a facility under article V or article V-B of the Banking Law.

3 CRR-NY 116.2 Anti-money laundering programs {#sec-3-crr-ny-116.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 116.2}

Every banking organization and every foreign banking corporation, in order to guard against money laundering through their institutions, shall establish and maintain an anti-money laundering program that complies with applicable Federal anti-money laundering laws (31 U.S.C. chapter 53, subchapter II), including the obligation to file suspicious activity reports ("SARs") (31 U.S.C. 5318[g]) and a customer identification program (31 U.S.C. 5318[l]), and regulations promulgated by the United States Department of Treasury (12 CFR part 103.120), and, as appropriate, regulations of the Board of Governors of the Federal Reserve Board (12 CFR parts 208.63 and 211.24), the Federal Deposit Insurance Corporation (12 CFR part 326.8) and the National Credit Union Administration (12 CFR part 748.2). In addition, when ordered, each such entity shall provide within 30 days a written report to the superintendent detailing the extent to which it has established such a program. Every banking organization and foreign banking corporation also shall comply with applicable regulations issued by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) (31 CFR part 500 et. seq.).

(a) For purposes of this Part, the required anti-money laundering program shall, at a minimum:

(1) provide for a system of internal controls to assure ongoing compliance;

(2) provide for independent testing for compliance to be conducted by bank personnel or by an outside party;

(3) designate an individual or individuals responsible for coordinating and monitoring day-to-day compliance; and

(4) provide training for appropriate personnel.

(b) The anti-money laundering program shall be in writing, approved by the institution's board of directors or equivalent body, and such approval shall be noted in the minutes of the board of directors or equivalent body.

(c) Every banking organization and every foreign banking corporation will also be required to demonstrate, as part of their anti-money laundering programs, a customer identification program that complies with the applicable Federal anti-money laundering laws and regulations referred to in section 116.1 of this Part.

(d) Every banking organization and every foreign banking corporation will further be required to demonstrate they have in place risk-based policies, procedures and practices to ensure, to the maximum extent practicable, that its transactions will comply with OFAC requirements.

(e) Every banking organization and every foreign banking corporation shall file SARs in accordance with applicable Federal law and regulations.

(f) Compliance with applicable Federal requirements shall constitute compliance with this Part.

3 CRR-NY 116.3 Additional reports {#sec-3-crr-ny-116.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 116.3}

Every banking organization and every foreign banking corporation shall provide such additional reports regarding its compliance with this Part as shall be directed by the superintendent.

Part 117 LENDING LIMITS: INCLUSION OF CREDIT EXPOSURES ARISING FROM DERIVATIVE TRANSACTIONS

3 CRR-NY 117.1 Definitions {#sec-3-crr-ny-117.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.1}

For the purposes of this Part:

(a) The appropriate Federal banking agency of a bank shall be the agency specified by section 3(q) of the Federal Deposit Insurance Act (FDIA), 12 USC section 1813(q), or the successor to such provision.

(b) Bank includes a bank or trust company or a savings bank formed under the Banking Law whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC).

(c) Credit derivative means a financial contract that allows one party (the protection purchaser) to transfer the credit risk of one or more exposures (reference exposure) to another party (the protection provider).

(d) The current credit exposure of a bank to a counterparty on a particular date with respect to a derivative transaction other than a credit derivative shall be the amount that the bank reasonably determines would be its loss under the terms of the derivative contract covering such transaction if the counterparty defaulted on such date.

(e) The credit exposure of a bank to a counterparty arising from derivative transactions other than credit derivatives is the higher of zero or the sum of the then positive current credit exposures with respect to such derivative transactions, provided, however, that in calculating such credit exposure, the bank may take into account netting to the extent specified in section 117.4(a) of this Part.

(f) Derivative transaction includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

(g) Effective margining arrangement means a master legal agreement governing derivative transactions between a bank and a counterparty that requires the counterparty to post, on a daily basis, variation margin to fully collateralize that amount of the bank’s net credit exposure to the counterparty that exceeds $25 million created by the derivative transactions covered by the agreement.

(h) Eligible credit derivative means a single-name credit derivative or a standard, non-tranched index credit derivative, provided that:

(1) the derivative contract is executed under standard industry credit derivative documentation and meets the requirements of an eligible guarantee and has been confirmed by both the protection purchaser and the protection provider;

(2) any assignment of the derivative contract has been confirmed by all relevant parties;

(3) if the credit derivative is a credit default swap, the derivative contract includes the following credit events:

(i) failure to pay any amount due under the terms of the reference exposure, subject to any applicable minimal payment threshold that is consistent with standard market practice and with a grace period that is closely in line with the grace period of the reference exposure; and

(ii) bankruptcy, insolvency, restructuring (for obligors not subject to bankruptcy or insolvency) inability of the obligor on the reference exposure to pay its debts, or its failure or admission in writing of its inability generally to pay its debts as they become due and similar events;

(4) the terms and conditions dictating the manner in which the derivative contract is to be settled are incorporated into the contract; and

(5) if the derivative contract allows for cash settlement, the contract incorporates a robust valuation process.

(i) Eligible protection provider means:

(1) a sovereign entity (a central government, including the United States government; an agency; department; ministry; or central bank);

(2) this state or any city, county, town, village or school district of this State, the New York State Thruway Authority, the Metropolitan Transportation Authority, the Triborough Bridge and Tunnel Authority or The Port Authority of New York and New Jersey;

(3) any state other than the State of New York;

(4) the Bank for International Settlements, the International Monetary Fund, the European Central Bank, the European Commission, or a multilateral development bank;

(5) a Federal Home Loan Bank;

(6) the Federal Agricultural Mortgage Corporation;

(7) a depository institution, as defined in section 3(c) of the FDIA, 12 U.S.C. section 1813(c);

(8) a bank holding company, as defined in section 2 of the Bank Holding Company Act, 12 U.S.C. section 1841;

(9) a savings and loan holding company, as defined in section 10 of the Home Owners’ Loan Act, 12 U.S.C. section 1467a;

(10) a securities broker or dealer registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, 15 U.S.C. section 78a et seq.;

(11) an insurance company that is subject to the supervision of a State insurance regulator;

(12) a foreign banking organization;

(13) a non-United States-based securities firm or a non-United States-based insurance company that is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies;

(14) a qualifying central counterparty; and

(15) such other entity or entities as may be designated from time to time by the superintendent.

(j) Readily marketable collateral means financial instruments and bullion that are salable under ordinary market conditions with reasonable promptness at a fair market value.

(k) Financial market utility shall have the same meaning as used in section 803(6) of the Dodd–Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. section 5462(6).

(l) The following terms shall have the same meaning as used in the Capital Adequacy Guidelines for Banks: Internal-Ratings-Based and Advanced Measurement Approaches (Capital Adequacy Guidelines) of the bank’s appropriate Federal banking agency.1

(1) Eligible guarantee.

(2) Qualifying netting agreement.

(3) Qualifying central counterparty.

3 CRR-NY 117.2 General rule {#sec-3-crr-ny-117.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.2}

(a) In computing the amount of loans of a bank outstanding to a person under section 103.1 of the Banking Law or to a borrower under section 235.8-c of the Banking Law at any specific time, the credit exposures of the bank arising from derivative transactions with respect to such person or borrower shall be included.

(b) Such credit exposures shall be calculated as the sum of the bank’s credit exposure to such person or borrower as a counterparty arising from derivative transactions other than credit derivatives plus the bank’s credit exposure to such person or borrower as a counterparty arising from credit derivatives plus, where such person or borrower is the obligor on a reference exposure, the bank’s credit exposure with respect to such person or borrower as obligor on such reference exposure arising from credit derivatives.

3 CRR-NY 117.3 Credit derivatives {#sec-3-crr-ny-117.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.3}

(a) Credit exposure to a counterparty.

A bank shall calculate its credit exposure to a counterparty arising from credit derivatives by adding the net notional value of all protection purchased from the counterparty with respect to each reference exposure.

(b) Credit exposure with respect to a reference exposure.

A bank shall calculate the credit exposure with respect to a reference exposure arising from credit derivatives entered by the bank by adding the notional value of all protection sold on such reference exposure.

In computing the exposures in subdivisions (a) and (b) of this section, the bank may take into account exposure mitigants to the extent specified in section 117.4 of this Part.

3 CRR-NY 117.4 Exposure mitigants {#sec-3-crr-ny-117.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.4}

(a) Netting.

In computing the credit exposures arising from derivative transactions of a bank with a particular counterparty with whom such bank has in force a qualifying master netting agreement, such bank may net the credit exposures covered by such qualifying master netting agreement.

(b) Collateral.

In computing the credit exposures arising from derivative transactions of a bank with a particular counterparty, such credit exposures may be reduced to the extent that such credit exposures have been secured with readily marketable collateral under an effective margining arrangement. The amount of such reduction shall be equal to the value of such collateral multiplied by the percentage applicable to such type of collateral as may be prescribed by the superintendent from time to time.

In computing the credit exposures arising from derivative transactions of a bank with a particular counterparty or with respect to a particular reference exposure, such credit exposures may be reduced to the extent hedged by an eligible credit derivative from an eligible protection provider.

3 CRR-NY 117.5 Exception {#sec-3-crr-ny-117.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.5}

In computing its credit exposures arising from derivative transactions, a bank need not include credit exposures to a qualifying central counterparty that has been designated by the Financial Stability Oversight Council as a financial market utility that is, or is likely to become, systemically important.

3 CRR-NY 117.6 Alternate valuation method {#sec-3-crr-ny-117.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.6}

With the permission of the superintendent, a bank may utilize an alternate method to evaluate its credit exposures arising from derivative transactions.

3 CRR-NY 117.7 [Repealed] {#sec-3-crr-ny-117.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.7}

3 CRR-NY 117.8 Residual authority of the superintendent {#sec-3-crr-ny-117.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 117.8}

Where the method or methods used by a bank fails to appropriately reflect the credit exposures of the bank arising from derivative transactions, the superintendent may direct such bank to use an alternate method or methods.

Part 120 COMPLIANCE WITH BANKING LAW SECTION 28-BB

3 CRR-NY 120.1 Definitions {#sec-3-crr-ny-120.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.1}

For purposes of this Part, the following definitions apply:

(a) Area median income means:

(1) the median family income for the metropolitan statistical area (MSA), as defined in subdivision (n) of this section, if a person or geography is located in an MSA, or for the metropolitan division as defined in subdivision (k) of this section, if a person or geography is located in an MSA that has been subdivided into metropolitan divisions; or

(2) the statewide nonmetropolitan median family income, if a person or geography is located outside an MSA.

(b) Assessment area shall mean a geographic area delineated in accordance with section 120.5 of this Part.

(d) Community development means:

(1) mortgage products and other efforts to assist with affordable housing, including multifamily rental housing, for low- or moderate-income individuals;

(2) mortgage products made as part of a special purpose credit program, as defined in subdivision (p) of this section;

(3) community services targeted to low- or moderate-income individuals;

(4) activities that revitalize or stabilize:

(i) low- or moderate-income geographies;

(ii) designated disaster areas; or

(iii) distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on:

(a) rates of poverty, unemployment, and population loss; or

(b) population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals; or

(5) activities that seek to prevent defaults and/or foreclosures on loans included in paragraph (1) of this subdivision.

(e) Community development service means a service that:

(1) has as its primary purpose community development; and

(2) is related to the provision of financial services.

(f) Community outreach means an activity that provides products and services to any populations, including but not limited to economically disadvantaged persons, who might not otherwise have access to those products and services or who use such products and services at lower rates relative to other populations.

(g) Geography means a census tract delineated by the United States Bureau of the Census in the most recent decennial census.

(h) HMDA means the Home Mortgage Disclosure Act and its implementing regulations.

(i) Income level includes:

(1) Low-income, which means an income that is less than 50 percent of the area median income, in the case of an individual, or a median family income that is less than 50 percent of the area median income, in the case of a geography.

(2) Moderate-income, which means an income that is at least 50 percent and less than 80 percent of the area median income, in the case of an individual, or a median family income that is at least 50 and less than 80 percent of the area median income, in the case of a geography.

(3) Middle-income, which means an income that is at least 80 percent and less than 120 percent of the area median income, in the case of an individual, or a median family income that is at least 80 and less than 120 percent of the area median income, in the case of a geography.

(4) Upper-income, which means an income that is 120 percent or more of the area median income, in the case of an individual, or a median family income that is 120 percent or more of the area median income, in the case of a geography.

(j) Loan location means the geographic location of the property to which a mortgage loan relates.

(k) Metropolitan division means a metropolitan division as defined by the Director of the Office of Management and Budget.

(l) Mortgage banker means a person or entity licensed pursuant to section 591 of the Banking Law to engage in the business of making mortgage loans in New York State.

(m) Mortgage loan has the same meaning as in section 590 of the Banking Law.

(n) MSA means a metropolitan statistical area as defined by the Director of the Office of Management and Budget.

(o) Qualified investment means a lawful investment, deposit, membership share, or grant that has as its primary purpose community development.

(p) Special purpose credit program means any credit program offered by a mortgage banker to meet special social needs which is in conformity with and explicitly authorized by the Equal Credit Opportunity Act (15 U.S.C. § 1691(c)) and Regulation B (12 C.F.R. § 1002.8).

(q) Superintendent means the Superintendent of Financial Services.

3 CRR-NY 120.2 Data collection and reporting {#sec-3-crr-ny-120.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.2}

(a) Each mortgage banker shall file with the superintendent, upon request, a copy of each report and document which it is required to prepare and/or file with one or more Federal, State, or local agencies and which relates to the credit needs of its community. Such documents shall include, but not be limited to, any data and/or supporting materials prepared or submitted for the purposes of compliance with HMDA or any other Federal, State, or local requirement. Nothing in this Part shall preclude the superintendent from requiring the submission of additional information and/or data which they deem necessary to evaluate an institution.

(b) Each mortgage banker shall test its collection and reporting of data, including of its HMDA data, as part of its routine internal controls to ensure the completeness and accuracy of its data and compliance with all data reporting requirements as well as its own policies and procedures.

At its option, a mortgage banker may provide other information. concerning its performance meeting the credit needs of its community, such as additional mortgage loan distribution data.

3 CRR-NY 120.3 Review of applications {#sec-3-crr-ny-120.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.3}

(a) The superintendent will consider the factors set forth in section 28-bb of the Banking Law and the performance tests and standards set forth in section 120.6 of this Part in assessing a mortgage banker’s record of performance in meeting the credit needs of its community.

(b) When taking any action on any application made by a mortgage banker, including an application to open and maintain a branch office made pursuant to section 591 of the banking law and a change of control application made pursuant to section 594-b of the Banking Law, the superintendent shall take into account, among other factors, such assessment of the mortgage banker’s record of performance, if any, as set forth in this Part, in helping to meet the credit needs of its entire community, including low and moderate income neighborhoods and consistent with safe and sound operation of the mortgage banker.

(c) The superintendent may deny any such application on the basis of the assessment. Furthermore, the superintendent may condition the approval of any application as the facts and circumstances warrant.

3 CRR-NY 120.4 Performance evaluations; public disclosure {#sec-3-crr-ny-120.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.4}

(a) From time to time, as determined by the superintendent, the department will evaluate the record of performance in helping to meet the credit needs of the community of each mortgage banker who has originated 200 or more mortgage loans in New York State in the last calendar year reportable under HMDA. The evaluation shall be conducted pursuant to section 28-bb of the Banking Law and the tests set forth in section 120.6 of this Part. The department will assign a rating for a mortgage banker reflecting the department’s assessment of the mortgage banker’s record of helping to meet the credit needs of the community. In general, a mortgage banker that received an “Outstanding” on its most recent evaluation will be evaluated less frequently than a mortgage banker that received a lower rating, unless the department has cause to conduct an evaluation more frequently.

(b) In conducting an evaluation of a mortgage banker under this Part, the department may perform its evaluation on-site at the institution or at the department; require the submission of written responses to department requests for documentation and other information, including responses to the so-called “First Day Letter” or similar requests; interview mortgage banker personnel; conduct branch visits; and require any other information or documentation, or utilize any other procedure that the superintendent deems necessary. The department may rely, in part, on any similar evaluation by another state, commonwealth, or territory or upon any similar evaluation by the appropriate Federal regulatory authorities of a mortgage banker.

(c) The lending and service performance for each mortgage banker evaluated under paragraph (1) of subdivision (a) of section 120.6 of this Part shall be assigned one of the four following ratings: Outstanding, Satisfactory, Needs to Improve, or Substantial Noncompliance. A mortgage banker’s performance need not fit each aspect of a particular rating profile for the mortgage banker to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. The mortgage banker’s overall performance must be consistent with safe and sound business practices and generally consistent with the appropriate rating profile. The department’s assessment shall form the basis of the numerical rating based on a 1-4 scoring system assigned to each such mortgage banker by the department. Specifically, such numerical scores shall represent performance assessments as follows:

(1) outstanding record of meeting the credit needs of the community (“Outstanding” or “1”);

(2) satisfactory record of meeting the credit needs of the community (“Satisfactory” or “2”);

(3) needs to improve record of meeting the credit needs of the community (“Needs to Improve” or “3”); and

(4) substantial noncompliance in meeting the credit needs of the community (“Substantial Noncompliance” or “4”).

(d) Evidence of discriminatory or other illegal credit practices.

(1) The department’s evaluation of a mortgage banker’s performance in meeting the credit needs of the community is adversely affected by evidence of discriminatory or other illegal credit practices in any geography by the mortgage banker. In connection with any type of lending activity described in subdivision (a) of section 120.7 of this Part, evidence of discriminatory or other credit practices that violate an applicable law, rule, or regulation includes, but is not limited to:

(i) discrimination against applicants on a prohibited basis in violation, for example, of section 296-a of the New York State Executive Law, the Equal Credit Opportunity Act, or the Fair Housing Act;

(ii) violation of either section 6-l of the Banking Law or the Home Ownership and Equity Protection Act;

(iii) violation of section 5 of the Federal Trade Commission Act;

(iv) violation of section 8 of the Real Estate Settlement Procedures Act; and

(v) violation of the Truth in Lending Act provisions regarding a consumer’s right of rescission.

(2) In determining the effect of evidence of practices described in paragraph (1) of subdivision (d) of this section on the mortgage banker’s assigned rating, the department considers the nature, extent, and strength of the evidence of the practices; the policies and procedures that the mortgage banker has in place to prevent the practices; any corrective action that the mortgage banker has taken or has committed to take, including voluntary corrective action resulting from self-assessment; and other relevant information.

(e) The department will prepare a written summary of the results of its assessment, and the rating and the written summary will be made available to the public.

3 CRR-NY 120.5 Assessment area {#sec-3-crr-ny-120.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.5}

(a) In general.

A mortgage banker shall delineate one or more assessment areas within New York State, under the criteria specified in this section, within which the department evaluates the mortgage banker’s record of helping to meet the credit needs of its community. Where the mortgage banker has discretion with respect to the establishment of its assessment area(s), the department does not evaluate the mortgage banker’s delineation of its assessment area(s) as a separate performance criterion, but the department reviews the delineation for compliance with the requirements of this section.

(b) Branch-based assessment areas.

A mortgage banker with one or more branches within New York State shall delineate one or more branch-based assessment areas for evaluating performance.

(1) Geographic area(s). Branch-based assessment area(s) must:

(i) consist generally of one or more MSAs or metropolitan divisions (using the MSA or metropolitan division boundaries that were in effect as of January 1 of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns, in addition to any geographic requirements for assessment areas in this section; and

(ii) include each county in which a mortgage banker has a branch, as well as the surrounding geographies in which the mortgage banker has originated or purchased a substantial portion of its mortgage loans.

(2) Adjustments to geographic area(s). A mortgage banker may adjust the boundaries of its assessment area(s) to include only the portion of a political subdivision that it reasonably can be expected to serve. An adjustment is particularly appropriate in the case of an assessment area that otherwise would be extremely large, of unusual configuration, or divided by significant geographic barriers.

(3) Limitations on the delineation of an assessment area. Each mortgage banker’s assessment area(s):

(i) must consist only of whole geographies;

(ii) may not reflect illegal discrimination; and

(iii) may not arbitrarily exclude low- or moderate-income geographies, taking into account the mortgage banker’s size and financial condition.

(4) Each branch-based assessment area delineated by the mortgage banker is subject to the lending test and the service test, as provided in sections 120.7 and 120.8 of this Part.

(c) Assessment areas for mortgage bankers without branches. A mortgage banker with no branches within New York State shall specify one or more of its lending-based assessment areas to be subject to the lending test and the service test, as provided in sections 120.7 and 120.8 of this Part, consistent with meeting the credit needs of the community.

(d) In the event of an evaluation of a mortgage banker with no branches within New York State has not originated, in each of the two preceding calendar years, at least 100 mortgage loans in any MSA or nonmetropolitan area of New York State, that mortgage banker shall be subject to the lending test and the service test, as provided in sections 120.7 and 120.8 of this Part, in the MSA or nonmetropolitan area of New York State in which that mortgage banker originated the greatest number of mortgage loans over the two preceding calendar years.

(e) Lending-based assessment areas.

A mortgage banker must delineate a lending-based assessment area in each MSA or nonmetropolitan area of New York State, respectively, in which it originated, in each of the two preceding calendar years, at least 100 mortgage loans outside of branch-based assessment areas.

(1) Geographic requirements regarding lending-based assessment areas. A lending-based assessment area must consist of either:

(i) the entirety of a single MSA within New York State, excluding areas inside branch-based assessment areas; or

(ii) all of the areas in New York State that are not included in an MSA, excluding areas inside branch-based assessment areas, aggregated into a single lending-based assessment area.

(2) Each lending-based assessment area delineated by the mortgage banker is subject to the lending test, as provided in section 120.7 of this Part.

(f) Use of assessment area(s).

The department uses the assessment area(s) delineated by a mortgage banker in its evaluation of the mortgage banker’s performance unless the department determines that the assessment area(s) do not comply with the requirements of this section.

(g) Nothing in this section shall be construed to impose a requirement on any mortgage banker to locate any branch in a specific geographical area.

3 CRR-NY 120.6 Performance tests {#sec-3-crr-ny-120.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.6}

(a) Performance tests.

The department assesses the performance of mortgage bankers at meeting the credit needs of its community by applying the lending and service tests, as provided in sections 120.7 and 120.8 of this Part.

(b) Performance context.

The department will apply the tests in subdivision (a) of this section in the context of:

(1) demographic data including median income levels, distribution of household income, housing data, and any other relevant data pertaining to a mortgage banker’s assessment area(s);

(2) the performance of all mortgage lenders, including banking institutions as defined in Part 76 of this Title, in the mortgage banker’s assessment area(s);

(3) lending and service opportunities in the mortgage banker’s assessment area(s);

(4) the mortgage banker’s product offerings and business strategy;

(5) the mortgage banker’s institutional capacity and constraints;

(6) the mortgage banker’s past performance;

(7) the mortgage banker’s market share in its assessment area;

(8) community input; and

(9) any other information deemed relevant by the department.

3 CRR-NY 120.7 Lending test {#sec-3-crr-ny-120.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.7}

(a) Scope of test.

The scope of the lending test is as follows:

(1) The lending test evaluates a mortgage banker’s record of helping to meet the credit needs of its assessment area(s) through home mortgage lending activity.

(2) The department considers originations and purchases of mortgage loans as reported by the mortgage banker under HMDA. The department may also consider any other mortgage loan data the mortgage banker may provide.

(b) Performance criteria.

The department evaluates a mortgage banker’s lending performance pursuant to criteria which may include the following:

(1) Lending activity. The number and amount of the mortgage banker’s mortgage loans in the mortgage banker’s assessment area(s).

(2) Geographic distribution. The geographic distribution of the mortgage banker’s mortgage loans based on the loan location, including:

(i) the proportion of the mortgage banker’s lending in the mortgage banker’s assessment area(s);

(ii) the dispersion of lending in the mortgage banker’s assessment area(s); and

(iii) the number and amount of mortgage loans in low-, moderate-, middle-, and upper-income geographies in the mortgage banker’s assessment area(s).

(3) Borrower characteristics. The distribution, particularly in the mortgage banker’s assessment area(s), of the mortgage banker’s mortgage loans based on borrower characteristics, including the number and amount of mortgage loans to low-, moderate-, middle-, and upper-income individuals.

(4) Innovative or flexible lending practices. The mortgage banker’s use of innovative or flexible lending practices, in a safe and sound manner, to address the credit needs of low- or moderate-income individuals or geographies, or underserved individuals or geographies, including governmentally insured, guaranteed, or subsidized loan programs for housing, as appropriate for each borrower.

(5) Harmful practices. A mortgage banker’s rating on the lending test may be adversely affected by harmful practices such as those intended to discourage application for or extension of credit offered by the mortgage banker or which may result in harm to low- and moderate-income individuals.

(6) Third-party lending. No mortgage banker may include a mortgage loan origination for consideration if another mortgage banker or depository institution claims the same mortgage loan origination under this Part, under section 28-b of the Banking Law or its implementing regulations, or under the federal Community Reinvestment Act.

3 CRR-NY 120.8 Service test {#sec-3-crr-ny-120.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.8}

(a) Scope of test.

The service test evaluates a mortgage banker’s record of helping to meet the credit needs of its assessment area(s) by analyzing both the availability and effectiveness of a mortgage banker’s systems for delivering mortgage loan products and the extent and innovativeness of a mortgage banker’s community development services, qualified investments, community outreach, marketing, and educational programs.

(b) Area(s) benefited.

Community development services and qualified investments must benefit a mortgage banker’s assessment area(s) or a broader area within New York State that includes the mortgage banker’s assessment area(s).

The department evaluates community development services pursuant to criteria which may include the following:

(1) the extent to which the mortgage banker provides community development services;

(2) the innovativeness and responsiveness of community development services; and

(3) the range of services provided, and the degree to which the services are tailored to meet the needs of low- and moderate-income geographies and individuals, and other underserved communities and individuals;

(4) provided that not offering a particular type of community development service shall not, on its own, be a bar to achieving any rating on the service test.

(d) Performance criteria for qualified investments.

The Department evaluates qualified investment performance pursuant to criteria which may include the following:

(1) the dollar amount of qualified investments;

(2) the innovativeness or complexity of qualified investments;

(3) the responsiveness of qualified investments to credit and community development needs; and

(4) the degree to which the qualified investments are not routinely provided by private investors.

(e) A mortgage banker shall not be required to make qualified investments to achieve any rating on the service test.

(f) The service test includes an evaluation of the extent and nature of the mortgage banker’s marketing activities, if any, relative to the mortgage banker’s available resources.

3 CRR-NY 120.9 High cost areas {#sec-3-crr-ny-120.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.9}

(a) The department recognizes that the demographics and housing characteristics of an area may be such that the gap between housing costs and area median income greatly restricts the affordability of owner-occupied housing for low- and moderate-income persons residing in such an area. At the same time, there may exist a shortage of credit which endangers the preservation, stabilization, or improvement of middle-income geographies or limits access to credit for middle-income persons residing in such an area. Where, based on relevant, current, and verifiable data (including but not limited to the most recent census data pertaining to such area) these conditions are found to exist, the department may, in its assessment of the mortgage banker’s performance, be flexible in its consideration of a mortgage banker’s activities pertaining to owner-occupied housing in middle-income geographies or for middle-income individuals residing in such an area.

(b) Consideration of such activities shall be in addition to, and not in lieu of, consideration of activities in low- or moderate-income geographies and activities which serve low- or moderate-income individuals.

3 CRR-NY 120.10 Compliance date and transitional period {#sec-3-crr-ny-120.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 120.10}

The compliance date for this Part is six months after the date of publication of the Notice of Adoption in the State Register.

Chapter II REGULATIONS OF THE SUPERINTENDENT

Part 200 EFFECT OF REPEAL OF REGULATIONS

3 CRR-NY 200.1 Recodification effective May 1, 1969 {#sec-3-crr-ny-200.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 200.1}

The repeal effective May 1, 1969 of the general and special regulations of the superintendent referred to below in subdivisions (a) and (b) of this section shall not impair or affect in any way the validity of any investment or loan made or any other action taken or not taken in compliance therewith or in reliance thereon.

(a) General regulations (as in effect on April 30, 1969):

(1) Part 2, Special Notice of Meeting of superintendent.

(2) Part 6, Federal Housing Administration Loans.

(3) Section 9.1, Export-Import Bank loans.

(4) Section 9.2, Temporary office in emergency.

(5) Section 9.3, Suspension of business during air raids or test periods.

(6) Section 9.6, R.F.C. loans.

(7) Section 9.7, Savings bonds.

(8) Section 9.8, Directors absent in armed forces.

(9) Section 9.9, Limited banking facilities.

(10) Section 9.10, Pledge of assets to secure deposits.

(b) Special regulations (as in effect on April 30, 1969):

(1) Section 35.4, Savings and Loan Bank of State of New York.

(2) Part 36, Requirement That Directors of Bank or Trust Company Hold Qualifying Shares, Relaxed.

(3) Section 38.4, Morgan & Cie. Incorporated.

(4) Part 39, Regulations Concerning Morgan & Cie. Incorporated.

(5) Part 40, Regulations Relating to Housing Projects.

(6) Section 41.1, Joseph C. Rovensky.

(7) Section 41.2, A. Richard Todd.

(8) Section 41.3, Francis S. Baer.

(9) Section 41.4, William L. Pfeiffer.

(10) Section 41.5, Robert C. Tait.

(11) Section 41.8, Raymond V. V. Miller.

(12) Section 41.11, William Rosenblatt.

(13) Section 41.13, Louis Van Damme.

(14) Section 41.15, Henry Harris.

(15) Part 42, Authorization to Purchase Capital Stock.

(16) Part 43, Savings Banks and Savings and Loan Associations—Installment Sales Contracts.

(17) Part 44, Savings Banks—Permission to Lend to Corporation Not Organized for Profit, Incorporated under Laws of Other States and of United States.

(18) Part 45, Cost of Mortgages Insured or Guaranteed by Federal Housing Administration or Veterans' Administration Acquired in Exchange for United States Government Bonds.

Part 201 EXCEPTIONS FROM PART 20 (PAYMENT OF INTEREST ON COMMERCIAL BANK DEPOSITS)

3 CRR-NY 201.1 Textile Banking Company {#sec-3-crr-ny-201.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 201.1}

The superintendent hereby suspends section 20.1 (prohibiting the payment of interest on demand deposits) of Part 20 of this Title insofar as it applies to Textile Banking Company.

3 CRR-NY 201.2 Macy's Bank {#sec-3-crr-ny-201.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 201.2}

The superintendent hereby suspends section 20.1 (prohibiting the payment of interest on demand deposits) of Part 20 of this Title insofar as it applies to Macy's Bank.

3 CRR-NY 201.3 Savings Banks Trust Company {#sec-3-crr-ny-201.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 201.3}

The superintendent hereby suspends section 20.2(a)(1), (2) and (3)(i) (regulating the payment of interest on time deposits, other than savings deposits) of Part 20 of this Title insofar as it applies to Savings Banks Trust Company, provided that such suspension shall be effective only so long as Savings Banks Trust Company shall accept no deposits except:

(a) deposits of duly constituted mutual savings banks or arising out of the corporate business thereof; and

(b) deposits of public monies.

Part 203 PERMISSION TO SERVE AS DIRECTOR, OFFICER OR EMPLOYEE OF SECURITIES FIRMS

3 CRR-NY 203.1 Discount Corporation of New York {#sec-3-crr-ny-203.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.1}

The superintendent hereby grants permission for any officer, director or employee of any bank or trust company organized or existing under the laws of this State to be at the same time an officer, director or employee of Discount Corporation of New York, provided Discount Corporation of New York confines its dealings in securities to underwriting, distributing and dealing in such securities as national banks may lawfully underwrite and deal in pursuant to paragraph seventh of section 5136, Revised Statutes (12 U.S.C. sec. 24).

3 CRR-NY 203.2 Jock K. Finlayson {#sec-3-crr-ny-203.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.2}

The superintendent hereby grants permission for Jock K. Finlayson to be at the same time a director of The Royal Bank of Canada Trust Company and a director of RoyFund Ltd., Montreal, Canada, provided that there continue to be no business transactions between the fund and the trust company.

3 CRR-NY 203.3 [Repealed] {#sec-3-crr-ny-203.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.3}

3 CRR-NY 203.4 to 203.5 to 203.5 [Repealed] {#sec-3-crr-ny-203.4-to-203.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.4 to 203.5}

3 CRR-NY 203.6 Savings Banks Trust Company {#sec-3-crr-ny-203.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.6}

The superintendent hereby grants permission for present and future directors and officers of Savings Banks Trust Company to serve at the same time directors, officers or employees of M.S.B. Fund, Inc.

3 CRR-NY 203.7 [Repealed] {#sec-3-crr-ny-203.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.7}

3 CRR-NY 203.8 to 203.9 to 203.9 [Repealed] {#sec-3-crr-ny-203.8-to-203.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.8 to 203.9}

3 CRR-NY 203.10 [Repealed] {#sec-3-crr-ny-203.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.10}

3 CRR-NY 203.11 Samuel Rothberg {#sec-3-crr-ny-203.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.11}

The superintendent hereby grants permission for Samuel Rothberg to be at the same time a director of Bank Leumi Trust Company of New York and president of Capital for Israel, Inc. and a director of Development Corporation for Israel.

3 CRR-NY 203.12 [Repealed] {#sec-3-crr-ny-203.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.12}

3 CRR-NY 203.13 [Repealed] {#sec-3-crr-ny-203.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.13}

3 CRR-NY 203.14 [Repealed] {#sec-3-crr-ny-203.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.14}

3 CRR-NY 203.15 John William Campo {#sec-3-crr-ny-203.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.15}

The superintendent hereby grants permission for John William Campo to be at the same time a director of Central State Bank and a registered representative of Ter Bush & Putnam Securities, Inc., a company engaged in the retail sale of shares of various open-end mutual funds.

3 CRR-NY 203.16 [Repealed] {#sec-3-crr-ny-203.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.16}

3 CRR-NY 203.17 Henry M. Marx {#sec-3-crr-ny-203.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.17}

The superintendent hereby grants permission for Henry M. Marx to be at the same time a director of the Canadian Bank of Commerce Trust Company and a director of American Investment Trust (N.V.) Curacao, Netherlands, West Indies.

3 CRR-NY 203.18 Harry W. Fowler, Ruppert E. Hutton, John B. Hadik and Landon Thomas, Jr {#sec-3-crr-ny-203.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.18}

The superintendent hereby grants permission for Harry W. Fowler, Ruppert E. Hutton, John B. Hadik and Landan Thomas, Jr. to be at the same time directors and/or officers of Fiduciary Trust Company of New York (“Fiduciary New York”) and directors and/or officers of Akimco International Ltd., a Bahamian management company and a 50-percent-owned subsidiary of Fiduciary Trust Company of New York (Geneva) S.A., a wholly-owned subsidiary of Fiduciary New York.

3 CRR-NY 203.19 [Repealed] {#sec-3-crr-ny-203.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.19}

3 CRR-NY 203.20 [Repealed] {#sec-3-crr-ny-203.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.20}

3 CRR-NY 203.21 [Repealed] {#sec-3-crr-ny-203.21 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.21}

3 CRR-NY 203.22 [Repealed] {#sec-3-crr-ny-203.22 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.22}

3 CRR-NY 203.23 [Repealed] {#sec-3-crr-ny-203.23 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.23}

3 CRR-NY 203.24 [Repealed] {#sec-3-crr-ny-203.24 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.24}

3 CRR-NY 203.25 [Repealed] {#sec-3-crr-ny-203.25 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.25}

3 CRR-NY 203.26 Martin M. Rosen {#sec-3-crr-ny-203.26 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.26}

The superintendent hereby grants permission for Martin M. Rosen to be a director of The Atlantic Bank of New York while president of Model, Roland & Co., Inc., a New York stockbrokerage firm, chairman of The First Washington Securities Corporation, investment bankers headquartered in Washington, D.C. and chairman of First Washington International Corporation, located in New York and a member of the National Association of Securities Dealers.

3 CRR-NY 203.27 The Depository Trust Company {#sec-3-crr-ny-203.27 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.27}

The superintendent hereby grants permission for present and future directors of The Depository Trust Company to serve at the same time as directors, officers, or employees of firms engaged in the process of underwriting, distributing or dealing in securities, provided that The Depository Trust Company confines its investments in securities to obligations of the United States government or its agencies and to obligations of any State or political subdivision thereof.

3 CRR-NY 203.28 Ruppert E. Hutton {#sec-3-crr-ny-203.28 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.28}

The superintendent hereby grants permission for Ruppert E. Hutton to be at the same time a vice president of Fiduciary Trust Company of New York and a director of Gerifonds, a management company under the laws of Switzerland.

3 CRR-NY 203.29 Kirk T. Dornbush {#sec-3-crr-ny-203.29 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.29}

The superintendent hereby grants permission for Kirk T. Dornbush to be at the same time a director of the New York Venture Fund, Inc. and a director of the First Women's Bank.

3 CRR-NY 203.30 [Repealed] {#sec-3-crr-ny-203.30 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.30}

3 CRR-NY 203.31 [Repealed] {#sec-3-crr-ny-203.31 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.31}

3 CRR-NY 203.32 Daniel Kelly {#sec-3-crr-ny-203.32 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.32}

The superintendent hereby grants permission for Daniel Kelly to be at the same time a director of Hartford Trust Company and a limited partner of Salomon Brothers, a New York Stock Exchange member firm and underwriter.

3 CRR-NY 203.33 Triston E. Beplat {#sec-3-crr-ny-203.33 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 203.33}

The superintendent pursuant to authority granted under section 14(1)(k) and 130(4) of the Banking Law hereby grants permission for Triston E. Beplat to be at the same time a director of Daiwa Bank Trust Company and continue to serve as a director of the Japan Fund, Inc.

Part 204 AUTHORIZATION TO ACT AS FINANCIAL AGENT OF UNITED STATES GOVERNMENT

3 CRR-NY 204.1 J. Henry Schroder Banking Corporation {#sec-3-crr-ny-204.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.1}

The superintendent hereby authorizes J. Henry Schroder Banking Corporation:

(a) to act as financial agent of the United States government in connection with the sale of United States government securities issued under the authority of the Second Liberty Bond Act, as amended, and to receive deposits arising solely as the result of subscriptions made by or through it for such United States government securities;

(b) to perform all such reasonable duties as may be required of it as depositary of the public money comprising such deposits, and as financial agency of the United States government;

(c) to pledge assets or furnish other security, satisfactory in form and amount to the Secretary of the Treasury of the United States, for the safekeeping and prompt payment of such deposits and for the faithful performance of its duties as such financial agent; and

(d) to receive money for transmission and to transmit the same from the United States to any foreign country and from any foreign country to the United States.

3 CRR-NY 204.2 French-American Banking Corporation {#sec-3-crr-ny-204.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.2}

The superintendent hereby authorizes French-American Banking Corporation:

(a) to act as financial agent of the United States government in connection with the sale of the United States government securities issued under the authority of the Second Liberty Bond Act, as amended, and to receive deposits arising solely as the result of subscriptions made by or through it for such United States government securities;

(b) to perform all such reasonable duties as may be required of it as depositary of the public money comprising such deposits, and as financial agent of the United States government; and

(c) to pledge assets or furnish other security, satisfactory in form and amount to the secretary of the treasury of the United States, for the safekeeping and prompt payment of such deposits and for the faithful performance of its duties as such financial agent.

3 CRR-NY 204.3 Discount Corporation of New York {#sec-3-crr-ny-204.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.3}

The superintendent hereby authorizes Discount Corporation of New York:

(b) to perform all such reasonable duties as may be required of it as depositary of the public money comprising such deposits, and as financial agent of the United States Government; and

3 CRR-NY 204.4 [Repealed] {#sec-3-crr-ny-204.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.4}

3 CRR-NY 204.5 Nordic American Banking Corporation {#sec-3-crr-ny-204.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.5}

The superintendent hereby authorizes Nordic American Banking Corporation:

(b) to perform all such reasonable duties as may be required of it as depository of the public money comprising such deposits, and as financial agent of the United States government;

(d) to receive money for transmission and to transmit the same from the United States to any foreign country and from any foreign country to the United States.

3 CRR-NY 204.6 Baer American Banking Corporation {#sec-3-crr-ny-204.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 204.6}

The superintendent hereby authorizes Baer American Banking Corporation to receive money for transmission and to transmit the same from the United States to any foreign country and from any foreign country to the United States.

Part 206 EQUITY METHOD OF ACCOUNTING

3 CRR-NY 206.1 Equity method of accounting for investments in subsidiaries {#sec-3-crr-ny-206.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 206.1}

Banks and trust companies, savings banks and savings and loan associations may report investments in subsidiaries in conformity with the “equity method of accounting” as approved by the Accounting Principals Board of the Amercian Institute of Certified Public Accountants, provided, however, that once this accounting method is adopted, it shall be consistently applied and will not be discontinued without the prior approval of the superintendent.

Part 207 PERMISSION TO SERVE AS AN EXECUTIVE OFFICER, DIRECTOR OR TRUSTEE OF BANKS, TRUST COMPANIES, SAVINGS BANKS, SAVINGS AND LOAN ASSOCIATIONS, FOREIGN BANKING CORPORATIONS, NATIONAL BANKS, FEDERAL SAVINGS AND LOAN ASSOCIATIONS AND BANK HOLDING COMPANIES

3 CRR-NY 207.1 The Depository Trust Company {#sec-3-crr-ny-207.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 207.1}

The superintendent hereby grants permission for present and future executive officers of banks, trust companies, bank holding companies, foreign banking corporations maintaining branches in this State and national banks located in this State to serve at the same time as directors or members of committees authorized by the board of directors, or both, of The Depository Trust & Clearing Corporation and its subsidiaries.

3 CRR-NY 207.2 Freedom National Bank {#sec-3-crr-ny-207.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 207.2}

The superintendent hereby grants permission for Frank R. Rosenbach a vice president of Morgan Guaranty Trust Company of New York to serve as a director of Freedom National Bank of New York.

3 CRR-NY 207.3 Signature Bank {#sec-3-crr-ny-207.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 207.3}

The superintendent hereby grants permission for Mr. Scott Shay, an executive officer of Signature Bank, to serve as a director of Bank Hapoalim, B.M.

Part 209 PROCEDURE FOR MEETINGS OF MEMBERS AND FOR NOMINATION AND ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE MUNICIPAL CREDIT UNION OF THE CITY OF NEW YORK WHILE THE SUPERINTENDENT IS IN POSSESSION OF THE BUSINESS AND PROPERTY THEREOF PURSUANT TO SECTION 606 OF THE BANKING LAW

3 CRR-NY 209.1 Definitions {#sec-3-crr-ny-209.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 209.1}

For the purpose of this Part:

(a) Superintendent shall mean the Superintendent of Financial Services of the State of New York.

(b) MCU shall mean the Municipal Credit Union of the City of New York.

3 CRR-NY 209.2 Application {#sec-3-crr-ny-209.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 209.2}

This regulation shall govern all meetings of the members of the MCU while the superintendent is in possession of the MCU's business and property. To the extent that the bylaws of the MCU are inconsistent or conflict with the Banking Law, this Part, or any action taken by the superintendent hereunder, such bylaws are superseded and shall have no force and effect.

3 CRR-NY 209.3 Meetings of members {#sec-3-crr-ny-209.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 209.3}

(a) The annual meeting of the members of the MCU, for the purposes of electing members to serve on the board of directors, supervisory committee and credit committee, and transacting such other business as may properly come before the meeting, shall be held at such time and place as shall be fixed by the superintendent.

(b) The superintendent, at least 120 days prior to the annual meeting, shall appoint a nominating committee of not less than 5 nor more than 13 members. Members of the nominating committee need not be members of the MCU. The nominating committee shall make nominations for members to serve on the board of directors and the credit and supervisory committees, and deliver such nominations in writing to the superintendent at least 60 days prior to the date set for the annual meeting.

(1) the form of the petition shall be determined by the superintendent and shall be printed and made available at least 75 days before the annual meeting; and

(2) signatures on nominating petitions shall be valid as long as the member signing shall have been a member of the MCU for at least 90 days immediately preceding the date of the signing of the petition, and shall have furnished on the petition next to the member's name either:

(i) the member's address;

(ii) the member's account number; or

(iii) the member's social security number.

Petitions shall be filed with the superintendent at least 40 days prior to the date set for the annual meeting.

(d) To be eligible for election to membership on the board of directors, the credit committee or the supervisory committee, a person must have been a member of the MCU at least 30 days prior to the date set for the annual meeting.

(e) Special meetings of the members may be called upon the order of the superintendent or upon the written request of five percent of the members of the MCU.

(f) Notice of the time and place of the annual meeting or any special meeting of members, and of nominations received by the superintendent in timely fashion, shall be sent by mail to all members and shall be posted in a conspicuous place in all offices of the MCU at least 21 days prior to such meeting.

(g) The superintendent shall designate and implement such procedures for voting by proxy, at the annual meeting or any special meeting of members, as she may deem appropriate in accordance with section 464 of the Banking Law.

(h) The superintendent shall determine, in her discretion, the nature and order of the business to be conducted at all meetings of members.

(i) To be eligible to vote at a meeting of members, a person must have been a member of the MCU for at least 90 days immediately preceding the date of the meeting.

(j) The superintendent shall present for approval of the membership, at the annual meeting or any special meeting of members, such proposed changes in the bylaws of the MCU as she may deem necessary or appropriate.

(k) In connection with the superintendent's possession of the business and property of the MCU, the superintendent is authorized to designate and implement such other procedures pertaining to meetings of members of the MCU as she may deem necessary or appropriate to effectuate the policies declared in section 10 of the Banking Law.

Chapter III SUPERINTENDENT'S REGULATIONS

Subchapter A BANKING ORGANIZATIONS

Part 300 REPORTING OF CRIMES AGAINST BANKING INSTITUTIONS, MYSTERIOUS DISAPPEARANCES AND MISCONDUCT

3 CRR-NY 300.1 Reports {#sec-3-crr-ny-300.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.1}

Every organization organized, licensed or registered under the Banking Law shall submit a report to the superintendent immediately upon the discovery of any of the following events:

(a) embezzlement, misapplication, larceny, forgery, fraud, dishonesty, making of false entries and omission of true entries, or other misconduct, whether or not a criminal offense, in which any director, trustee, partner, officer, employee (excluding tellers), or agent of such organization is involved;

(b) embezzlement, misapplication, larceny, forgery, fraud, dishonesty, making of false entries and omission of true entries, or other misconduct, whether or not a criminal offense, in which any teller of such organization is involved;

(d) money payments which result in a loss by reason of having been drawn against nonexistent accounts or on nonexistent banks or by reason of the maker's signature or the signature of any endorser having been forged on checks, notes, withdrawal orders, letters of credit, bills of lading or other documents.

For purposes of this Part, a disappearance of securities shall constitute a reportable item under subdivision (a) of this section in which case the organization shall have up to five business days after discovery thereof in which to make such report except as provided in section 300.5 of this Part.

Editors Note:

In September 1981 the text of section 300.1 was inadvertently reinstated to read as it did prior to the June 16, 1981 amendment. In July 1988 the text of 300.1 was corrected to correspond with the June 16, 1981 amendment.

3 CRR-NY 300.2 Content of reports {#sec-3-crr-ny-300.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.2}

Each report submitted pursuant to section 300.1 of this Part shall set forth all pertinent details known at the time of the report, including the following information:

(a) estimate of the amount of the loss;

(b) name, address and position of every offender, if known;

(c) statement as to insurance coverage; whether the matter has been reported to the insurance carrier and the name and address of such insurance carrier;

(d) statement, if the matter has not been reported to the insurance carrier, that the relevant contract(s) of insurance has been reviewed to make certain that such failure to report does not jeopardize all or any part of the insurance coverage;

(e) if the loss is covered by insurance and no claim has been made, the reasons therefor;

(f) statement as to whether the matter has been reported to the appropriate law enforcement authorities and the name and address of any such authority to whom a report has been submitted; and

(g) extent of reimbursement received, if any.

If any such organization is required by other governmental authority to report any of the above-mentioned events to the department, such report shall constitute a report pursuant to this Part so long as the information required hereunder is given.

3 CRR-NY 300.3 Subsequent reports {#sec-3-crr-ny-300.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.3}

In addition to the report required by section 300.1 of this Part, such organization shall submit to the superintendent further reports of any material developments relating to the reported events, and each such report shall contain a statement of the actions taken or proposed to be taken with respect to such developments. Such organization shall also submit to the superintendent a statement of the changes, if any, in its operations which are deemed desirable and feasible by its directors or trustees in order to avoid repetition of similar events.

3 CRR-NY 300.4 Other reports {#sec-3-crr-ny-300.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.4}

Reports shall also be made of any other incident if there are indications that it, or any act therein involved, relates to a plan or scheme and would be of interest to similar organizations located in the same area or throughout the State.

3 CRR-NY 300.5 When reports not required {#sec-3-crr-ny-300.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.5}

(a) If a loss is due to a mysterious disappearance or shortage which does not indicate misconduct—such as clerical or operational error—no report is required. Frequent or numerous “errors” by the same person or persons may, however, indicate misconduct.

(b) Organizations with assets of $1 billion or more are not required to report any incident specified in section 300.1(b)-(d) of this Part if the loss is less than $100,000; and

(c) Organizations with assets over $500 million but less than $1 billion are not required to so report if the loss is less than $50,000; and

(d) Organizations with assets over $100 million but less than $500 million are not required to so report if the loss is less than $25,000.

(e) Other organizations are not required to so report if the loss is less than $5,000.

3 CRR-NY 300.6 Records to be maintained {#sec-3-crr-ny-300.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.6}

A record is to be maintained of all incidents described in section 300.1 of this Part whether or not they are required to be reported. Such records are to be made available for examination by the superintendent or his representative.

3 CRR-NY 300.7 Reports to law enforcement authorities, etc {#sec-3-crr-ny-300.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.7}

Every organization which discovers or experiences any of the incidents described in section 300.1 of this Part is strongly urged to report the details thereof to the appropriate State and local law enforcement authorities, to the local office of the Federal Bureau of Investigation, if appropriate, and to the insurance carrier, even though such incident may not be required to be reported to the department because of the size of the loss involved.

3 CRR-NY 300.8 Confidentiality {#sec-3-crr-ny-300.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 300.8}

Reports submitted pursuant to section 300.1 of this Part shall be treated as confidential pursuant to Supervisory Procedure G106.6.

Part 301 SECURITY AT AUTOMATED TELLER FACILITIES

3 CRR-NY 301.1 Explanation {#sec-3-crr-ny-301.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.1}

In enacting chapter 9 of the Laws of 1996, which, inter alia, added article II-AA to the Banking Law, the Legislature has found and declared that automated teller machines are greatly utilized by consumers and that the convenience and safety of such consumers must be ensured by establishing security measures for automated teller machine facilities operated by Federal and State chartered banking institutions. Article II-AA sets forth the specific security measures which must be employed at automated teller machines subject to its provisions. The provisions of this Part define and implement the provisions of article II-AA.

3 CRR-NY 301.2 Qualifications of experts {#sec-3-crr-ny-301.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.2}

Any “expert” rendering an opinion pursuant to the provisions of section 75-c(3)(b) or 75-m(2)(c) of the Banking Law shall be licensed as a professional engineer under article 145 of the Education Law or as an architect under article 147 of the Education Law. In the superintendent's sole discretion, an “expert” may be any other person who possesses experience and/or education which the superintendent deems sufficient to give such person the competence to render an opinion under those sections of law.

3 CRR-NY 301.3 Size of sign {#sec-3-crr-ny-301.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.3}

The sign in the automated teller machine facility which contains the information required by section 75-c(3)(d) of the Banking Law shall be of such size as to make such information clearly visible from the entryway to the facility.

3 CRR-NY 301.4 Notification of additional facilities or discontinuance of facilities {#sec-3-crr-ny-301.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.4}

Every banking institution which is required to file information on additional automated teller facilities with the department pursuant to section 75-d of the Banking Law shall file such information within 14 business days from the date upon which the facility or facilities commences operation. Additionally, within 14 business days from the date on which it ceases to operate an automated teller machine facility which is subject to the provisions of article II-AA, every banking institution shall notify the department in writing of such fact.

3 CRR-NY 301.5 Type and frequency of video tapes or digital recording media for ATM surveillance systems {#sec-3-crr-ny-301.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.5}

(a) Any analog surveillance system operated by a banking institution within an automated teller machine facility under its dominion and control as required by section 75-c(1) of the Banking Law must use a commercial/industrial grade video tape, or a tape of better quality. Such tape shall be used no more than one time (or cycle), from beginning to end, in any 30-day period. Such videotapes shall not be used more than 12 times in total and must be replaced not later than 365 days from the date of its first use. Once such videotape is used, it must be retained for at least a 45-day period prior to reuse.

(b) Any digital surveillance system operated by a banking institution within an automated teller machine facility under its dominion and control as required by section 75-c(1) of the Banking Law, must retain the digitally recorded images for at least 45 days.

(c) The intent of this regulation is that a banking institution's video recording method produce a clear and undistorted picture image. A banking institution may request from the superintendent approval of an alternative method of producing images which is at least as effective in meeting this objective as the measures set forth in this regulation.

3 CRR-NY 301.6 Report of compliance {#sec-3-crr-ny-301.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.6}

The semi-annual report of compliance required to be filed pursuant to the provisions of section 75-g of the Banking Law shall be filed with the Department of Financial Services no later than the 15th day of January and July of each year or the following business day if that day is not a business day. This report shall be certified, under the penalties of perjury, and shall be on a form prescribed by the superintendent.

3 CRR-NY 301.7 Variances and exemptions {#sec-3-crr-ny-301.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.7}

A banking institution which requests a variance or exemption from the requirements of article II-AA shall make such request in writing. All such requests will be considered on a case-by-case basis and must comply with each of the specific documentary requirements of the provisions of section 75-m of the Banking Law.

3 CRR-NY 301.8 Documentation {#sec-3-crr-ny-301.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 301.8}

All documentation required to be sent to the department under article II-A and this Part shall be sent to the New York State Department of Financial Services, Criminal Investigations Bureau at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

Part 303 PUBLICATION OF ANNUAL FINANCIAL STATEMENTS BY MUTUAL SAVINGS BANKS AND MUTUAL SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY 303.1 General {#sec-3-crr-ny-303.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 303.1}

On or prior to the 60th day after the end of each fiscal year, each mutual savings bank and mutual savings and loan association shall prepare a complete statement of its financial condition and of its income and expense as of the end of such year, in conformity with generally accepted accounting principles. The statements may also include such additional information as the institution may wish to provide its depositors.

3 CRR-NY 303.2 Publication {#sec-3-crr-ny-303.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 303.2}

In addition to making copies of such statements available to depositors and other persons in a convenient and conspicuous location on the premises of each of its authorized places of business, other than electronic facilities, each mutual savings bank and mutual savings and loan association shall mail a copy of the statement of its financial condition and of its income and expense, to each depositor who requests it.

3 CRR-NY 303.3 Remuneration of management {#sec-3-crr-ny-303.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 303.3}

Upon written request by a depositor or other person, the department shall furnish such depositor or other person with the following information with respect to the remuneration paid or to be paid to the three highest paid officers and the fees paid to the trustees or directors of the mutual organization:

(a) the name of each of the three highest paid officers, the title of the office held thereby, the salary (including deferred compensation) paid or to be paid to each such officer for the period covered by the statement, and the total annuities, pension or retirement benefit paid or proposed to be paid to such officer, either directly or indirectly, under any existing plan in the event of retirement at normal retirement date;

(b) the fee paid a trustee or director for attendance at a board or committee meeting, specifying the various committees; and

(d) A fee in the amount specified in section 1.2 of Supervisory Policy G 1 of this Title is required for each institution for which information is requested.

Part 305 COMPOSITION OF BOARDS OF DIRECTORS OF BANKS AND TRUST COMPANIES

3 CRR-NY 305.1 Explanatory note {#sec-3-crr-ny-305.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 305.1}

Section 7001(4) of the Banking Law authorizes the superintendent to adopt a regulation which establishes the amount of capital stock, surplus and undivided profits above which a bank or trust company may not have more than one third of its directors as active officers or employees. Any officer or employee serving as a director at the time this regulation takes effect or at the time the total capital stock, surplus and undivided profit of an institution rises above the threshold contained herewith, may continue to serve as a director until the expiration of the term for which such person was elected.

3 CRR-NY 305.2 Definition {#sec-3-crr-ny-305.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 305.2}

For the purpose of this Part, capital notes and debentures shall be counted as capital stock. Undivided profits are defined by Supervisory Procedure CB 120.

3 CRR-NY 305.3 Superintendent's determination {#sec-3-crr-ny-305.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 305.3}

(a) No more than one third of the entire board of directors of any bank or trust company with capital stock, surplus fund and undivided profits (as shown on the most recent call report of condition filed with the superintendent) in excess of $50,000,000 shall be active officers or employees of such institution.

(b) No more than one half of the entire board of directors of any bank or trust company with capital stock, surplus fund and undivided profits in excess of $7,500,000, but less than $50,000,000 shall be active officers or employees of such institution.

(c) Any bank or trust company with capital stock, surplus fund and undivided profits in excess of $7,500,000, but less than $50,000,000, with more than one half of its board as active officers or directors at the time this regulation takes effect, shall have until its 1988 annual meeting to comply with this threshold.

Part 306 CORPORATE GOVERNANCE VACANCIES ON THE BOARD OF DIRECTORS

3 CRR-NY 306.1 Explanatory note regarding vacancies on the board of directors {#sec-3-crr-ny-306.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 306.1}

(a) Subdivision 1 paragraph (b) of section 7005 of the Banking Law authorizes the superintendent to adopt a regulation which establishes the circumstances under which vacancies on the board of directors of a bank, trust company, stock-form savings bank, and stock-form savings and loan association may be left unfilled until the next annual election by the stockholders.

3 CRR-NY 306.2 Maximum number of vacancies on the board of directors that may be left unfilled {#sec-3-crr-ny-306.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 306.2}

(a) Unless the superintendent, in his/her discretion provides otherwise, an institution described in section 306.1 of this Part is permitted to have vacancies of up to one-third of its entire board of directors left unfilled until the next annual election by the stockholders provided that the institution:

(1) is well capitalized (within the meaning of title 12, Code of Federal Regulations* section 325.103[b][1]);

(2) is well managed (within the meaning of title 12, Code of Federal Regulations* section 362.17[e]). Any non-depository institution will be considered well managed if it is in satisfactory condition as determined upon examination by the superintendent. In the case of an institution that has not been examined by the superintendent, such institution will be considered well managed upon a finding by the superintendent of managerial resources that the superintendent determines satisfactory; and

(3) has been in existence for more than five years.

(b) Unless the superintendent, in his/her discretion provides otherwise, an institution described in section 306.1 of this Part is permitted to have vacancies of up to one-tenth of its entire board of directors left unfilled until the next annual election by the stockholders, or where a board of directors is comprised of less than ten members, no more than one vacancy on the board may be left unfilled until the next annual election by the stockholders provided that the institution:

(1) is adequately capitalized (within the meaning of title 12, Code of Federal Regulations* section 325.103[b][2]);

(3) has been in existence for more than five years.

(a) Subdivision 3 of section 7008 of the Banking Law authorizes the superintendent to adopt a regulation which establishes the circumstances under which any action, authorized by the organization certificate or the by-laws to be taken at a meeting of the board of directors of a bank, trust company, safe deposit company, investment company, mutual trust investment company, stock-form savings bank or stock-form savings and loan association may be taken without a meeting, provided that all members of the board consent thereto in writing and the resolution and written consents thereto are filed with the minutes of the proceedings of the board. Subdivision 3 of section 7008 of the Banking Law does not govern meetings of committees of such board of directors. Pursuant to section 7012 of the Banking Law, the conduct of committees of such a board is governed by board resolution, organization certificate, or by-laws, except as specified by section 7012. Action taken by unanimous written consent pursuant to section 307.2 of this Part shall not be considered a "meeting" for purposes of section 6.6 of this Title.

3 CRR-NY 307.2 Prerequisite requirements {#sec-3-crr-ny-307.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 307.2}

Unless the superintendent in his/her discretion provides otherwise, an institution described in section 307.1 of this Part shall be eligible to have its board of directors take actions authorized by its organization certificate or by-laws by unanimous written consent except as specified in section 307.3 of this Part, provided that the institution:

(a) is well capitalized (within the meaning of title 12, Code of Federal Regulations* section 325.103[b][1]);

(b) is well managed (within the meaning of title 12, Code of Federal Regulations* section 362.17[e]). Any non-depository institution will be considered well managed if it is in satisfactory condition as determined upon examination by the superintendent. In the case of an institution that has not been examined by the superintendent, such institution will be considered well managed upon a finding by the superintendent of managerial resources that the superintendent determines satisfactory; and

Although an institution may satisfy the prerequisite requirements specified in section 307.2 of this Part, it is prohibited from taking action by unanimous written consent of the board of directors in any of the following circumstances, unless the superintendent in his/her discretion provides otherwise:

(a) adopting or amending any policies required by any bank regulatory agency to be approved by the board of directors;

(b) submitting to the stockholders any action that requires stockholders' authorization under the Banking Law;

(d) removing any director or filling any vacancy in the board of directors, or removing any member of a committee thereof or filling any vacancy in such a committee;

(e) fixing compensation of the directors for serving on the board or on any committee thereof;

(f) selecting or removing any of the following executive officers or the equivalent thereof; chairman of the board, chief executive officer, president, chief financial officer, chief operating officer, chief risk officer, or a member of the management committee;

(g) causing or permitting any change in the general character of the institution's business or in the scope of its corporate powers;

(h) conveying any communication from the department that is required to be presented to the board of directors, pursuant to Banking Law section 11.4, or that is required to be presented to the board of directors by any other bank regulatory agency; or

(i) the taking of any action which is expressly required by any provision of the Banking Law to be taken at a meeting of the board of directors or by a specified proportion of the directors at a board meeting.

Part 321 LOANS TO EXECUTIVE OFFICERS AND DIRECTORS OF BANKS AND BANK HOLDING COMPANIES

3 CRR-NY 321.1 Definitions {#sec-3-crr-ny-321.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.1}

(a) The term bank when used in this Part, unless a different meaning appears from the context, means a bank or a trust company, a stock-form savings bank or a stock-form savings and loan association.

(b) The term executive officer means every officer who participates or has authority to participate, otherwise than in the capacity of a director, in major policy-making functions of the bank, regardless of whether he or she has an official title or whether such title contains a designation of assistant and regardless of whether he or she is serving without salary or other compensation, provided that the chairman of the board of directors, the president, every vice president, the cashier, the secretary and the treasurer are assumed to be executive officers, unless, by resolution of the board of directors or by the bylaws of the bank, any such officer is excluded from participation in major policy-making functions, otherwise than in the capacity of a director of the bank, and he or she does not actually participate therein.

3 CRR-NY 321.2 General provisions {#sec-3-crr-ny-321.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.2}

(a) Except as provided in subdivision (b) of this section, each of the following shall be considered to be a loan to, extension of credit to or indebtedness of an executive officer or director of a bank under the provisions of Banking Law, sections 103(8), 130(5) and 130(6):

(1) any transaction as a result of which an executive officer or director of a bank becomes obligated, or renews his obligation, to such bank upon any note, draft, bill of exchange or other indebtedness, as maker, drawer, endorser, guarantor, surety or otherwise;

(2) any transaction as a result of which a corporation, in which such executive officer or director, or any combination of such persons, owns or controls a majority of the stock, or as a result of which a partnership in which an executive officer or director is a partner, becomes obligated, or renews its obligation, to such bank upon any note, draft, bill of exchange or other indebtedness, as maker, drawer, endorser, guarantor, surety or otherwise;

(3) any advance by means of an overdraft; and

(4) any issuance of a standby letter of credit.

(b) None of the following shall be considered to be a loan to, extension of credit to or indebtedness of an executive officer or director of a bank, under the provisions of Banking Law, sections 103(8), 130(5) and 130(6):

(1) an advance against accrued salary or other accrued compensation;

(2) an advance of unearned salary or other unearned compensation, provided the salary or other compensation so advanced is to become due and payable not more than 30 days from the date of such advance;

(3) an advance to provide for the payment of authorized travel or other expenses incurred or to be incurred on behalf of the bank;

(4) the acquisition by the bank of any check deposited in or delivered to the bank in the usual course of business, unless it results in the carrying of a cash item for or the granting of an overdraft (other than an inadvertent overdraft in a nominal amount that is promptly repaid) to:

(i) an executive officer or director of the bank;

(ii) a corporation in which such executive officer or director, or any combination of such persons, owns or controls a majority of the stock; or

(iii) a partnership in which such executive officer or director is a partner;

(5) the acquisition of any note, draft, bill of exchange or other evidence of indebtedness:

(i) through a merger or consolidation of the bank with another bank or banking institution or a similar transaction by which the bank acquires assets and assumes liabilities of another bank or banking institution, or

(ii) through foreclosure on collateral or similar proceeding for the protection of the bank;

(6) an advance made pursuant to an agreement evidencing a credit card, check credit or similar plan, whereby the bank is committed to extend credit up to a specified maximum amount, provided:

(i) the aggregate unpaid principal amount of all such advances by such bank to any person at any time outstanding shall not exceed $25,000; and

(ii) the advance is made in compliance with section 321.3(a)(1)-(2) of this Part; nor

(7) (i) an endorsement or guarantee for the protection of a bank of any loan or other asset previously acquired by the bank in good faith; or

(ii) any indebtedness to a bank for the purpose of protecting the bank against loss or of giving financial assistance to it.

3 CRR-NY 321.3 Loans to executive officers and directors {#sec-3-crr-ny-321.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.3}

(a) A bank may not make a loan to an executive officer or director unless the loan:

(1) is made on terms, including interest rate and collateral, that are not more favorable to the executive officer or director than those customarily offered by the bank to persons who are not executive officers or directors and who are not employed by the bank; and

(2) does not involve more than the normal risk of repayment or present other unfavorable features.

(b) Exception.

Nothing in subdivision (a) of this section shall prohibit any extension of credit made pursuant to a benefit or compensation program:

(1) that is widely available to employees of the bank; and

(2) does not give preference to any executive officer of director of the bank over other employees of the bank.

A bank may not make a loan to any of its executive officers or directors in an amount that, when aggregated with the unpaid principal amount of all other loans to that person, exceeds the higher of $25,000 or five percent of the bank's capital stock, surplus fund and undivided profits, unless:

(1) the loan has been approved in advance by a majority of the entire board of directors of that bank; and

(2) the interested party has abstained from participating directly or indirectly in the voting.

In no event may a bank make a loan to any one of its executive officers or directors in an amount that, when aggregated with all other loans to that person, exceeds $500,000, except by complying with the requirements of this subdivision.

(d) Approval by the board of directors under subdivision (c) of this section is not required for an extension of credit that is made pursuant to a line of credit that was approved under subdivision (b) of this section within 14 months of the date of the extension of credit. The extension of credit must also be in compliance with the requirements of subdivision (a) of this section.

3 CRR-NY 321.4 Additional restrictions on loans to executive officers {#sec-3-crr-ny-321.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.4}

(a) A bank is authorized to make a loan to any executive officer of the bank:

(1) in any amount to finance the education of the executive officer's children;

(2) in any amount to finance or refinance the purchase, construction, maintenance or improvement of a residence of the executive officer if:

(i) the loan is secured by a first lien on the residence and the residence is owned (or expected to be owned) by the executive officer; and

(ii) in the case of a refinancing, that only the amount thereof used to repay the original extension of credit, together with the closing costs of the refinancing, and any additional amount thereof used for any of the purposes enumerated in this paragraph, are included within this category of credit;

(3) in any amount, if the extension of credit is secured by:

(i) a perfected security interest in bonds, notes, certificates of indebtedness, or treasury bills of the United States or in other such obligations fully guaranteed as to principal and interest by the United States; or

(ii) unconditional takeout commitments or guarantees of any department, agency, bureau, board, commission or establishment of the United States or any corporation wholly owned directly or indirectly by the United States;

(iii) a perfected security interest in a segregated deposit account in the lending bank;

(4) for any other purpose not specified in paragraphs (1) through (3) of this subdivision, if the aggregate amount of loans to that executive officer under this paragraph does not exceed at any one time the higher of 2.5 percent of the bank's capital stock, surplus fund and undivided profits, or $25,000, but in no event more than $100,000.

(b) Any loan by a bank to any of its executive officers shall be:

(1) promptly reported to the board of directors;

(2) made in compliance with the requirements of section 321.3 of this Part; and

(3) preceded by the submission of a detailed current financial statement of the executive officer.

(c) For purposes herein, a residence shall include a cooperative apartment, provided the loan is secured by certificates of stock evidencing an ownership interest in the apartment together with an assignment of the proprietary lease.

3 CRR-NY 321.5 Reports of executive officers' indebtedness to other banks {#sec-3-crr-ny-321.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.5}

Every executive officer of a bank who becomes indebted to any domestic or foreign banking corporation other than the bank of which he or she is an executive officer or becomes indebted to any banking institution organized under the laws of the United States, in an aggregate amount greater than the amount specified for a category of credit in section 321.4 of this Part shall, within 10 calendar days of the date the indebtedness reaches such a level, make a written report to the board of directors of the bank of which he or she is an executive officer, stating the date and the amount of such loan or indebtedness and the security therefor. The reporting requirement may be satisfied by making the report to the secretary of the board within the allotted time and the subsequent presentation of the report to the board at its next scheduled meeting.

3 CRR-NY 321.6 Annual financial statements of directors {#sec-3-crr-ny-321.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.6}

Every director of a bank who is obligated on any loan or extension of credit made by such bank to such director or to any other individual, partnership or unincorporated association or corporation, shall file a statement of his or her financial condition with such bank at least once in each year and at such other times as the superintendent may require. This section shall not apply to directors whose obligations are secured by collateral having an ascertained market value of at least 15 percent more than the amount of such obligations.

3 CRR-NY 321.7 Loans to executive officers and directors of bank holding companies {#sec-3-crr-ny-321.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.7}

(a) The provisions of sections 321.1(b), 321.2, 321.3 and 321.4 of this Part shall apply to any loan made by a bank subsidiary of a bank holding company to an executive officer or director of the bank holding company.

(b) The provisions of section 321.6 of this Part shall apply to any director of a bank holding company who becomes obligated on any loan or extension of credit to any banking subsidiary of a bank holding company.

3 CRR-NY 321.8 Limitations on certain loans to executive officers and directors of stock-form savings banks and savings and loan associations {#sec-3-crr-ny-321.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.8}

A stock-form savings bank or a stock-form savings and loan association may not make a loan secured by an interest in improved or unimproved real property to its executive officer or director if the amount of that loan, aggregated with the amount of all such other loans to that executive officer or director exceeds 15 percent of the bank's capital, surplus account and undivided profits.

3 CRR-NY 321.9 Compliance with Federal regulation {#sec-3-crr-ny-321.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 321.9}

Banking organizations that comply with regulation O of the Board of Governors of the Federal Reserve System (12 CFR part 215) shall be deemed to be in compliance with this Part. In addition to complying with regulation O, such banking organizations shall remain subject to section 321.6 or 321.7 of this Part, as the case may be.

Part 322 PLEDGE OF ASSETS AND MAINTENANCE OF ASSETS BY LICENSED FOREIGN BANKING CORPORATIONS IN NEW YORK

3 CRR-NY 322.1 Deposit of assets; amount of assets to be deposited {#sec-3-crr-ny-322.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.1}

(a) Upon opening a branch or branches or agency or agencies in this State and at all times thereafter, except in the instance where the deposit accounts at a branch or branches of a foreign banking corporation are insured by the Federal Deposit Insurance Corporation, each foreign banking corporation shall keep assets on deposit in accordance with Part 51 of this Title ("assets"), in an amount, based upon the lower of principal amount or fair (market) value, equal to the greater of:

(1) one percent of average total liabilities for the previous month of such branch or branches or agency or agencies, including liabilities of an international banking facility maintained by such branch or branches or agency or agencies, but excluding amounts due and other liabilities to other offices, agencies, branches and affiliates as defined in section 322.6 of this Part, of such foreign banking corporation; or

(2) $2 million.

(b) A foreign banking corporation opening its initial branch or agency shall deposit assets based upon the branch's or agency's projection of total liabilities at the end of its first year of operation.

(c) For purposes of paragraph (a)(1) of this section, liabilities arising from "qualified financial contracts" as that term is defined in section 618-a.2(e) of the Banking Law, may be excluded from the calculation of total liabilities to the extent such liabilities are secured by collateral within the meaning of section 618-a.2(d) of the Banking Law, unless a branch or agency has been notified otherwise by the superintendent.

(d) For purposes of paragraph (a)(1) of this section, except as otherwise provided in this Part, calculation of liabilities shall be in accordance with the instructions in the FFIEC 002 Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (call report).

(e) For purposes of paragraph (a)(1) of this section, the asset pledge calculation shall be on the same basis on which quarterly averages are calculated for call report purposes (currently, the average of liabilities subject to asset pledge as of the close of business on each Wednesday during the previous month). The pledged assets, as well as the asset pledge report required under section 322.5(c) of this Part, shall be due on the fifth business day immediately following the end of the monthly period for which the calculation is made.

(f) For a well-rated foreign banking corporation as defined in section 322.7 of this Part, the maximum amount required to be deposited pursuant to paragraph (a)(1) of this section shall be, calculated according to the following schedule, as a percentage of average total liabilities for the previous month of such branch or branches or agency or agencies, including liabilities of an international banking facility maintained by such branch or branches or agency or agencies, but excluding amounts due and other liabilities to other offices, agencies, branches and affiliates as defined in section 322.6 of this Part, of such foreign banking corporations:

(1) one percent of the first $1 billion;

(2) three quarters of one percent of the next $4 billion;

(3) one half of one percent of the next $5 billion;

(4) one quarter of one percent of any additional liabilities;

(5) provided, however, that in no event shall the maximum amount required to be deposited hereunder exceed $100,000,000.

3 CRR-NY 322.2 Assets that may be deposited; conditions and limitations {#sec-3-crr-ny-322.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.2}

(a) The following categories of assets are eligible for pledge, to the extent they are included on the superintendent's asset pledge list (APL). The APL will be made available to the public by the department and posted on the department's website.

(1) Specified assets. Obligations specified in Banking Law section 202-b(1) (the specified assets).

(2) Permitted assets. Assets permitted as eligible for pledge (the permitted assets) shall include:

(i) commercial paper, provided such paper is accorded the highest rating of a rating service designated by the superintendent pursuant to section 61.1 of this Title. In the event that an issue of commercial paper is rated by more than one designated rating service, it must have the highest rating of each;

(ii) negotiable certificates of deposit issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation; and

(iii) bankers' acceptances issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation.

(3) Additional assets. Additional assets that may be included on the superintendent's APL (the additional assets).

Under special circumstances, the superintendent may approve otherwise ineligible assets upon written application by the foreign banking corporation.

(b) Unless the superintendent specifically permits otherwise, the following conditions and limitations shall apply to the asset pledge:

(1) All assets must be payable in the United States in United States' dollars.

(2) Additional assets may not comprise more than 50 percent of the foreign banking corporation's total asset pledge requirement.

(3) For all foreign banking corporations, additional assets may include assets that have been accorded an investment grade rating of a rating service designated by the superintendent pursuant to section 61.1 of this Title. In the event that an asset is rated by more than one designated rating service, it must have received at least an investment grade rating from each.

(4) No foreign banking corporation may pledge any obligations issued or guaranteed by an entity located or domiciled in, or any governmental entity of, the home country of such foreign banking corporation (same-country obligor).

(5) With respect to any asset, the superintendent may determine that, for purposes of this Part, such asset shall be valued at other than face value, or shall be held in such form or subject to such conditions as the superintendent may prescribe. The superintendent may expressly disallow one or more otherwise eligible assets, either for all institutions or for specific institutions. All assets shall be subject to any additional conditions or limitations as determined by the superintendent with respect to such assets.

3 CRR-NY 322.3 Eligible assets {#sec-3-crr-ny-322.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.3}

For the purpose of section 202-b(2) of the Banking Law and Part 52 of this Title, the term eligible assets shall include any assets (reduced by the amount of any specifically allocated reserves established on the books in connection with such assets) held in this State and recorded on the general ledger of a licensed branch or agency of the foreign banking corporation, subject, however, to the following adjustments and situations:

(a) Marketable debt securities shall be allowed at their principal amount or market value, whichever is lower.

(b) Restructured foreign debt bonds backed by United States Treasury obligations (commonly known as “Brady Bonds”), whether carried on the books of the branch or agency as loans or securities, shall be allowed at their book value or market value, whichever is lower.

(d) The balance from time to time of any assets classified loss, doubtful or substandard at the preceding examination by the superintendent, any other regulatory agency, outside accountants or the bank's internal loan review staff, shall be ineligible to the extent of 100 percent, 50 percent and 20 percent, respectively. Assets classified value impaired shall be ineligible to the extent of 100 percent of the amount of allocated transfer risk reserve which would be required for such exposure at a domestically chartered bank and 20 percent of any residual exposure. For assets classified at the preceding examination by the superintendent or any other regulatory agency, if the deficiency or defect giving rise to the classification shall be removed subsequent to the examination, the department, will, upon written request supported by appropriate documentation, reconsider the classification.

(e) Accrued income on assets classified loss, doubtful, substandard or value impaired shall be ineligible.

(f) The balance from time to time of any other asset or asset category disallowed at the preceding examination or by direction of the superintendent for any other reason shall be treated as ineligible until the underlying reasons for the disallowance have been removed.

(g) All amounts due from the home office, other offices and affiliates as defined in section 322.6 of this Part, including income accrued but uncollected on such amounts, shall be ineligible, except that upon a letter application to the department and the superintendent's prior approval, all amounts due from other offices located within the United States shall be considered eligible. Approval shall be based in part upon the report of examination submitted pursuant to section 36 of the Banking Law and the letter application shall constitute correspondence which concerns such examination for purposes of section 36(10) of the Banking Law.

(h) Precious metals shall be considered eligible to the extent of 75 percent of the market value.

(i) Prepaid expenses and unamortized costs, furniture and fixtures and leasehold improvements shall be ineligible.

(j) Real estate located in New York and carried on the accounting records as an asset shall be considered eligible at net book value or appraised value, whichever is less.

3 CRR-NY 322.4 Liabilities requiring cover {#sec-3-crr-ny-322.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.4}

For the purposes of this Part and Part 52 of this Title, liabilities requiring cover shall include all liabilities of a foreign banking corporation appearing in the books, accounts and records of its agency, agencies, branch or branches in this State as liabilities of such agency, agencies, branch or branches, including acceptances and such other liabilities (including contingent liabilities) as the superintendent shall determine, but excluding the following:

(a) amounts due and other liabilities to other offices, agencies, branches and affiliates as defined in section 322.6 of this Part of such foreign banking corporation, including unremitted profits; and

(b) reserves for possible loan losses and other contingencies.

3 CRR-NY 322.5 Record of assets and liabilities {#sec-3-crr-ny-322.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.5}

(a) Except as provided in subdivision (c) of this section, every foreign banking corporation licensed to maintain one or more agencies or branches in this State shall maintain a record of the liabilities of the foreign banking corporation appearing in the books, accounts and records of its agency, agencies, branch or branches in this State as liabilities of such agency, agencies, branch or branches as of the close of business on each Wednesday as determined in accordance with section 202-b(2) of the Banking Law and section 322.4 of this Part (liabilities requiring cover) and the assets as determined in accordance with section 202-b(2) of the Banking Law and section 322.3 of this Part (eligible assets). The record shall be written in ink or maintained in other permanent legible form and be retained until the conclusion of the next examination of the agency or branch by the department. A foreign banking corporation authorized to maintain more than one agency or branch in this State shall maintain the record on a consolidated basis. In the event that such corporation is authorized to maintain both insured and uninsured branches, a separate record may be maintained for each such category. No specific format for the record is prescribed. It shall, however, contain such information in sufficient detail as will permit ready verification of its accuracy.

(b) Each foreign banking corporation licensed to maintain one or more branches or agencies in this State shall maintain, in addition to the record required to be maintained by subdivision (a) of this section, an itemized record of assets deposited for the account of the superintendent pursuant to section 202-b(1) of the Banking Law and section 322.1 of this Part. The record shall include the value of assets deposited, at principal or fair (market) value, whichever is lower.

(c) Each foreign banking corporation licensed to maintain one or more branches or agencies in this State shall, in a form and at an interval to be prescribed by the superintendent, prepare a report showing the assets deposited pursuant to section 202-b(1) of the Banking Law and section 322.1 of this Part and, except for those well-rated foreign banking corporations eligible for and having on deposit eligible assets at least in the amount of the cap provided in section 322.1(f) of this Part, the calculation of the pledge required under section 322.1 of this Part.

(d) The records required to be maintained by subdivisions (a) and (b) and the report required by subdivision (c) of this section shall be authenticated by the signature of a duly authorized officer of the agency or branch.

3 CRR-NY 322.6 Definition of affiliate {#sec-3-crr-ny-322.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.6}

For purposes of this Part:

(a) Affiliate means any person, or group of persons acting in concert, that controls, is controlled by or is under common control with such foreign banking corporation.

(b) Control means any person, or group of persons acting in concert, directly or indirectly:

(1) owning, controlling or holding with power to vote, more than 50 percent of the voting stock of a company;

(2) having the ability in any manner to elect a majority of the directors of a company; or

(3) otherwise exercising a controlling influence over the management and policies of a company.

(c) A controlling influence shall be presumed to exist when any person, or group of persons acting in concert, directly or indirectly:

(1) is a general partner of the company;

(2) has the power to direct the management or policies of the company; or

(3) owns, controls or holds with power to vote, 25 percent or more of the voting stock or 40 percent or more of any class of stock of the company and is subject to one of the control factors in subparagraphs (i) through (viii) of this paragraph:

(i) is one of the two largest holders of any class of voting stock of the company;

(ii) holds more than 50 percent of the total shareholders' equity of the company;

(iii) holds more than 75 percent of the combined debt securities and stockholders' equity of the company;

(iv) is a party to any agreement pursuant to which it possesses a material economic stake in the company resulting from a profit-sharing arrangement, use of common names, facilities or personnel, or the provision of essential services to the company;

(v) would have the ability, other than through the holding of revocable proxies, to direct the vote of 50 percent or more of any class of the company's voting stock or to vote 50 percent or more of a class of voting stock in the future upon the occurrence of a future event;

(vi) has the power to direct the disposition of 50 percent or more of any class of the company's voting stock in a manner other than a widely dispersed or public offering;

(vii) would constitute or designate its representative or nominee as more than one member of the company's board of directors; or

(viii) would serve or designate its representative or nominee to serve as the chairman of the board of directors, chairman of the executive committee, chief executive officer, chief operating officer, chief financial officer, or in any position with similar policymaking authority in the company.

(d) For purposes of this definition, the term person shall mean a corporation, unincorporated association, partnership, or any other entity or individual. The term company includes the foreign banking corporation.

3 CRR-NY 322.7 Definition of well-rated foreign banking corporation {#sec-3-crr-ny-322.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 322.7}

(a) For purposes of this Part, well-rated foreign banking corporation means a foreign banking corporation designated as such by the superintendent. Such an institution must be considered by the superintendent generally to be well-capitalized and well-managed. The superintendent will consider the following factors, among others, in making such determination:

(1) whether the parent foreign bank on a consolidated basis maintains a well-capitalized position (currently, tier 1 and total risk-based capital ratios of 6 and 10 percent, respectively, as calculated in accordance with standards set by the Basel Committee on Banking Supervision);

(2) the strength of support assessment (SOSA) rating issued by the Federal banking agencies;

(3) the composite rating for the foreign banking corporation's New York office or offices (such rating should be no lower than a "2"); and

(4) whether there are any formal supervisory, regulatory, or enforcement actions outstanding against the New York office or offices.

(b) A well-rated foreign banking corporation shall promptly inform the superintendent if it becomes aware of the existence of any fact that could cause its loss of status as "well-rated." The superintendent will also notify the foreign banking corporation of its loss of status as a well-rated institution when such determination is made. Upon a foreign banking corporation being informed by the superintendent that it is no longer deemed "well-rated" for purposes of this Part, the foreign banking corporation shall have 30 days to comply with the requirements of this Part applicable to those institutions not designated as "well-rated," unless otherwise directed by the superintendent.

Part 323 ACCEPTANCE OF DEPOSITS FROM NONCITIZENS AND NON-U.S. RESIDENTS BY LICENSED AGENCIES OF FOREIGN BANKING CORPORATIONS

3 CRR-NY 323.1 Explanation {#sec-3-crr-ny-323.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 323.1}

Section 202-a(1)(c) of the Banking Law permits a licensed agency of a foreign banking corporation to accept deposits other than from citizens or residents of the United States as the superintendent shall define. The purpose of this Part is to define the term residents of the United States as used therein, and to provide for appropriate disclosures as to the uninsured status of such deposits. Unlike large-denomination obligations which may be issued to corporations and other business entities pursuant to section 202-a(1)(b) of the Banking Law and Part 81 of this Title, the deposits which may be taken pursuant to the terms of this Part 323 may be in amounts of less than $100,000 and may be taken from natural persons as well.

3 CRR-NY 323.2 Definition {#sec-3-crr-ny-323.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 323.2}

For purposes of section 202-a(1)(c) of the Banking Law, the term resident of the United States shall mean:

(a) any individual residing in the United States;

(b) any corporation, partnership, association or other entity organized in the United States; or

3 CRR-NY 323.3 Notification that deposits are uninsured {#sec-3-crr-ny-323.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 323.3}

At or prior to the time a licensed agency of a foreign bank shall open any deposit account under $100,000 for a depositor not a citizen or resident of the United States, pursuant to section 202-a(1)(c) of the Banking Law, and this Part, it shall notify the depositor that the agency's deposits are not insured by the FDIC. Such notification shall be in writing and shall appear in a conspicuous place on the signature card or other related documentation pertaining to the opening of the account.

Part 324 REPORTS TO DIRECTORS AND TRUSTEES

3 CRR-NY 324.1 Purpose {#sec-3-crr-ny-324.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 324.1}

Sections 121 and 252 of the Banking Law provide for a monthly report to the board of directors or the executive committee of such board of each bank, trust company or savings bank containing certain information as listed by the statute except as otherwise provided by the superintendent by regulation. This Part establishes the requirements as to the minimum content of such monthly report. Nothing in this Part shall be deemed to imply that the responsibility of management to keep its directors informed in the areas of loans and investments will be met solely through the fulfillment of these reporting requirements. It is emphasized that it remains the responsibility of management to keep directors informed of any important developments in these areas, and directors continue to have the responsibility to keep so informed.

3 CRR-NY 324.2 Definitions {#sec-3-crr-ny-324.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 324.2}

For the purpose of this Part:

(a) The term capital funds shall mean the total of the combined capital stock (including capital notes and debentures authorized under section 27.1 of this Title), surplus fund and undivided profits (as defined by Supervisory Procedure CB 120) of a bank, trust company or stock-form savings bank. In the case of a mutual savings bank the term capital funds shall mean the net worth (as defined in sections 234[5] and 244[4] of the Banking Law).

(b) The term loan shall include all discounts, loans or other advances and such other extensions of credit, including certain letters of credit, as are considered to be loans for the purpose of section 103(1) of the Banking Law.

(c) The term obligations of the U.S. Government shall mean all securities issued by or unconditionally guaranteed in full as to principal and interest by the U.S. Government or any agency of the U.S. Government.

(d) The term classified loans shall mean all loans adversely classified in the most recent State or Federal report of examination, including those loans classified under the Statistical Sampling and Shared National Credit programs, and all loans adversely classified at the most recent Directors' Examination conducted pursuant to sections 122 and 123 or 254 of the Banking Law.

(e) The term Federal funds shall have the same meaning as given in section 103(1)(h) of the Banking Law.

(f) The term broker/dealer shall have the same meaning as that contained in section 224.5(C) of Federal Reserve Board Regulation X.

(g) The terms director, directors and board of directors shall, in the case of mutual savings banks, refer to trustees and boards of trustees thereof.

3 CRR-NY 324.3 General provisions {#sec-3-crr-ny-324.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 324.3}

The monthly report to the board of directors shall contain a written report of the following transactions which have taken place since the date of the last preceding similar report:

(a)

(1) Any purchase of the securities of any one issuer (except those which are obligations of the U.S. Government) if it, by itself or together with any previously unreported purchases, brings the total holdings of securities of that issuer to an amount equal to, or in excess of, 2½ percent of capital funds.

(2) Any increase to a securities holding previously reported (except those which are obligations of the U.S. Government) if it, together with any other increases since the item was last reported, is in an amount equal to, or in excess of, one percent of capital funds. However, increases need not be reported if the total holdings of securities of that issuer during the period since the last similar report was prepared did not equal or exceed 2½ percent of capital funds.

(b) The maximum overnight advance of Federal funds to any single obligor if this amount equals or exceeds five percent of capital funds.

(c) Any renewal, increase, or new loan, including the maximum overdraft, made to an entity with a classified loan if it, together with any other renewals, increases, or new loans since the item was last reported, is equal to, or in excess of, 1/10 of 1 percent of capital funds. However, these items need not be reported if the total loan to that entity is not equal to, or in excess of, 1/2 of 1 percent of capital funds.

(d)

(1) Every other loan made or renewed, together with the maximum overdraft, if it, by itself or together with any other previously unreported loans; brings the aggregate loan to any one entity to an amount equal to, or in excess of, 2½ percent of capital funds. In the case of loans to broker/dealers which are fully secured by readily marketable securities only the maximum amount outstanding during the period need be reported.

(2) Any increase to a loan previously reported if it, together with any other increases since the item was last reported, is in an amount equal to, or in excess of, one percent of capital funds. However, increases need not be reported if the total amount outstanding during the period since the last similar report was prepared did not exceed 2½ percent of capital funds. The aggregate loan to any one entity shall be computed as provided in section 103(1)(e) of the Banking Law.

(e) Securities holdings of, and loans to the same entity, must be aggregated for the purpose of the thresholds set under subdivisions (a), (c) and (d) of this section.

Part 325 NONACCRUAL OF INTEREST

3 CRR-NY 325.1 Explanatory note {#sec-3-crr-ny-325.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 325.1}

(a) Section 109(2)(a) of the Banking Law prohibits a bank or trust company from accruing interest on interest-bearing assets upon which a default of principal or interest has existed for a period which shall be determined by the superintendent, unless such assets are fully secured as to both principal and interest.

(b) Section 244(1)(b) of the Banking Law permits the superintendent to direct that certain portions of interest accrued but uncollected by a savings bank be excluded from income.

(c) Section 386(1)(a) of the Banking Law prohibits a savings and loan association from accruing interest upon any asset upon which a default exists. For the purpose of this section of the Banking Law, a default is deemed to exist when payment of principal or interest is 90 days or more past due and the asset is not fully secured as to both principal and interest.

3 CRR-NY 325.2 Nonaccrual threshold {#sec-3-crr-ny-325.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 325.2}

(a) For the purpose of section 109(2)(a) of the Banking Law, the period of time beyond which a bank or trust company must not accrue interest upon a defaulted asset will be 90 days, except as noted in section 325.3 of this Part.

(b) For the purpose of sections 244(1)(b) and 386(1)(a) of the Banking Law, savings banks and savings and loan associations, respectively, will be subject to the same rules as banks and trust companies regarding the nonaccrual of interest.

3 CRR-NY 325.3 Policy {#sec-3-crr-ny-325.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 325.3}

(a) A debt will be considered fully secured for the purpose of this section if it is secured:

(1) by collateral in the form of liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt (including accrued interest) in full; or

(2) by the guaranty of a financially responsible party.

(b) Loans which reach nonaccrual status may not be restored to accruing status until all delinquent principal and/or interest has been brought current, or the loan becomes fully secured as to both principal and interest. Notwithstanding the foregoing, a loan may be restored to accrual status in accordance with applicable regulatory accounting principles.

(c) The date on which a loan reaches nonaccrual status is determined by the contractual terms of the loan. If a loan reaches nonaccrual status on a date which falls between the dates on which the bank or trust company closes its books, it remains on nonaccrual status until it meets the criteria for restoration to accruing status.

(d) Consumer loans and loans secured by one- to four-family residential properties, on which principal or interest is due and unpaid for 90 days or more, are not required to be placed in nonaccrual status. Such loans should, however, be subject to other alternative methods of evaluation to assure that the institution's net income is not materially overstated.

(e) The reversal of previously accrued but uncollected interest applicable to any asset placed in nonaccrual status, and the treatment of any subsequent payments as either principal or interest, should be handled in accordance with generally accepted accounting principles. Acceptable accounting treatment includes a reversal of all previously accrued but uncollected interest applicable to assets placed in a nonaccrual status against appropriate income and balance sheet accounts.

Part 326 MAINTENANCE OF RESERVES BY CREDIT UNIONS

3 CRR-NY 326.1 Applicability {#sec-3-crr-ny-326.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 326.1}

The provisions of this Part shall apply to all net worth reserve accounts required to be established and maintained by credit unions.

3 CRR-NY 326.2 Reserve accounts {#sec-3-crr-ny-326.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 326.2}

Credit unions shall establish and maintain such net worth reserve accounts as are required for federally chartered credit unions pursuant to title 12 U.S.C. 1790d and any regulations promulgated thereunder by the National Credit Union Administration.

3 CRR-NY 326.3 Definition {#sec-3-crr-ny-326.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 326.3}

(a) The term net worth shall mean the retained earnings balance of the credit union at the end of a quarterly period as determined under generally accepted accounting principles. Retained earnings consists of undivided earnings, regular reserves, and any other appropriations designated by the management of a credit union or regulatory authorities. Only undivided earnings and appropriations of undivided earnings shall be included in net worth. Net worth shall not include the allowance for loan and lease losses account. In the case of a credit union that qualifies to be designated as a low income credit union, net worth shall also include secondary capital accounts that are uninsured and subordinate to all other claims of creditors, shareholders and the National Credit Union Share Insurance Fund.

(b) In the event that a different definition of net worth is contained in 12 CFR 702.2, this section shall be deemed to define net worth as set forth in such section.

Part 327 INVESTMENTS BY CREDIT UNIONS IN THE SHARES OF CORPORATE CREDIT UNIONS LOCATED IN THIS STATE

3 CRR-NY 327.1 Investments by credit unions in the shares of corporate credit unions located in this State {#sec-3-crr-ny-327.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 327.1}

Any credit union that seeks to invest in the shares of a state or Federal corporate credit union located in this State in an amount that exceeds 50 percent of its total capital or the insured limit, whichever is greater, shall give the superintendent prior written notice of its intent to make such investment. If the superintendent shall find that the proposed investment is consistent with the declaration of policy set forth in section 10 of the Banking Law, he or she shall, within 30 days after receipt of such notice, notify the credit union in writing that such investment may be made or that an additional period of time, not to exceed 60 days, is required to properly make a determination.

Part 333 INDICES WHICH MAY BE USED IN CONNECTION WITH VARIABLE RATE CLOSED-END PERSONAL LOANS MADE BY LENDING INSTITUTIONS PURSUANT TO PART 33 OR IN CONNECTION WITH VARIABLE RATE OPEN-END ACCOUNTS ESTABLISHED BY BANKING INSTITUTIONS PURSUANT TO PART 90

3 CRR-NY 333.1 Approval of indices {#sec-3-crr-ny-333.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 333.1}

The following are the indices approved by the superintendent, for use by lending institutions which are making variable rate closed-end personal loans pursuant to the provisions of Part 33 of this Title, and for use by banking institutions which establish variable rate open-end accounts pursuant to the provisions of Part 90 of this Title:

(a) the bank prime loan index;

(b) the indices for one-month, three-month or six-month certificates of deposit sold in the secondary market;

(c) the indices for the auction averages from the sale of United States three-month, six-month or one-year Treasury bills;

(d) the indices for three-month, six-month or one-year Treasury bills sold in the secondary market;

(e) the indices for the one-year, two-year, three-year, five-year, seven-year, ten-year, twenty- year or thirty-year constant maturity yield for United States Treasury securities;

(f) the index for the average cost of funds for FSLIC-insured institutions, for the New York district, as published by the Federal Home Loan Bank Board;

(g) the prime rate as published by The Wall Street Journal; and

(h) the indices for one-month, three-month, six month and one year London Interbank Offered Rate (LIBOR) as published in The Wall Street Journal;

(i) the indices for one-month, three-month, and six month secured overnight financing rate (SOFR) as published by the Federal Reserve Bank of New York.

The indices under subdivisions (a) through (e) of this section are the indices published and announced by the Board of Governors of the Federal Reserve System in such publications as The Federal Reserve Bulletin, H.15, G.13, etc. With respect to these indices, where daily rates and weekly and monthly averages of such daily rates are published, this Part allows use of either the daily rate or the weekly or monthly average rate for such index. This Part also allows use of a rate such as a quarterly or semiannual rate calculated by averaging four or less of the subdivision (a) through (e) rates. In the event of split rate figures for the prime rate as published under subdivision (g) of this section, the lending or banking institution shall use the low figure except where use of the high figure or an average of the two figures is provided by contract and disclosed to the borrower or customer.

3 CRR-NY 333.2 Availability of index figures {#sec-3-crr-ny-333.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 333.2}

The figures used from any of the above indices shall be confirmed for accuracy by the lending or banking institution. The above indices, except for section 333.1(g) of this Part, may only be used if the lending or banking institution readily makes available to borrowers and customers at every branch office (excluding automated teller machines or similar facilities) or by mailing or otherwise upon request, the index figures used in the rate calculation as such figures appear in the source publication.

Part 334 INDICES WHICH MAY BE USED IN CONNECTION WITH PART 80 VARIABLE RATE JUNIOR MORTGAGE LOANS, PART 91 VARIABLE RATE INSTALLMENT AGREEMENTS AND PART 92 VARIABLE RATE CLOSED-END RETAIL INSTALLMENT CONTRACTS AND OBLIGATIONS

3 CRR-NY 334.1 Approval of indices {#sec-3-crr-ny-334.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 334.1}

The following indices are approved by the superintendent for use in connection with variable rate junior mortgage loans made pursuant to Part 80 of this Title by licensees as defined thereunder, in connection with variable rate retail instalment credit agreements established pursuant to Part 91 of this Title by retail sellers or creditors as defined thereunder, and in connection with variable rate closed-end retail instalment contracts and obligations entered into pursuant to Part 92 of this Title by retail sellers or holders as defined thereunder:

(a) the bank prime loan index;

(b) the indices for one-month, three-month or six-month certificates of deposit sold in the secondary market;

(c) the indices for the auction averages from the sale of United States three-month, six-month or one-year Treasury bills;

(d) the indices for three-month, six-month or one-year Treasury bills sold in the secondary market;

(e) the indices for the one-year, two-year, three-year, five-year, seven-year, ten-year, twenty- year or thirty-year constant maturity yield for United States Treasury securities;

(f) the prime rate as published in The Wall Street Journal;

(g) the indices for one-month, three-month, six-month and one year London Interbank Offered Rate (LIBOR) as published in The Wall Street Journal; and

(h) the indices for one-month, three-month, and six month secured overnight financing rate (SOFR) as published by the Federal Reserve Bank of New York.

All the indices listed above, except (f), (g) and (h) are published and announced by the Board of Governors of the Federal Reserve System in such publications as The Federal Reserve Bulletin, H.15, G.13, etc. With respect to any indices listed under subdivisions (a) through (e) of this section which provide daily rates and also weekly and monthly averages of such daily rates, this Part allows use of either the daily rate or the weekly or monthly average rate for such index. In the event of split rate figures for the prime rate as published under subdivision (f) of this section, the licensee, retail seller or creditor, or retail seller or holder shall use the low figure except where use of the high figure or an average of the two figures is provided by contract and disclosed to the borrower or buyer. Except as provided above, averaging of index figures is prohibited.

3 CRR-NY 334.2 Availability of index figures {#sec-3-crr-ny-334.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 334.2}

The figures from any of the above indices shall be confirmed by the licensee, retail seller or creditor, or retail seller or holder which is using the index. The above indices, except for section 334.1(f), may only be used if the licensee, retail seller or creditor, or retail seller or holder makes available to borrowers or buyers at every place of business, or by mailing or otherwise upon request, the index figures used in the rate calculation as such figures appear in the source publication.

3 CRR-NY 334.3 [Repealed] {#sec-3-crr-ny-334.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 334.3}

Part 340 EXTENSION OF CREDIT ON A NONDISCRIMINATORY BASIS

3 CRR-NY 340.1 Inquiries concerning marital history, status, and number of dependents {#sec-3-crr-ny-340.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 340.1}

For purposes of Executive Law section 296-a(1)(c), it shall not be considered an expression of limitation, specification or discrimination on the basis of sex or marital status if:

(a) a creditor requires an applicant to disclose the name or names by which he or she has previously been known, provided that this information is used solely to determine the applicant's identity and previous credit history;

(b) Where application is made for a mortgage and the creditor determines that the signature of the spouse is required in order to pass clear title in the event of a default, a creditor requests information concerning marital status, provided that the information disclosed by such inquiry is used solely for the purpose of perfecting title;

(c) a creditor inquires as to the number of the applicant's dependents, provided that the information disclosed by such inquiry is used solely to determine costs and expenses payable by the applicant.

3 CRR-NY 340.2 Statement of reasons for rejection {#sec-3-crr-ny-340.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 340.2}

For purposes of Executive Law section 296-a(4)(a), a statement of the specific reasons for rejection of an application for credit shall be deemed to be in compliance with this section if it is a clear and meaningful statement of all of the factors which justified rejection.

3 CRR-NY 340.3 Attribution of past joint obligations {#sec-3-crr-ny-340.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 340.3}

For purposes of Executive Law section 296-a(4)(b), a response to a request for a separate credit history, made after July 15, 1974, shall include all obligations, whenever entered into, as to which the creditor or credit reporting bureau then has information in its files. In creating such a separate history, all obligations on which two parties were jointly liable shall be reported as the obligation of each, irrespective of the actual source of payments.

Part 341 RECORDS OF MORTGAGE LOAN APPLICATIONS

3 CRR-NY 341.1 Application and definitions {#sec-3-crr-ny-341.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 341.1}

(a) This Part shall apply to all banking organizations, as defined in section 2.11 of the New York Banking Law, which, in the ordinary course of business, originate loans to be secured by a mortgage or other lien upon residential real property located in the State of New York, including a leasehold estate, and cooperative apartment loans subject to the provisions of section 103.5, 235.8-a or 380.2-a of the New York Banking Law. This Part shall also apply to all inquiries and applications to such banking organizations regarding such loans shich are being granted under the current lending policy of such banking organizations.

(b) Application form.

An application form shall be a printed or otherwise reproduced standard form. Nothing herein shall prohibit any banking organization from:

(1) using any application form, including any form required or permitted by applicable provisions of Federal of State laws or regulations; or

(2) making informational requests of an applicant in addition to such information as is provided in the application form.

The term branch shall include a station of a credit union, but shall not include electronic facilities authorized pursuant to section 105-a, 240-a or 396-a of the Banking Law, electronic facilities for which no authorization is necessary or public accommodation offices, authorized pursuant to article IV-A of the Banking Law.

(d) Substantially completed application form means an application form which has been substantially completed and which complies with all applicable provisions of Federal and State laws and regulations; e.g., Federal Reserve Board Regulation B and New York Supervisory Procedure G-107.

3 CRR-NY 341.2 Responses to inquiries {#sec-3-crr-ny-341.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 341.2}

The requirements of subdivision 3 of section 6-c of the Banking Law shall apply to all written and oral inquiries, whether made in person, by letter or by telephone.

3 CRR-NY 341.3 Availability of application forms {#sec-3-crr-ny-341.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 341.3}

Every banking organization which originates loans to which this Part applies shall, at all times, maintain a supply of application forms, sufficient to satisfy the volume of requests for such forms reasonably expected to be received in the ordinary course of business, at its principal office and at each of its branches. An application form shall be provided to each person who requests an application form. Such request may be written or oral. If no application forms are available at the location where the request is made, the banking organization shall make an application form available to the person making the request within five business days after the date on which the request was made.

3 CRR-NY 341.4 Acceptance of application forms {#sec-3-crr-ny-341.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 341.4}

No banking organization shall refuse to accept a substantially completed application form; provided, however, that a banking organization may require a personal interview with the applicant as part of the application process.

3 CRR-NY 341.5 Records of application forms {#sec-3-crr-ny-341.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 341.5}

(a) Every banking organization shall maintain records of all applications which it has accepted. Such records shall be retained for at least 25 months after the date on which the banking organization notifies an applicant of the action taken on his application. Such records shall include, but need not be limited to:

(1) the application form and any written or recorded information used in evaluating the application and not returned to the applicant at the applicant's request; and

(2) a copy of the notification of action taken; in the case of adverse action, as defined in regulation B of the Board of Governors of the Federal Reserve System, a copy of the statement of specific reasons therefor (if this information was furnished orally, a notation or memorandum thereof); and any written statement by the applicant alleging a violation of the applicant's rights.

(b) Compliance with the recordkeeping requirements of section 202.12 of regulation B shall be deemed compliance with this section, provided that records maintained pursuant to regulation B shall be fully available for inspection and copying by representatives of the New York State Department of Financial Services.

Part 342 CALL REPORTS

3 CRR-NY 342.1 Call reports {#sec-3-crr-ny-342.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 342.1}

(a) Section 204 of the Banking Law requires every foreign banking corporation doing business in this State to make written reports to the superintendent under oath showing the amount of its assets and liabilities and containing such other matters as the superintendent shall prescribe.

(b) Section 255 of the Banking Law requires savings banks to make a written report to the superintendent annually which shall contain a statement of its condition and shall include such information and be in such form as the superintendent may prescribe. This section also requires savings banks to make such other special reports as the superintendent shall from time to time require.

(c) Section 404 of the Banking Law requires every savings and loan association to make a written report to the superintendent annually which shall contain a statement of its condition and shall include such information and be in such form as the superintendent may prescribe. This section also requires savings and loan associations to make such other special reports as the superintendent shall from time to time require.

(d) Such reports shall be in the form and shall include the content required by the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks or the Consolidated Report of Condition and Income promulgated by the Federal Financial Institutions Examination Council (FFIEC), whichever is applicable, whether or not such reporting entity is otherwise required to file a report of condition with a Federal banking regulator. Forms and instructions for such reports may be found on the website of the FFIEC (http://www.ffiec.gov/).

3 CRR-NY 342.2 Filing; deemed filing {#sec-3-crr-ny-342.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 342.2}

(a) A reporting entity shall render a periodical report of condition, either electronically or in hard copy, to the superintendent.

(b) A periodical report of condition shall be deemed rendered to the superintendent if the superintendent shall have such access as he or she deems appropriate through the facilities of the Federal Deposit Insurance Corporation or the Federal Reserve Board, as the case may be (the appropriate Federal regulatory authority), to such reports of condition as have been rendered to the appropriate Federal regulatory authority, in compliance with the rules and regulations of such appropriate Federal regulatory authority.

3 CRR-NY 342.3 Certification {#sec-3-crr-ny-342.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 342.3}

By virtue of filing its periodical report of condition with the appropriate Federal regulatory authority, the reporting entity, through its chief financial officer (or equivalent officer), and its attesting senior executive officer, shall be deemed to have made the appropriate certification set forth below; provided, however, that if there is a change in the wording of the attestation required in the applicable form of call report promulgated by the FFIEC, a comparable change shall be deemed to have been made in such form of certification.

(a) CFO (or equivalent).

I attest that this report of assets and liabilities or report of condition, whichever is applicable, (including the supporting schedules and supplement) for this report date has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct to the best of my knowledge and belief.

(b) Attesting senior executive officer of foreign bank branch or agency or each director or trustee of savings bank or savings and loan association.

I attest to the correctness of this report of assets and liabilities or report of condition, whichever is applicable, (including the supporting schedules and supplement) for this report date and declare that it has been examined by me and to the best of my knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct.

3 CRR-NY 342.4 Corrected filings {#sec-3-crr-ny-342.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 342.4}

If the reporting entity files a corrected report of assets and liabilities or report of condition with the appropriate Federal regulatory authority, it will immediately notify the superintendent in writing of such corrected filing.

Subchapter B NON-BANKING ORGANIZATIONS

Part 400 LICENSED CASHERS OF CHECKS

3 CRR-NY 400.1 Original issuance of license or change of control of a licensee {#sec-3-crr-ny-400.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.1}

(a) Application.

No person shall engage in the business of cashing checks, drafts or money orders, as principal, broker, agent or otherwise, for a consideration, without first obtaining a license from the superintendent. This licensing requirement applies whether such activities are conducted for customers who are natural persons or for any business, corporation, partnership, limited liability company or partnership, association, or sole proprietorship, or any other entity. Application for a new license or for a change of control of a licensee shall be made upon forms issued by the superintendent. These forms may be obtained at department offices at the locations specified in Supervisory Policy G 1 of this Title. For purposes of this Part, the term person shall include a natural person or a partnership, corporation, association or any other entity. The term control shall mean having the power directly or indirectly to direct or cause the direction of the management and policies of a licensee, whether through the ownership of voting stock of a licensee, the ownership of voting stock of any corporation which possesses such power or otherwise and shall be presumed to exist if any person, directly or indirectly, owns, controls, or holds with power to vote 10 percent or more of the voting stock of any licensee or any person owning, controlling or holding with power to vote 10 percent or more of the voting stock of any licensee.

(b) Application procedure.

Completed applications should be delivered to the Licensed Financial Services Division of the Banking Division of the Department of Financial Services at the New York City office location specified in Supervisory Policy G 1 of this Title. An application for a new license for a fixed location or for a mobile unit must be accompanied by payment of the fees specified in section 1.2 of Supervisory Policy G 1 of this Title. An application by a licensee to operate a limited station must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. An application for change of control of a licensee must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Applicants for a new license seeking to conduct business under a trade name must file a certificate in the office of the county clerk as required by General Business Law, section 130. A certificate of the county clerk stating that such a document has been filed must be submitted with an application for a new license.

Any person seeking to obtain a license to cash checks or to acquire control of a licensed check casher shall submit the following information and documents:

(1) The name and address of the applicant(s). If the applicant is a partnership or corporation, the names and addresses of all partners, officers, directors and substantial stockholders of the applicant, as applicable. For purposes of this Part, substantial stockholder means any stockholder that owns, controls or holds with power to vote 10 percent or more of the voting stock of the applicant.

(2) A background report prepared by an independent investigatory agency acceptable to the superintendent for every partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable.

(3) For each partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable, detailed biographical information in such form as the superintendent shall prescribe.

(4) For each partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable, and for all individuals to be employed by the licensee (or, for a change of control application, for all individuals not currently employed by a licensee):

(i) a set of completed fingerprint cards;

(ii) a receipt from a law enforcement agency indicating the place at which the fingerprints were taken;

(iii) a check in the appropriate amount payable to the “Superintendent of Financial Services - Fingerprints”; and

(iv) two portrait-style photographs of the individual measuring not more than 2″ × 2″.

(5) Documentation demonstrating:

(i) that one or more of the partners, officers, directors, substantial stockholders or owners of the applicant, as may be applicable, has management or supervisory experience of at least one year in the check cashing business with a licensee in this State or in the case of changes of control;

(ii) that at least one individual with such experience, or such other equivalent experience deemed adequate by the superintendent, has been engaged by the applicant for a period of at least one year following the date of commencement of business or the effective date of the change of control, whichever is the case. The superintendent may increase such one-year experience requirement if it is determined that such increase is in accordance with the purposes of article 9-A of the Banking Law. If at any time during the one-year period (or any longer period required by the superintendent) the licensee ceases to be in compliance with the requirements of this subdivision, it shall notify the superintendent within 10 calendar days of such noncompliance. The name and qualifications of any other individual engaged by the licensee to satisfy the requirements of this subdivision shall be submitted to the superintendent for approval.

(6) Financial documentation including:

(i) a current financial statement for each applicant;

(ii) a current personal financial statement for each partner, officer, director, stockholder or owner, as may be applicable;

(iii) in the case of an application for a new license, a projected (pro forma) balance sheet and income and expense statement for the first year of operation;

(iv) in the case of an application for a new license, an affirmation that net liquid assets of at least $10,000 shall be available each business day for each licensed location (including mobile units). Net liquid assets, as used in this subparagraph, shall mean funds on hand, funds in banking institutions and marketable securities owned, less any loans and accounts payable in one year or less; and

(v) in the case of an application for a new license, a credit facility letter provided by a banking institution or similar credit facility approved by the superintendent demonstrating an existing right of access to a line of credit in an amount of $100,000 or more for each licensed location. This line of credit must be available continuously and a licensee must immediately give written notice to the superintendent if it is not at any time in compliance with this requirement.

(7) A business plan containing such information as shall permit the superintendent to make a finding that the granting of the license will promote the convenience and advantage of the area in which the business is to be conducted including a determination that there is a community need for a new licensee in the proposed area to be served. Such a plan shall contain at least the following information.

(i) description of primary market area (e.g., identification of blocks and other landmarks including the locations of banking institutions and other licensed check cashers operating in the service area surrounding the proposed location;

(ii) description of projected customer base;

(iii) proposed days and hours or operation;

(iv) types of services proposed to be offered including special services such as fluency in languages which are predominant in the area of licensed location(s);

(v) detailed description of demographics of the area including population density which information should be derived from official government records and other published sources;

(vi) description of any proposed economic development of area; and

(vii) specific marketing targets, if any.

In evaluating an application to permit a change of control of a licensee, where the operations conducted at the licensed location are not to be moved to a new location, the superintendent shall not be required to make a determination that there is a community need for the licensee in the area to be continued to be served.

(8) In the case of an application for a new license, a copy of the deed to the property on which the check cashing business will be conducted or a copy of the contract to purchase such property or, if the proposed licensed location is leased or to be leased, a copy of the lease or proposed lease or letter from the owner or its agent that the applicant has obtained or will obtain possession of the proposed licensed location. All leases shall be for a term of at least three years. For a change of control application wherein succession to the licensee's business premises does not occur by operation of law, the applicant shall provide evidence to the satisfaction of the superintendent that the lease(s) for the licensed locations will be assigned or sublet to the applicant or that a new lease(s) will be given the applicant if the applicant is not purchasing the property. All licensed locations except for limited stations and mobile units must have minimum dimensions of at least 480 square feet. The dimensions of the location and a diagram of the proposed layout must be included with the application.

(9) An affidavit signed by the applicant stating that the information given in the application is accurate and complete.

(10) The superintendent may request such additional information from an applicant deemed necessary to determine whether the applicant satisfies the standard set forth in section 369 of the Banking Law.

(d) Publication of application.

Upon receipt of an application for a license or a change of control of a licensee in a form satisfactory to the superintendent, notice thereof shall be published in the Weekly Bulletin. Each notice shall contain the name of the applicant and the location of the proposed site. Comments or objections regarding the application should be submitted in writing to the superintendent within 10 business days of the date of publication.

(e) Determination.

The superintendent shall make a determination on the granting of a license within 90 days after the receipt of all information and documents required by this Part.

(f) If an application for change of control is approved by the superintendent, a new license is granted to the applicant in cases in which the name of the licensee is changed. However, although section 369(1) of the Banking Law indicates that no license shall be granted in such cases, where the licensee is located within three-tenths of a mile of another licensee, the legislative intent, as expressed in chapter 546 of the Laws of 1994 and set forth in section 400.15 of this Part, is consistent with the granting of licenses in all cases in which there is a change of control of an existing licensee. Consequently, an applicant may acquire control of a licensee and change the name of the licensee even if the licensee being acquired is located within three-tenths of a mile of another licensee.

(g) The license of a restricted location authorized pursuant to subdivision 1 of section 369 of the Banking Law shall not be affected by a change of control, pursuant to section 370-a of the Banking Law, pertaining solely to such restricted location of such licensee, provided that the licensee continues thereafter to engage at that location in the cashing of checks, drafts or money orders only for payees that are other than natural persons and provided further that such license shall bear a legend stating that such location is restricted to the cashing of checks, drafts or money orders only for payees that are other than natural persons.

3 CRR-NY 400.2 Books, records and microfilm {#sec-3-crr-ny-400.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.2}

Every licensee shall maintain the following records and information. All entries therein shall be made in ink, be typed or be available through computer printouts. Records maintained under subdivision (a) of this section may, with the prior written approval of the superintendent, be maintained on microfilm. Approval shall be granted if the superintendent finds that the licensee has the capability of utilizing microfilm in accordance with subdivision (b) of this section. These records must be preserved for at least three years after the date of final entry, and kept readily available for inspection by representatives of the department.

(a) A “daily record of checks cashed”, in which shall be recorded all cash transactions occurring each day. This record shall include the following information with respect to each check, draft or money order cashed in the face amount of $100 or more, and with respect to any number of checks cashed at any one time drawn by any one maker with an aggregate face amount thereof totaling $100 or more:

(1) Date on which the check, draft, or money order is cashed.

(2) Date of the check, draft, or money order.

(3) Number of the check, draft, or money order.

(4) Name and location, or American Bankers Association number, or Clearing House number, of the banking institution on which the check, draft, or money order is drawn.

(5) Name of the drawer of the check, draft, or money order which is cashed.

(6) Name and home or business address of the individual, partnership, or corporation for which such check, draft, or money order is cashed. Where the licensee maintains an index card or computer record showing current home or business addresses of customers, such address need not be repeated for each transaction on individual checks, drafts, or money orders for $1,500 or less. Complete details, including current address, must be recorded individually for each check (other than a payroll check), draft, or money order exceeding $1,500. On payroll checks, the licensee may accept the address of the employer as the address of the employee cashing the check.

(7) Face amount of the check, draft, or money order.

(8) The fee collected for cashing each such check, draft, or money order.

(9) The amount of each bank deposit, recorded in such form as will clearly identify the particular checks, drafts, money orders, or cash included in each such deposit.

Reporting requirements (1) through (8) (paragraphs [1]-[8] of this subdivision) shall not apply to any United States Government, state, or municipal checks or to checks issued by any banking institutions or insurance companies less than $1,500; that is to say all items more than $1,500 are to be individually listed. However, when 10 or more payroll checks, regardless of amount, of any one employer or 10 or more checks, each of which is less than $1,500, of the United States Government or of any state or municipality are cashed during any one day, it will be sufficient for the licensee to retain a duplicate adding machine listing or other record of each group of such items, showing the individual checks and fees charged as well as the total number of such checks cashed, the name of the drawer, the bank on which they are drawn, the total amount of the checks, and the total fees charged. This information need be shown only once in the daily record of checks cashed for each group of such checks cashed. Except for checks cashed at any one time drawn by any one maker with the aggregate amount thereof totaling $100 or more, the licensee shall retain a duplicate adding machine listing or other record of all checks, drafts, or money orders where the face amount thereof is less than $100, showing the face amounts of individual checks, drafts, or money orders, the total amount thereof, and the total fees charged therefor listed on such tape. The information need be shown only once in the daily record of such checks, drafts, or money orders cashed, covered by a separate adding machine listing or other equivalent record. Additionally, when the licensee receives checks, drafts, or money orders in connection with any other business conducted on the premises, a separate record shall be made of such checks, drafts, or money orders, and the nature of the transaction must also be shown.

(b) Microfilm.

Microfilm equipment may be used to record all the checks, drafts and money orders cashed in the business, under the following conditions:

(1) Each roll of film must be processed promptly after it is exposed.

(2) The date items are microfilmed shall be identified by means of a date card inserted into the machine before the items are microfilmed. This shall be done at the beginning of each business day and whenever a new roll of film is put into use. The date indicated shall be the date on which these items were cashed.

(3) The microfilm equipment must simultaneously record together or in sequence the front and back of each check, draft or money order that the licensee cashes.

(4) Each check, draft or money order cashed shall be microfilmed together with the deposit ticket indicating the date and total amount of the deposit. The adding machine tape listing all items included in such deposit will be attached to the “Daily Record of Checks Cashed”. Items shall be microfilmed in such a manner as to avoid overlapping of the checks, drafts or money orders or otherwise obscuring such items.

(5) The name and home or business address of the individual, partnership or corporation for which the check, draft or money order is cashed shall be indicated on the item before it is microfilmed. Where the licensee maintains an index card or computer record with the current home or business address of customers, such address need not be microfilmed for each transaction on individual checks, drafts or money orders for $1,500 or less. However, the complete details as required by subdivision (a) of this section including the current address shall be maintained in written or typed form for each check, draft or money order exceeding $1,500. On payroll checks, the licensee may accept the address of the employer as the address of the employee cashing the check.

(6) The fee collected for cashing each check, draft or money order must be indicated on the face of the item before it is microfilmed. If payroll checks are cashed and no fee is charged, a notation to this effect (such as N/C) must be indicated on the face of the item.

(7) An inventory log of microfilm shall be maintained. This log is to include the following information for every roll of film exposed:

(i) The beginning and ending dates of the period covered.

(ii) The date on which the exposed roll was sent for processing.

(iii) The date on which the developed roll was returned and reviewed.

(iv) The name of the employee reviewing the film.

(8) If the licensee's review of microfilm determines that processed film is not accurate and legible, or if any equipment becomes inoperable, the licensee shall immediately begin to maintain written records as required by subdivision (a) of this section until such time as the microfilm equipment has been repaired or replaced.

(9) Each roll of microfilm shall be clearly labeled showing the beginning and ending dates of the period covered.

(10) An operative microfilm viewer must be maintained on the premises at all times.

(11) The licensee must:

(i) maintain all microfilm equipment so as to ensure continuous proper operation;

(ii) verify that all microfilmed records are maintained in an accurate and legible form; and

(iii) assure that all personnel working at the location are familiar with these terms and requirements.

If it is found that the licensee is not complying with any of the above requirements, authorization to use microfilm equipment may be revoked in the sole discretion of the superintendent and, upon notice thereof, the licensee shall thereafter be required to maintain the record of checks, drafts and money orders cashed in written form in conformity with subdivision (a) of this section.

(c) A “summary of business” in which the number of checks, drafts, or money orders cashed, their total face amount, and the aggregate fees received, shall be shown for each business day and totaled for each calendar month. If this information is included in a horizontal form of daily cash reconcilement, such record will be acceptable in lieu of a separate “summary of business”.

(d) A “returned items record”, in which the following information shall be clearly recorded with respect to each check, draft or money order, returned unpaid:

(1) Date on which check, draft, or money order, was reported unpaid.

(2) Issue date of check, draft or money order.

(3) Date check, draft, or money order was originally cashed by licensee.

(4) Name of drawer of the check, draft, or money order returned unpaid.

(5) Name of payee or last endorser of check, draft, or money order.

(6) Amount of check, draft, or money order returned unpaid.

(7) Name of bank on which check, draft, or money order is drawn.

(8) Reason for which check, draft, or money order was returned unpaid.

(9) Date on which check, draft, or money order was redeposited.

(10) Date and manner of payment of check, draft or money order, other than by redeposit, with complete details of its disposition. Checks, drafts and money orders returned unpaid and immediately charged off or written off must also be listed in the “returned items record”. An item will be considered returned unpaid when the licensee's account has been debited for the amount of the item even though such item has not been physically returned to the licensee by the bank, but instead has been redeposited or entered for collection. Such information shall be recorded in the “returned items record” as soon as it becomes known to the licensee.

(11) A current record of the efforts being made to collect unpaid checks, drafts, or money orders which are not redeposited or redeemed.

(e) A “daily cash reconcilement”, which shall contain the following information:

(1) Cash on hand at opening of business.

(2) Checks, drafts, or money orders cashed the previous day, and on hand at opening of business.

(3) Cash received during the day and the source of funds in detail.

(4) Total amount of fees received during the day.

(5) The sum of items (1) through (4) (paragraphs [1]-[4] of this subdivision).

(6) The total deposits made during the day.

(7) Other cash paid out during the day showing in detail the nature of the disbursement.

(8) The sum of items (6) and (7) (paragraphs [6]-[7] of this subdivision).

(9) Item (5) (paragraph [5] of this subdivision) less item (8) (paragraph [8] of this subdivision), representing the cash on hand and the total of undeposited checks, drafts, or money orders, cashed during the day.

(10) The total of cash included in item (9) (paragraph [9] of this subdivision).

The “daily record of checks cashed”, “summary of business”, “returned items record”, and “daily cash reconcilement” may be combined into one or more records, provided the required information is kept in such combined record.

(f) A “general ledger” containing all assets, liabilities, capital, income, and expense accounts. The “general ledger” shall be posted from the “daily record of checks cashed”, “summary of business” and any other records of original entry, at least monthly, and shall be so kept as to facilitate the preparation of an accurate trial balance.

(g) A “journal”, tickets or other record showing with full explanation, all opening, closing and adjusting entries.

(h) All licensees must maintain separate income and expense statements for each licensed location.

(i) Evidence that a net liquid asset position of not less than $10,000 is being maintained for each licensed location.

(j) A “daily record of money orders sold”.

Check cashers which sell money orders shall keep the following information with respect to money order sales to the same person aggregating $3,000 or more in one day:

(1) the purchaser's name and address;

(2) form of identification used to identify the purchaser;

(3) the method of payment; and

(4) if payment is made by check, the name of the bank and the American Banking Association number or clearing house number of the banking institution upon which the check is drawn.

3 CRR-NY 400.3 Reports {#sec-3-crr-ny-400.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.3}

Each licensee shall file an annual report within 75 days of the close of the calendar year covering the preceding calendar year for each licensed location on forms provided by the department. The figures entered on these forms shall be derived from financial statements of the licensee that have been audited by an independent certified public accountant (CPA) and on which the CPA has expressed an opinion. Only one certified financial statement shall be prepared for all locations licensed under the same legal entity. The annual report shall contain such information as required by the superintendent. In addition to the above report, the superintendent may require, under oath and in the form prescribed by the superintendent, such additional regular or special reports as the superintendent may deem necessary to the proper supervision of any licensee under article 9-A of the Banking Law.

3 CRR-NY 400.4 Depositing of checks, etc {#sec-3-crr-ny-400.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.4}

(a)

(1) Except as hereinafter stated all checks, drafts and money orders must be deposited in the licensee's bank account in a branch or principal office of a bank, savings bank, savings and loan association, trust company, national bank, Federal savings bank, or Federal savings and loan association or any other duly chartered depository institution that is insured by the Federal Deposit Insurance Corporation, regardless of whether the branch and/or principal office of the foregoing banking institution is located within or without this State (collectively, "banking institution"), not later than the first business day following the day on which they were cashed. Such items must be deposited during the regular business hours of such banking institution so as to enable it to credit the deposits to the licensee's account on that business day.

(2) Any account maintained by a licensee for the deposit of checks, drafts or money orders in a banking institution shall be subject to a written account agreement between the licensee and the banking institution that expressly provides for the personal and in rem jurisdiction over the parties and the account, respectively, of State and Federal courts located in the State of New York and the agreement shall be governed by the laws of the State of New York, except that this requirement shall not apply:

(i) with respect to an account maintained in New York or in a State of New York- chartered bank prior to November 1, 2005, unless or until such existing account agreement is amended subsequent to November 1, 2005; or

(ii) if this requirement is waived in the superintendent's discretion.

Every licensee or applicant for a license shall provide to the superintendent a copy of any such account agreement within 15 days of establishing any such account or any amendment thereto relating to the items required by this subdivision. Every licensee shall maintain a copy of such account agreement as part of its records available for examination by the superintendent.

(3) Prior to depositing any checks, drafts or money orders in an account at a banking institution, the licensee shall cause such banking institution to give the superintendent written authorization to conduct any such examination of all books, records, documents and materials, including those in electronic form, as they relate to such account and any checks, drafts, or money orders placed on deposit in such account, as the superintendent in his/her discretion deems necessary, except that this written authorization requirement shall not apply:

(ii) if this requirement is waived in the superintendent's discretion. The licensee shall pay the cost of any such examination.

(4) When the number of payroll checks cashed at a limited station amount to 50 or more, the licensee may present those checks to the drawee bank or the maker of the checks and receive in exchange a single draft, provided full details of the transaction are recorded in a manner satisfactory to the superintendent.

(b) All checks, drafts and money orders, cashed on any one day and deposited on the same day or the next business day must be deposited under a separate deposit total and not commingled with any other day's business.

(c) This section shall be deemed to be violated if a licensee, instead of depositing all checks, drafts and money orders as required herein, cashes all or any of them at another check casher, exchanges all or any of them for another check or checks or negotiates all or any of them in any manner or for any purpose other than that provided in this section.

(d) The checks, drafts, money orders or cash of any other business in which the licensee is engaged must not be commingled with other funds in the licensee's bank account or with the cash or checks on hand. Separate records must be kept for a check cashing business conducted on the same premises where another business is also being operated. In such case the licensee should apportion to the check cashing business its share of expense. Reasonable estimates may be used.

3 CRR-NY 400.5 Conduct of business {#sec-3-crr-ny-400.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.5}

(a) Every licensee shall:

(1) Post and display at all times in a conspicuous place on the premises the license. Every licensee that cashes one or more checks, drafts or money orders for any payees that are natural persons must post the schedule of rates to be charged with respect to such transactions involving payees that are natural persons. The schedule shall be made of durable material, be no less than 30 inches wide and 36 inches high with letters at least ¾ inch in size and indicate the fee applicable to the full amount of the check to be cashed. The schedule shall indicate the fee that corresponds to the amount of the check. The amount of the check shall be set forth on the schedule in increments of $25 ranging from $25 to $2,000. The schedule shall also indicate the percentage charge imposed on all checks and the minimum charge of $1 per check. The schedule shall be in English and in Spanish and posted in the customer's area.

(2) Pay to every customer tendering any check, draft or money order to be cashed, the entire face amount of such instrument in cash less any charges permitted by this Part, on the same date upon which such instrument is presented. In no event shall the licensee make a partial payment on account, on any such instrument.

(3) Indicate on every check, draft or money order cashed at the time of cashing, the date on which such item was cashed.

(4) Maintain continuously for each licensed premises net liquid assets of at least $10,000. In order to determine whether the said sum is continuously available for each licensed premises, each licensee shall compute and include the following: add the amount of cash in bank, cash on hand, checks on hand not previously dishonored and marketable securities owned, and deduct the amount of any loans due in one year or less, including loans payable on demand, and all accounts payable.

(5) Be held responsible for any violation of the Banking Law or regulations promulgated thereunder by any employee or by anyone directly or indirectly connected with the licensee's check cashing business.

(6) Reconcile its bank statements at least monthly.

(7) Keep a true copy of each and every report which it shall be called upon to furnish to any agency or department of the U.S. government, this State or any municipality in this State. Such copies, together with any work sheets used to assemble the figures and/or facts shown in such report, are to be retained as part of the records of each licensee for a period of three years.

(b) No licensee shall:

(1) Cash any check, draft or money order, nor act as intermediary, agent or in any way assist in the negotiation of any such instrument, at any place other than the premises licensed.

(2) Act as an agent for the collection of checks, drafts, money orders or other negotiable paper.

(3) Cash any check or draft of any drawer if the licensee has any reason to believe that such a check or draft is likely to be dishonored.

(4) Cash any check, draft or money order if the licensee has reason to believe or know, that the maker, the payee or any of the endorsers of such instruments, or the persons presenting it for cashing, are known by any name other than that appearing on such instruments, without recording on its books and records the true name or names, as well as the assumed name or names of such person or persons, together with the true addresses.

(5) Cash any check on which the date line is blank.

(6) Alter or change the date of any check presented for cashing.

(7) Charge, take or receive any money, goods or things in action, for or in connection with the cashing of a check, draft or money order in excess of the fees and charges prescribed in section 400.12 of this Part.

(c) Each check casher shall provide receipts to customers for every check cashed. The receipt shall indicate the face amount of each check which has been cashed, followed by the fee charged for cashing the check, the face amount of each money order sold to the customer and the cost thereof, amounts taken in payment of utility bills and the fees charged for such service less deductions for any other services provided and the balance thereof which is paid to the customer. The receipt shall be dated and have the name and address of the check casher on it.

(d) Every licensee shall display on its premises a sign made of either plastic or metal which shall be no less than 18 inches wide and 12 inches high with letters one inch in size indicating that:

(1) the check casher is licensed by the department; and

(2) inquiries may be made by calling the department's toll-free number or if the customer has a complaint against the check casher by writing to the New York State Department of Financial Services, c/o Consumer Services Division, in both cases as set forth in section 1.1 of Supervisory Policy G 1 of this Title. This sign shall be located at or near the tellers' window and be in English and Spanish.

3 CRR-NY 400.6 Reports of arrests, convictions, etc {#sec-3-crr-ny-400.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.6}

A written report shall be made to the superintendent of any arrest, indictment or conviction (including any plea bargaining agreement) of any stockholder, director, officer, owner, partner or employee connected with the business of the licensee, for the violation of any law within 10 days after such arrest, indictment or conviction becomes known to the licensee.

3 CRR-NY 400.7 Reports of changes in directors, officers, employees, etc {#sec-3-crr-ny-400.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.7}

The licensee shall inform the department in writing, within 10 days of the occurrence, of the name of any director, stockholder, officer, owner, partner, employee or other individual connected with the business of the licensee who terminates or alters his or her status with the licensee, and the name of any individual who becomes connected with the business of the licensee as a director, stockholder, officer, employee or in any other capacity. Any change in partnership, or in the ownership or in the officers, directors or stockholders of a corporation, or in the persons financially interested in the business of the licensee, will not become effective until approved by the superintendent. If the superintendent finds that an individual who becomes connected with the business of a licensee does not meet the standards set forth in section 369 of the Banking Law, the licensee, upon receiving written notice of such findings, shall immediately take steps to ensure that such individual ceases to have any connection with the licensee. The superintendent may request any information and documentation from the licensee in determining whether to approve any such individuals. Nothing in this section shall be deemed to apply to any person who becomes connected with the business of the licensee and who is required to submit an application under section 400.1 of this Part to acquire control of the licensee.

3 CRR-NY 400.8 Advertising {#sec-3-crr-ny-400.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.8}

If a licensee states or indicates in advertising of any kind or nature, or by a sign of any kind, that it is licensed by or subject to the supervision of the superintendent it may do so only by use of the following phrase:

“Licensed by the Superintendent of Financial Services, pursuant to article 9-A of the Banking Law.”

3 CRR-NY 400.9 Limited station license {#sec-3-crr-ny-400.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.9}

(a) For the purposes of this section, a limited station is hereby defined as a place where a licensed casher of checks may maintain and make available to the particular group specified in the application, and to that group only, the facilities for cashing checks, drafts or money orders on the designated premises, such facilities being made available for no more than two days of each week (such days to be designated in the application). Neither the location, the group, nor the days designated in the application may be changed without the written approval of the superintendent.

(b) The holder of a license to maintain a limited station shall observe the rules and regulations issued by the superintendent which are applicable to all licensed cashers of checks, except that if the information called for and required to be kept in books or records as outlined in section 400.3 of this Part is kept as part of the records of the principal office of the licensee then separate records at the limited station shall not be required.

3 CRR-NY 400.10 Mobile unit {#sec-3-crr-ny-400.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.10}

In addition to the information and procedure required under section 400.1 of this Part:

(a) Every applicant for a mobile unit license must specify in the application:

(1) The one or more designated places in a general area described and bounded by streets and avenues at which the facilities of the mobile unit are to be made available to the public for the cashing of checks, drafts or money orders.

(2) The names and addresses of the principal establishments whose employees are to be primarily served by the operation of the mobile unit in such general area, together with a statement outlining the convenience, advantage and necessity therefor, particularly with regard to the presence of existing banking institutions and/or other check cashing facilities available in the general area.

(3) The particular streets within the general area on which it is expected that the mobile unit will actually transact its business.

(4) The days of the week (not more than one day or one period of 24 consecutive hours for each designated place) that the unit will be in operation within such general area.

(5) The place where the books, records, and all information pertaining to its business are to be kept and be available to representatives of the department. Such place shall not be changed without first advising the superintendent in writing of the new place where such records are to be kept.

(b) A licensee of a mobile unit may only transact business at the particular locations specified in its licenses.

(c) Neither the places nor the days designated in the application may be changed without the written approval of the superintendent as provided for in Banking Law, section 370(3).

(d) The holder of a license to operate a mobile unit must comply with the Vehicle and Traffic Law and the ordinances and traffic regulations issued by municipal and other authorities. In the event that any municipality shall require a special permit or license for the purpose of operating a mobile unit, the obtaining of such special permit or license by the applicant shall be a condition precedent to the issuance of a license by the superintendent.

(e) A licensee of a mobile unit shall observe the rules and regulations issued by the superintendent which are applicable to all licensed cashers of checks.

3 CRR-NY 400.11 Fees {#sec-3-crr-ny-400.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.11}

(a) Except with respect to the cashing of checks, drafts or money orders for payees of such checks, drafts or money orders that are other than natural persons, a licensee shall be permitted to charge or collect a fee for cashing a check, draft or money order not to exceed:

(1) 2.27 per centum of the amount of the check, draft or money order in addition to any increase that shall hereafter be made pursuant to subdivision (b) of this section; or

(2) $1, whichever is greater.

(b) Effective January 1, 2023, and annually thereafter, the maximum per centum fee specified in subdivision (a) of this section, shall be increased by a per centum amount, based upon an increase in the consumer price index for the New York - Newark - Jersey City, NY - NJ - PA area for all urban consumers (annual CPI-U), as reported by the Bureau of Labor Statistics of the U.S. Department of Labor for the calendar year preceding the year in which such increase is made compared to such annual CPI-U for the year prior to such preceding year. The maximum per centum fee that may be charged or collected for cashing a check, draft or money order pursuant to this section in effect at such time shall be multiplied by such computed per centum amount and the result added to such maximum per centum fee. The resulting sum shall be the revised maximum per centum fee, which shall be posted upon the internet site of the Department of Financial Services (www.dfs.ny.gov) by the superintendent not later than 45 days following the public release of such annual index by the U.S. Department of Labor. Such revised maximum per centum fee shall be calculated and posted to the nearest one-hundredth of a per centum. Such revised maximum per centum fee shall be effective not later than 45 days after the superintendent shall have notified the Majority Leader of the Senate, the Speaker of the Assembly, and the chairperson of the Senate and Assembly Committees on Banks of his/her intention to change the maximum per centum fee pursuant to the provisions of section 372.3 of the Banking Law and shall continue in effect until revised and increased in the next succeeding year based upon an increase in such annual index. If such CPI-U does not increase in any one year, the maximum per centum fee in effect during the year in which the index does not increase shall remain unchanged in the next succeeding year. Nothing herein shall be deemed to prohibit the superintendent from setting, by regulation, a different maximum per centum fee at any time where the superintendent shall find that such a fee is necessary and appropriate to protect the public interest and to promote the stability of the check cashing industry for the purpose of meeting the needs of the communities that are served by check cashers. No maximum fee shall apply to the charging of fees by licensees for the cashing of checks, drafts or money orders for payees of such checks, drafts or money orders that are other than natural persons.

3 CRR-NY 400.12 Agents of money transmitters {#sec-3-crr-ny-400.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.12}

(a) Definitions.

As used in this section:

(1) The term money transmission activities shall mean any of those activities for which a license is required under article 13-B of the Banking Law, including but not limited to the sale of money orders and the transfer of funds.

(2) The term transfer of funds shall mean the transmission of funds from one location to another by electronic devices or otherwise, including but not limited to the acceptance of funds for utility bill payments (but not including the sale of money orders).

(3) The term licensed money transmitter shall mean all entities licensed under article 13-B of the Banking Law and all entities exempt from such licensing.

(b) A licensee shall not engage in any money transmission activities as an agent for a licensed money transmitter without first obtaining the written approval of the superintendent for the contemplated money transmission activities.

(c) To seek such approval, a written application containing the following information shall be submitted to the superintendent:

(1) the name and address of the licensed money transmitter;

(2) the locations at which the licensee will engage in money transmission activities as agent;

(3) the activities to be engaged in as agent to the licensed money transmitter; and

(4) a brief description of the procedures and methods by which the money transmission activities will be carried out.

(d) The following documents shall also be submitted to the superintendent together with the written application:

(1) a copy of the agency agreement with the licensed money transmitter, which agreement must specifically state that the licensee is acting as agent for the money transmitter for the money transmission activity or activities; and

(2) copies of any documentation which the licensee intends to furnish to the public in connection with the money transmission activities (e.g., forms, receipts).

(e) The superintendent may request further information and documentation from the licensee in determining whether to approve the agency activities of the licensee.

(f) The superintendent may prohibit a licensee from acting as agent for a licensed money transmitter if it is determined that:

(1) the licensee has not or is not conducting its business in accordance with applicable laws and regulations;

(2) the department's regulatory experience with the licensee has not been satisfactory; or

(3) it would not be in the public interest to authorize the licensee to act as agent for a licensed money transmitter.

(g) The superintendent may prohibit a licensee from acting as agent for a licensed money transmitter if it is determined that the money transmitter does not have adequate capital or sufficient expertise to utilize licensed check cashers as agents for the intended activity.

(h) All licensees acting under the authority of this Part shall clearly display on their premises, in full public view, a sign for each money transmission activity, which shall be no less than 18 inches wide and 12 inches high, prominently indicating the following:

(1) the name and address of the money transmitter and the type of money transmission activity for which the licensee is acting as agent;

(2) except in the case of acceptance of utility bill payments, a toll-free number established by the money transmitter which may be called to answer complaints or questions;

(3) that the check casher is licensed and regulated by the New York State Department of Financial Services located at the New York City office location specified in Supervisory Policy G 1 of this Title; and

(4) in the case of the transfer of funds, that persons receiving funds may not be charged any fee by the licensee and that the licensee is acting as agent of the licensed money transmitter in accepting such funds. If the licensee is transferring funds to utility companies for payment of utility bills, it must be indicated that utility payments are not considered paid until received by the utility company.

(i) Except in the case of acceptance of utility bill payments, the form utilized by the licensee for persons requesting a transfer of funds shall contain the information required by paragraphs (h)(1), (2) and (4) of this section and the following additional information:

(1) a statement of the liability of the money transmitter for delayed delivery or nondelivery;

(2) a statement of the refund policy of the licensed money transmitter;

(3) the dollar amount of the transmission; and

(4) the fee charged to persons who transfer funds.

A copy of this form shall be given to every person who utilizes a licensee to transfer funds, together with a receipt for the amount of money transmitted. The form and receipt may be contained in a single document.

(j) Except in the case of utility bill payments, the licensee shall receive all agency fees from the licensed money transmitter for the transfer of funds subsequent to the remittance of the monies to the licensed money transmitter.

(k) A licensee's acceptance of utility bill payments as agent for a licensed money transmitter shall be in accordance with the following:

(1) Funds received by the licensee for payment of utility bills must be remitted to the utility company by means of money orders issued by a licensed money transmitter. Such funds must be remitted using such money orders on a current basis no less than twice a week.

(2) The licensee shall insure against the loss to the licensed money transmitter and the customer of any utility bill payment accepted by securing a surety bond payable to the licensed money transmitter, in the amount of at least $100,000 for each of the licensee's locations, covering all utility bill payments accepted by the licensee. Evidence of such surety bond, satisfactory to the superintendent, shall be given to the superintendent prior to the acceptance of the utility bill payments by a licensee.

(3) At the time any licensee accepts a utility bill payment for remittance, the licensee shall furnish to the customer a separate receipt for each utility bill payment showing the date, the amount accepted by the licensee, and the public utility company to which the payment is to be remitted. A stamped customer's copy of the utility bill shall be deemed a separate receipt for purposes of this section, if the stamp identifies the licensee accepting the utility bill payment and shows the amount accepted for remittance and the date of receipt.

(l) The books and records of the licensee which relate to its activities as an agent for a licensed money transmitter shall be kept separate and distinct from those relating to any other business of the licensee and shall be readily available for examination by the superintendent.

(m) Any licensee which terminates its agency relationship with a licensed money transmitter for one or more money transmission activities shall notify the department within 30 days of such termination. If a licensee seeks to act as agent for another licensed money transmitter, it shall follow the procedures set forth in subdivisions (c) and (d) of this section.

(n) The superintendent may, upon 30 days' written notice to the licensee, suspend or revoke the authorization for any or all of its money transmission activities if it shall be determined that any of the grounds for denying an application specified in subdivision (f) of this section exist.

3 CRR-NY 400.13 Reports of misconduct, etc {#sec-3-crr-ny-400.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.13}

Every licensee shall submit a report to the superintendent immediately upon the discovery of the taking, or attempted taking, of money or property from such licensee. Such reports shall be submitted as prescribed by Part 300 of the superintendent regulations.

3 CRR-NY 400.14 Relocation of licensed location {#sec-3-crr-ny-400.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.14}

Background. Chapter 546 of the Laws of 1994 altered the licensing criteria applicable to check cashers by substantially amending section 369 of the Banking Law to require, among other things, that the superintendent determine whether there is a community need for a new licensee in the proposed area to be served and to prohibit entirely the granting of a license at a location which is less than three-tenths of a mile from an existing licensee. In so acting, the Legislature adopted a specific statutory finding of legislative intent, to wit, “The legislature hereby finds and declares that check cashers provide important and vital services to New York citizens; that the business of check cashers shall be supervised and regulated through the department in such a manner as to maintain consumer confidence in such business and protect the public interest; that the licensing of check cashers shall be determined in accordance with the needs of the communities they are to serve; and that it is in the public interest to promote the stability of the check cashing business for the purpose of meeting the needs of the communities that are served by check cashers.” However, the legislation left unamended Banking Law, section 370 which permits a licensee to apply to the superintendent for leave to change its place of business to any other location and which does not make explicit the standards to be applied by the superintendent in granting permission to relocate. A licensee must obtain a new license to conduct business at another location. In order to promote and maintain the stability of the check cashing business while accommodating the reasonable needs of current licensees to relocate, the following standards shall be applied by the superintendent in determining whether to approve applications for relocation to any site which is within three-tenths of a mile of another licensed location:

(a) No relocation shall be permitted to a site within three-tenths of a mile of another existing licensee location from a location greater than three-tenths of a mile from such existing licensee location, unless such other existing licensee engages in the cashing of checks, drafts or money orders only for payees of such checks, drafts or money orders that are other than natural persons at a restricted location authorized pursuant to subdivision 1 of section 369 of the Banking Law or at any other licensed location whereat the licensee engages solely in the cashing of checks, drafts or money orders only for payees that are other than natural persons.

(b) A relocation may be approved, from a site within three-tenths of mile of another licensee to another site within three-tenths of a mile of such other licensee so long as such new site is farther from such existing licensee than the site from which permission to relocate is sought. If, however, a licensee seeks to relocate from a site within three-tenths of a mile of another licensee and the new site is closer to an existing licensee, the superintendent shall approve the relocation only under the following conditions:

(1) the relocation is consistent with the legislative intent as expressed in chapter 546 of the Laws of 1994;

(2) the licensee seeking to relocate must demonstrate that extraordinary circumstances are forcing it to relocate (e.g., fire, condemnation). The superintendent, in his or her sole discretion, shall determine the existence of “extraordinary circumstances”; and

(3) the licensee seeking to relocate has no reasonable alternative but to move closer to another licensee.

If the licensee seeks to relocate from a site within three-tenths of a mile of another licensee to another site within three-tenths of a mile of another licensee and the new site is closer to an existing licensee it may relocate to such site without complying with the conditions set forth in paragraphs (1), (2) and (3) of this subdivision if the licensee which is impacted by the relocation gives its written consent to such relocation. A copy of this consent shall be submitted to the superintendent by the licensee seeking to relocate together with its application. The superintendent shall approve or disapprove such application in accordance with the provisions of section 370(3) of the Banking Law. In the case in which a licensee applies to relocate to a site which is not within three-tenths of a mile from another licensed location, in the absence of special factors, public convenience and advantage shall be deemed to be promoted without demonstration of community need therefor where the new location is no greater than three-tenths of a mile from the site from which permission to relocate is sought. For purposes of this subdivision, the term “ special factors” shall include such interceding geographic or topographic features as may inhibit reasonable foot traffic between such locations (e.g., major roads or highways, bridges, mountains or the lack of reasonably direct street access).

3 CRR-NY 400.15 [Repealed] {#sec-3-crr-ny-400.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 400.15}

Part 401 LICENSED LENDERS

3 CRR-NY 401.1 Application procedure; licenses {#sec-3-crr-ny-401.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.1}

(a) Application.

Application for a license to engage in the business of making loans in the principal amount of $25,000 or less for any loan to an individual for personal, family, household, or investment purposes and in a principal amount of $50,000 or less for business and commercial loans may be obtained from the Department of Financial Services, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. If an application is requested in writing, the address should indicate the following: Attn: Licensed Financial Services Division.

(b) Financial responsibility.

Applicants for a license shall demonstrate and maintain:

(1) Liquid assets of at least $50,000 available for the operation of the business at the location specified in the application.

(2) Net worth of at least $100,000.

(3) A confirmed line of credit of at least $100,000 issued by any banking institution incorporated under the laws of the United States or any state or any insurance company.

The applicant shall provide a report from an independent investigatory firm detailing the personal and financial background of the applicant. This report shall contain the information necessary for the superintendent to determine whether the applicant has the financial responsibility, experience, character and general fitness required by article 9 of the Banking Law.

(d) Business background.

Applicants for a license shall demonstrate to the superintendent's satisfaction that it has five years verifiable experience in the business of making consumer loans or similar lending and credit evaluation experience or that it has engaged or will engage in its employ one or more persons having such experience. The superintendent may permit other relevant educational or business experience to be credited towards satisfaction of the lending and credit evaluation experience requirement.

3 CRR-NY 401.2 Application for acquisition of control of licensed lender by purchase of stock, merger, consolidation, purchase of assets or otherwise {#sec-3-crr-ny-401.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.2}

(a) Application.

An application for acquisition of control of a licensed lender may be obtained from the Department of Financial Services, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. If an application is requested in writing, the address should indicate the following: Attn: Licensed Financial Services Division.

(b) Financial responsibility.

An applicant desiring to acquire control of a licensee shall have and maintain liquid assets of at least $50,000 for the operation of each place of business of the licensee. In addition, the applicant shall have and maintain net worth of at least $100,000 and a confirmed line of credit of at least $100,000 issued by any banking institution incorporated under the laws of the United States or any state or any insurance company.

Unless the applicant is already licensed under article 9 of the Banking Law, the applicant shall provide a report from an independent investigatory firm detailing the personal and financial background of the applicant. This report shall contain the information necessary for the superintendent to determine whether the applicant has the financial responsibility, experience, character and general fitness required by article 9 of the Banking Law.

(d) Business background.

Unless the applicant is already licensed under article 9 of the Banking Law, the applicant shall demonstrate to the superintendent's satisfaction that it has five years verifiable experience in the business of making consumer loans or similar lending and credit evaluation experience or that it has engaged or will engage in its employ one or more persons having such experience. The superintendent may permit other relevant educational or business experience to be credited towards satisfaction of the lending and credit evaluation experience requirement.

3 CRR-NY 401.3 Changes in directors or officers {#sec-3-crr-ny-401.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.3}

Within 30 days after a change of any of the executive officers or directors a licensee shall submit to the superintendent, in writing:

(a) the name, address and occupation of each new officer or director; and

(b) provide such other information as may be required by the provisions of article 9 of the Banking Law;

(c) for purposes of this section, the term executive officer means every officer who participates or has authority to participate, otherwise than in the capacity of a director, in major policymaking functions, regardless of whether he or she has an official title or whether such title contains any designation of assistant and regardless of whether he or she is serving without salary or other compensation. The chairman of the board of directors, the president, every vice- president, the secretary, and the treasurer are assumed to be executive officers, unless, by resolution of the board of directors or by the bylaws of the corporation, any such officer is excluded from participation in major policymaking functions, otherwise than in the capacity of a director, and he or she does not actually participate therein.

3 CRR-NY 401.4 Change of location {#sec-3-crr-ny-401.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.4}

A licensee may, subject to the superintendent finding that there is no reasonable objection, change its location by giving written notice to the superintendent at least 30 days prior to such change. The written notice shall set forth the current address, the complete address of the proposed new location, the effective date of the relocation, and shall be accompanied by a postal verification of the address of the new location, payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title and the original license certificate.

3 CRR-NY 401.5 Loans, books and records {#sec-3-crr-ny-401.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.5}

(a) When payment is received on any loan, entry shall be made in the licensee's record of the borrower's account as follows:

(1) on a simple interest loan—the date of payment, the amount applied to interest, the amount credited to principal and the unpaid principal balance; and

(2) on a precomputed interest loan—the date of payment, any amount applied to default or deferment charges, the amount applied to the total unpaid balance and the total unpaid balance.

(b) The application for any loan and all original papers relating to it shall be filed so as to be readily available for inspection at any time, except those papers returned to the borrower on paid- up accounts. All such papers and instruments shall bear the number of the loan to which they relate.

(c) Every licensee shall keep, for at least two years, a record which will readily disclose the number, date and amount financed of all loans granted to each borrower, and the unpaid principal balance of each such loan which is paid by a new loan or the date of final payment when it is paid in any other manner. All such information with respect to each loan shall be recorded on one line and may be incorporated with existing records. An example showing the information desired follows:

John Jones

15 Court Street, Troy, NY

| Number | Date | Amount Financed | Unpaid principal paid by new loan or date paid | | --- | --- | --- | --- | | 17496 | 6-19-60 | $400 | $250.00 | | 19102 | 12-5-60 | 800 | 629.97 | | 19901 | 6-6-61 | 600 | 9-2-61 |

(d) In lieu of the loan history record prescribed above, for each open-end loan agreement, the licensee shall keep, for at least two years, one record from which may be readily determined the name, address and account number of the borrower, the date upon which the credit was initially established, the amount of such initial credit, each date upon which an additional credit was made available, the amount of such additional credit, and the amount of the unpaid balance as of each date upon which an additional credit was made available.

(e) With respect to any loan, whether charged off or not, for which a licensee maintains records in accord with section 349 of the Banking Law, every licensee shall record all information relating to the borrower's account including:

(1) the date upon which an attorney has been asked to commence legal action;

(2) the date upon which any legal action (including steps to collect by means of garnishees or attachments of salary) or summary action is taken for or against the licensee, and its nature;

(3) the date upon which judgment is obtained with respect to any signer or endorser;

(4) the date and terms of any settlement agreed upon as a result of any legal or summary action taken for or against the lender;

(5) the nature of any collection expense or expense incurred by the lender in connection with litigation, charged to or paid by any obligor; and

(6) the date upon which the lender's attorney discontinues efforts to collect by legal action.

All information required to be maintained pursuant to this subdivision shall be readily accessible for review and examination by the superintendent.

(f) Whenever a precomputed interest loan is prepaid in full in cash or by refinancing or otherwise, before the final installment date, the licensee's record of the borrower's account shall disclose the amount owing on the loan at the time of such prepayment (including default or deferment charges if any), and any refund paid or credited to the account by reason of such prepayment and the licensee shall deliver to the borrower at the time of such prepayment a record disclosing the information required by this subdivision.

3 CRR-NY 401.6 Place of business; conduct of business {#sec-3-crr-ny-401.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.6}

(a)

(1) The place of business designated in the license shall be open each business day during normal business hours except where otherwise authorized by the superintendent. If the superintendent authorizes a licensed location to be open for business only during certain days or hours, the licensee shall post on the window the days and hours such office is open.

(2) A closed-end loan agreement shall provide for payments of principal, or principal and interest combined, to be made not less frequently than one each month beginning not more than one month and 15 days after the date the loan is made.

(b)

(1) A licensee may enter into an open-end loan agreement with a borrower which shall provide for a credit in a principal amount not exceeding the maximum amount permitted by Banking Law, section 340 against which one or more advances to or for the account of the borrower may be made, either at the time the credit is established or thereafter from time to time, or both, by means of honoring or causing to be honored one or more written orders or requests of the borrower, or one or more checks or drafts negotiated by the borrower. Interest shall be computed on the unpaid aggregate principal amount of advances determined by adding the amounts unpaid for each day of the monthly billing cycle and dividing the sum by the number of days in the billing cycle. The term billing cycle shall have the same meaning as set forth in section 226.2(a)(4) of Regulation Z of the Federal Reserve Board.

(2) An open-end loan agreement shall provide for payments at intervals at least monthly for such term as agreed upon by the licensee and the borrower and may provide that the payments to be made after an advance shall be larger than those made before the advance.

(3) At least 14 days before the date each payment pursuant to an open-end loan agreement is due, the licensee shall deliver to the borrower, or mail to the borrower at the mailing address last known to the licensee, a statement of account covering the period for which payment will be due. Such statement shall contain all disclosures required by the Act of Congress entitled Truth-in-Lending Act (15 USC section 1501 et seq.) and the regulations and rules thereunder.

(4) Nothing in this Part is intended to authorize financings of the type permitted pursuant to the New York Retail Instalment Sales Act.

(c) When a cash payment is made pursuant to any closed-end loan agreement, the lender shall give to the person making it, at the time the payment is made, a receipt which specifies the amount applied to the outstanding loan balance and any other charges. In any case of an open-end loan agreement, the receipt shall specify the amount applied as finance charge, the amount applied to insurance premiums, if any, the amount applied to the previous balance and the amount of the new balance. If the licensee provides the borrower with a periodic billing statement which contains the information required by this paragraph, a receipt may be issued which specifies only the amount of the cash payment.

(d)

(1) Every loan agreement which is sold or otherwise transferred by a licensee shall contain printed in a size equal to at least 10-point bold type the statement:

If this agreement is sold or otherwise transferred, the borrower's rights under the law or under this agreement are in no way altered or impaired.

(2) A licensee is prohibited from selling or otherwise transferring an open-end loan agreement which it originates unless at least 15 days before such sale or transfer takes place the licensee which originated the open-loan agreement mails or delivers to the borrower at the mailing address last known to the licensee notice of such sale or transfer. Such notice shall contain a statement to the effect that the borrower may terminate the open-end loan agreement at any time and repay the outstanding unpaid balance in accordance with the terms of the loan agreement.

(3) Every licensee shall promptly notify the superintendent in writing of the date any licensed office has discontinued business and shall surrender the license for such office within fifteen days of such discontinuance.

(4) If the 10th day of a default in the payment of any scheduled installment of a precomputed interest loan falls on a Sunday, a legal holiday, or a Saturday (if the office of the licensee at which payment is to be made is closed on Saturday), the borrower shall have all of the next business day in which to pay said installment before a default charge may be imposed.

(5) Except upon written request of the borrower, no licensee shall impose a deferment charge on a precomputed interest loan if the amount tendered is sufficient to pay the full amount in default plus any default charge owing thereon.

3 CRR-NY 401.7 Purchase and collection of loans made in other jurisdictions {#sec-3-crr-ny-401.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.7}

Each licensee is authorized to purchase and collect, within any office, room or place of business wherein said licensee conducts its business, direct loans made by any of its branches or other lenders if:

(a) such loans were legally made in a foreign country at a rate of interest not in excess of that permitted by article 9 of the Banking Law; or

(b) such loans were legally made in a state which then had in effect a regulatory small loan law similar in principle to article 9 of the Banking Law; and

(c) a record of such purchases and collections is kept separate and apart from the books and files relating to the activities of the licensed lender in making loans under its license, and the ledger cards relating to such purchases and collections are appropriately identified; and

(d) the records, documents and correspondence relating to such purchases and collections are filed so as to be readily available for inspection at any time by the department.

3 CRR-NY 401.8 Advertising {#sec-3-crr-ny-401.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.8}

Every licensee shall maintain samples of all advertising material used by it (including commercial script of all radio broadcasts) for a period of two years from the date of its use and shall inform the superintendent of the licensed location at which such materials are kept. Such samples shall be available for inspection at any time by a representative of the department.

3 CRR-NY 401.9 Insurance {#sec-3-crr-ny-401.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.9}

(a) Whenever a licensee requires or provides insurance, it shall furnish to the borrower a standard policy or certificate of insurance at the time the loan is granted or within 30 days thereafter, and shall retain on file in its office a specimen copy of such policy or certificate.

(b) Each licensee shall maintain, at a designated licensed location of the licensee or of any affiliate, a specimen copy of any master or blanket policy used in connection with such insurance coverage.

3 CRR-NY 401.10 Computation of interest or charges {#sec-3-crr-ny-401.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.10}

(a) In computing interest on the amount financed or in precomputing interest, fractions of a month shall be computed on the basis of the actual number of days; each day in the fraction shall be considered as 1/30 of a month, and the rate of charge for each day shall be 1/30 of the monthly rate.

(b) In fixing the date of the first installment beyond one month, a licensee shall determine the number of days in excess of one month by:

(1) using the unit period, as defined in Appendix J of Regulation Z, measuring back from installment due date. All months shall be considered equal. Full months shall be measured from any point in time on a given date to the same point in time on the same date of another month.

(2) measuring the number of days forward from the loan date to the beginning of the first full unit period. The amount of the first installment may be increased by the amount of interest for the number of days in excess of one month.

3 CRR-NY 401.11 Authorization for the conduct of other business {#sec-3-crr-ny-401.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.11}

(a) Prior to the commencement of any other business activity which is not licensed under the Banking Law or authorized by article 9 of such law at a licensed location a licensee shall notify the superintendent, in writing, of such proposed activity. The notification shall contain a detailed description of such activity together with all related documentation. The superintendent shall approve or deny the conduct of such activity and shall so notify the licensee in writing within 60 days after receiving a properly completed request for such authorization.

(b) Upon written notice to the superintendent, a licensee may conduct on its premises the following business activities in conformity with section 350(3) of the Banking Law:

(1) an income tax preparation service;

(2) an agency activity performed pursuant to an agency agreement with a money transmitter licensed pursuant to article XIII-B of the Banking Law; and

(3) soliciting and selling of automobile club memberships.

(c)

(1) The activities, books, accounts and records which pertain to each of the business activities permitted shall be maintained so as to be readily separated and distinguished from those of the licensed lender. The name of each business must be prominently displayed on the exterior of the office and separate telephone listings must be maintained for each business.

(2) Joint expenses of the licensed lender and each of the permitted business activities, including heat, rent, electricity, telephone, insurance, supplies, and salaries, shall be apportioned between the licensed lender and each of the permitted business activities in accordance with generally accepted accounting principles.

(d) No licensee shall:

(1) grant, extend, or refinance a loan to any borrower who is delinquent under any sales finance company indebtedness in excess of 60 days unless such new agreement limits recovery by the licensee to 60 days delinquent interest. Where such new loan is granted but no new advance is made, the licensee shall supplement its file with a memorandum stating the reasons for making the loan and the benefit afforded the borrower. Nor shall a licensee grant, extend, or refinance a loan to any borrower who is delinquent under any insurance premium finance or mortgage banker indebtedness;

(2) grant, extend or refinance to any borrower a loan which is contingent upon an additional loan from any other business activity permitted pursuant to section 350(3) of the Banking Law;

(3) extend credit or adjust the terms of existing credit conditioned upon a requirement to purchase membership in any club activity or utilization of any other service; or

(4) require that payments be made via a money order instrument issued by a specific entity.

(e) The superintendent may, for good cause shown, suspend or revoke, in whole or in part, any authority for the conduct of other business activities and may impose additional conditions in connection with the operation of such other business activities.

3 CRR-NY 401.12 Filing of rate charts and loan forms {#sec-3-crr-ny-401.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 401.12}

(a) Within 30 business days after a licensee issues any rate chart(s) setting forth rates or amounts of interest to be used in its licensed lender operation, such licensee shall file with the superintendent two copies of each such chart(s).

(b) Within 30 business days after a licensee issues any form or forms of loan agreement or related security instruments to be used in its licensed lender operation, a licensee shall file with the superintendent one copy of each such loan agreement or related security instrument.

(c) Every form of loan agreement or related security instrument and every rate chart(s) of which a copy or copies are required to be filed with the superintendent pursuant to the provisions of this section shall indicate a date of issuance and an identifying symbol consisting of a combination of numbers and/or letters.

Part 402 BUDGET PLANNERS

3 CRR-NY 402.1 Definitions {#sec-3-crr-ny-402.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.1}

For purposes of this Part:

(a) The term control party shall mean any individual or entity that possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of a licensee.

(b) The term director shall mean any member of the governing board of the licensee whether designated as a director, officer, trustee, manager, governor or by any other title.

(c) The term capital certificate shall have the same meaning as is set forth in article 5 of the New York Not-for-Profit Corporation Law.

(d) The term debtor shall mean an individual who enters into a contract with a licensee while the individual is a New York resident.

(e) The term licensee shall mean any entity licensed pursuant to article 12-C of the New York Banking Law.

3 CRR-NY 402.2 Application for a license {#sec-3-crr-ny-402.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.2}

(a) Application form.

Application for a license shall be made upon a form provided by the New York State Department of Financial Services (department). Each application shall be signed by every individual or entity that will be a control party if a license is granted.

(b) Application procedure.

Applications should be delivered to the Department of Financial Services, Attn: Licensed Financial Services Division, and must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The application shall include the following information:

(1) the exact name and the address of the applicant and its date of incorporation;

(2) the name and the complete business and residential address and occupation of each director, whether or not a member of the governing board, and any other individual who supervises the daily operations of the applicant;

(3) the complete address where the business of the applicant is to be conducted, showing the street and number, if any, post office and building and room number, if any, the office building and room number, if any, and the municipality, county and state;

(4) if the applicant engages in the business of budget planning, as defined in section 455(1) of the New York General Business Law, in another state(s), identify such state(s) and provide the name and address of the regulatory agency, if any;

(5) a copy of the applicant's filing receipt, certified by the Secretary of State of New York, or, for out-of-state budget planners, a certificate of qualification to do business certified by the Secretary of State of New York;

(6) a copy of the applicant's bylaws;

(7) letter of tax exemption from the Internal Revenue Service indicating 501(c)(3) tax status, if applicable;

(8) charities registration statement from the State of New York Office of the Attorney General, Charities Bureau;

(9) schedule providing the following information with respect to each control party: name, prospective corporate title with licensee, employer's name, occupation and title, business address, and residential address;

(10) the name and residence of each holder of capital certificate whether voting or non- voting and/or subvention certificate;

(11) documentation demonstrating that a director, whether or not a member of the governing board, of such applicant has at least one year of experience in financial services or related fields applicable to budget planning. The superintendent may require that a director have more than one year experience if it is determined that such enhanced experience is in accordance with the purposes of article 12-C of the New York Banking Law;

(12) a set of completed fingerprint cards must be submitted by each individual who signs the application. In the case of an applicant which is not a natural person, each control party shall submit completed fingerprint cards;

(13) a background report prepared by an independent licensed private investigation firm for every applicant. In the case in which an individual is signing an application on behalf of an applicant that is not a natural person, a background report shall be prepared for both such individual and the entity for which he or she is signing the application;

(14) a description of the services that will be provided to the debtor by the applicant citing specifically the topics to be discussed and the related timeframes involved;

(15) a litigation affidavit prepared for each applicant;

(16) a statement of merit describing the proposed operation including but not limited to:

(i) a list of all fees to be charged by the applicant;

(ii) the sources of funding and financing available to the applicant; and

(iii) a business plan which describes in detail the budgeting, educational, and counseling services to be offered; the policies and procedures governing each such service including the curriculum to be utilized to provide the educational services; the person(s) responsible for administering each such service and the training to be provided to employees engaged in the rendering of each such service;

(17) the applicant's financial statements for the past three years or, for new corporations, a pro forma financial statement. Financial statements shall include a balance sheet, a statement of revenues and expenses, and a statement of cash flows;

(18) a copy of the contract to be used with debtors or potential debtors which shall at a minimum include:

(i) a complete list of the debtor's obligations to be adjusted, including the name of each creditor;

(ii) the total fees agreed to for such services, including any adjustments for estimated available rebates from creditors, provided that nothing in this subdivision shall require a licensee to share rebates with its clients;

(iii) the commencement and termination date of the contract;

(iv) a pro forma statement of the total fees to be charged, including expected available rebates from creditors, expressed as a percentage of the total obligations, principal and interest to be adjusted under such contract.

3 CRR-NY 402.3 Services to be provided by licensee {#sec-3-crr-ny-402.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.3}

(a) Every licensee shall make an initial assessment of the potential debtor's financial situation taking into account at a minimum, the potential debtor's available and projected income and the existence of other liquid assets as well as the potential debtor's indebtedness to determine if it is in the best economic interest of the potential debtor to enter into a budget planner contract. If not, the licensee shall recommend that the potential debtor seek legal or other appropriate advice as to other alternatives, including bankruptcy.

(b) Every licensee shall provide adequate budgeting, educational and counseling services directly to the debtor, consistent with the purposes of article 12-C of the New York Banking Law.

(c) Upon receipt of funds from the debtor, the licensee shall promptly transmit such funds, less any contractual fees which are due and owing to it from the debtor, to the creditor(s).

3 CRR-NY 402.4 Duration of qualifier experience {#sec-3-crr-ny-402.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.4}

If at any time the licensee ceases to be in compliance with the requirement of section 402.2(b)(11) of this Part, it shall notify the superintendent within 10 calendar days of such noncompliance. Within three calendar days of making such notification, the licensee shall submit to the superintendent, the name and qualifications of any other director, whether or not a member of the governing board, who has been engaged by the licensee to satisfy the requirements of section 402.2(b)(11) of this Part.

3 CRR-NY 402.5 Provision for surety bond {#sec-3-crr-ny-402.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.5}

(a) Except as provided in section 402.6 of this Part, every licensee shall file with the superintendent a corporate surety bond in the principal amount of $250,000, or such larger or smaller amount as the superintendent may require. If the licensee is notified that a larger bond is required, such larger bond shall be in full force within 30 days. A copy of the larger bond shall be submitted to the superintendent. The corporate surety bond required by the section shall be issued by a bonding company or insurance company authorized to do business in this State. The form of the bond shall be obtained from the Licensed Financial Services Division of the Banking Division of the Department of Financial Services.

(b) Such bond shall be in favor of the superintendent. The bond, or deposit agreement entered into pursuant to section 402.7 of this Part, shall contain substantially the following language:

"The proceeds of this shall constitute a trust fund in favor of the superintendent to be used exclusively to reimburse payments by debtors that have not been properly distributed to creditors or to reimburse fees determined by the superintendent to be improperly charged or collected and, in the event of the insolvency, liquidation or bankruptcy of such licensee, to pay outstanding department examination costs and assessments."

(c) Within 90 days of the effective date of Banking Law, section 580, as amended by chapter 629 of the Laws of 2002, which date is April 7, 2003, each licensee shall comply with the provisions of this section.

3 CRR-NY 402.6 Deposit of assets in lieu of surety bond; assets eligible for deposit {#sec-3-crr-ny-402.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.6}

(a) A licensee, in lieu of obtaining a bond pursuant to this Part, may keep on deposit in a branch of a bank, savings bank, savings and loan association, trust company, private banker, national bank, Federal savings bank, or Federal savings and loan association, located in this State, regardless of whether the principal office of the foregoing institution is located within or without this State, subject to the approval of the superintendent, interest-bearing bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States, or of this State, or of a city, county, town, village, school district, or instrumentality of this State or guaranteed by this State, or dollar deposits. The amount of the deposit shall be $250,000 (based on the lower of principal amount or market value), or such larger or smaller amount as the superintendent may require.

(b) In addition to the assets described in subdivision (a) of this section, the following assets are eligible for deposit for purposes of this Part:

(1) commercial paper payable in dollars in the United States provided such paper is accorded the highest rating of a rating service designated by the superintendent pursuant to section 61.1 of this Title. In the event that an issue of commercial paper is rated by more than one designated rating service, it must have the highest rating of each;

(2) negotiable certificates of deposit that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation;

(3) banker's acceptances that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation;

(4) bonds which have an investment grade rating from either Moody's Investors Services, Inc., Standard & Poor's Corporation or Fitch Investors' Service, Inc.; and

(5) such other assets as approved by the superintendent upon written application.

(c) If the superintendent determines that an asset which otherwise qualifies under paragraphs (b)(1) through (5) of this section is valued for purposes of this Part at less than the amount otherwise required by this Part, the superintendent shall so notify the licensee which shall thereafter value such asset for purposes of this Part as directed by the superintendent.

(d) Within 90 days of the effective date of Banking Law, section 580, as amended by chapter 629 of the Laws of 2002, which date is April 7, 2003, each licensee shall comply with the provisions of this section.

3 CRR-NY 402.7 Deposit agreement; certificate of licensee {#sec-3-crr-ny-402.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.7}

A licensee, which elects to deposit assets of the type listed in section 402.6 of this Part, shall execute with an approved depository a deposit agreement, which shall be in the form prescribed by the Licensed Financial Services Division of the Banking Division of the Department of Financial Services. An executed copy of such deposit agreement shall be filed with the superintendent. As part of the deposit agreement, the licensee shall agree that prior to the release or substitution of any pledged assets subject to the deposit agreement, the licensee shall file a certificate with the depository which shall specify the following:

(a) the complete title of each pledged asset being withdrawn;

(b) the complete title of each pledged asset being deposited in place thereof;

(c) the interest rate, series, serial number (if any), face value, maturity date, call date, principal amount and market value of each replacement pledged asset;

(d) the aggregate principal amount of all such replacement pledged assets;

(e) the amount, if any, of the funds being withdrawn or deposited; and

(f) a certification that any pledged assets being deposited in exchange for pledged assets being withdrawn comply as to type with the provisions of section 402.6 of this Part, and that, after giving effect to the exchange, the aggregate of all pledged assets remaining on deposit by the licensee, based in the case of such pledged assets upon the principal amount or market value, whichever is lower, shall be $250,000, or such larger or smaller amount as the superintendent may require.

3 CRR-NY 402.8 Reports of changes in directors, bylaws and certificate of incorporation of licensee {#sec-3-crr-ny-402.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.8}

(a) The licensee shall notify the superintendent in writing, within 10 days of the following:

(1) the name and address of any director or individual who supervises the daily operations of the licensee who terminates or alters his or her status with the licensee; and

(2) the name of any individual who becomes associated with the business of the licensee as a director or any new individual who supervises the daily operations of the licensee.

Any new director or individual shall also furnish a resume. The superintendent may request other information and documentation from the licensee in determining whether to approve any such director or individual. If the superintendent objects to any new director or individual, the superintendent shall notify the licensee of such objection setting forth the reasons therefor.

(b) If the superintendent finds that a proposed new director, who is not a control party, fails to meet the standards set forth in section 581 of the New York Banking Law, the superintendent may prohibit such person from serving in any capacity on behalf of the licensee or, in the case of an application for a change of control, deny such application. The superintendent may request other information and documentation from the licensee in determining whether to approve any such director. If the superintendent objects to any new director, the superintendent shall notify the licensee of such objection setting forth the reasons therefor.

(c) The licensee shall submit to the superintendent changes to its bylaws or certificate of incorporation within 30 days of such change.

3 CRR-NY 402.9 Debtors contact with licensees and department {#sec-3-crr-ny-402.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.9}

(a) Every licensee must establish either:

(1) a toll-free number; or

(2) a phone number which may be called “collect” for the purpose of enabling debtors to make inquiries of or complaints to the licensee.

Every debtor must be informed, in writing, of this phone number and the department's toll-free phone number at the time he or she executes the contract.

(b) Every licensee shall furnish to the debtor at least quarterly a periodic statement of account on which the department's toll-free telephone number, as set forth in section 1.1 of Supervisory Policy G 1 of this Title, shall be displayed conspicuously in at least 10-point bold type.

3 CRR-NY 402.10 Right of debtors to rescind contract {#sec-3-crr-ny-402.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.10}

(a) Every contract between a licensee and a debtor must provide that the debtor may rescind the contract until midnight of the third business day after the day on which the debtor signed the contract. The licensee shall expressly inform every debtor of such provision prior to or simultaneously with the execution of the contract.

(b) Notice of rescission is effective when it is given in writing to the licensee by the debtor.

(c) Notice of rescission, if given by mail, shall be deemed given when deposited in a mailbox with the correct address and proper postage.

(d) If a debtor exercises the right of rescission within the timeframe specified in this section, the licensee shall promptly return to the debtor all fees associated with the contract that were paid to it by the debtor. Such fees shall not include reasonable counseling fees imposed on debtors separate and apart from the execution of a budget planner contract.

3 CRR-NY 402.11 Term and termination; assignment {#sec-3-crr-ny-402.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.11}

(a) Every contract between a licensee and a debtor shall be limited to a payment period not to exceed 60 months.

(b) Every contract between a licensee and a debtor shall contain a provision which states that the debtor may terminate the contract upon 10 days written notice to the licensee without any fee or penalty. Upon receiving such notice, the licensee shall return to the debtor all monies received from the debtor which are in its possession. No licensee shall communicate any derogatory information about a debtor to a creditor based solely on the fact that a debtor has terminated his or her contract with the licensee. Derogatory information does not include notification that the debtor is no longer a client.

(c) Every contract between a licensee and a debtor shall contain a provision which states that the contract may not be assigned without the written consent of the debtor.

3 CRR-NY 402.12 Unfair or deceptive acts or practices {#sec-3-crr-ny-402.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.12}

No licensee shall seek to avoid compliance with this Part by any device, subterfuge or pretense whatsoever.

3 CRR-NY 402.13 Reports to be filed with the superintendent {#sec-3-crr-ny-402.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.13}

(a) Each licensee shall annually, on or before the first day of February, furnish a report containing the following information and documentation, which shall be certified as accurate by a control party:

(1) number of clients nationwide and number of debtors in the preceding calendar year;

(2) number of new clients nationwide and number of new debtors in the preceding calendar year;

(3) for debtors, a schedule of fees charged, including initial fee, monthly fee and specific details as to how these fees are computed; and

(4) the agreement utilized for debtors if it has been modified since the date of application or subsequently and has not been previously submitted.

(b) Each licensee shall, on a quarterly basis, report to the superintendent the highest daily amount of debtor funds held by the licensee for disbursement to creditors. This information shall be certified as accurate by a control party and shall be provided by no later than 10 business days after the end of the preceding quarter.

(c) Each licensee shall, within 90 days of the close of the licensee's fiscal year, submit an independently audited financial statement to the superintendent.

3 CRR-NY 402.14 Changes to licensee's fee structure {#sec-3-crr-ny-402.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.14}

Any modification of the licensee's fee structure for debtors shall require that the licensee notify the superintendent in writing of the proposed change(s) at least 30 calendar days prior to implementation. The superintendent shall review the fee structure taking into consideration the expenses of the operation, the financial status of the debtor(s) and such other factors as the superintendent shall deem relevant. The licensee may implement the modified fee structure unless the superintendent disapproves of the change(s) in writing within 30 days of notification of the proposed change(s) unless such time period is extended in writing by the superintendent.

3 CRR-NY 402.15 No commingling of licensee's funds {#sec-3-crr-ny-402.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.15}

(a) Accounts established by the licensee to maintain debtor(s) funds must be held in the title of “Budget Planner as Agent for the Benefit of Principal(s) (i.e., Debtor[s]).” The licensee must maintain, at all times, debtor records in such a manner as to make ascertainable the interests of the debtors, i.e., the records must sufficiently identify the deposit balance of each debtor on any given day.

(b) Accounts must be maintained in a branch of a bank, savings bank, savings and loan association, trust company, private banker, national bank, Federal savings bank, or Federal savings and loan association located in this State, regardless of whether the principal office of the foregoing institution is located within or without this State.

3 CRR-NY 402.16 Licensee's privacy policy {#sec-3-crr-ny-402.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.16}

Each licensee shall comply with the privacy provisions contained in title 5 of the Gramm- Leach-Bliley Act of 1999, which is found in 15 United States Code* section 6801 et seq., and the regulations promulgated thereunder by the Federal Trade Commission, which are found in title 16, Code of Federal Regulations,* part 313 et seq.

3 CRR-NY 402.17 Office display {#sec-3-crr-ny-402.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.17}

(a) Every licensed budget planner shall display in full public view at both its principal office and any branch office in New York State, a sign(s) which shall be no less than 20 inches wide and 12 inches high with letters one-half inch in size indicating:

(1) the name and principal address of the licensee;

(2) that the budget planner is licensed and regulated by the New York State Department of Financial Services; and

(3) that if a debtor has any inquiries or complaints, he or she may call the New York State Department of Financial Services’ toll-free number, write to the Department of Financial Services, c/o Consumer Services Division, or submit a complaint filed electronically via the department's web page, in each case as set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(b) The sign required in subdivision (a) of this section must be in the English language and in any other predominant language(s) spoken by the debtors of the licensee.

(c) The above information shall be conspicuously displayed in at least 10-point bold type in the appropriate language(s) on the front page of every contract with every debtor.

3 CRR-NY 402.18 Change of location {#sec-3-crr-ny-402.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.18}

A licensee seeking to change the location of one of its offices must give written notice to the superintendent at least 30 days prior to such change. The notice shall:

(a) state the reason(s) for the change;

(b) provide a projection of any increased expenses which may be incurred; and

(c) state the extent, if any, to which the licensee intends to increase fees to its debtors as a result of the change in location.

If the superintendent determines that there is no reasonable objection to such change of location, the superintendent shall attach a rider to the license setting forth the change in location.

3 CRR-NY 402.19 Reports of arrests, convictions, etc {#sec-3-crr-ny-402.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.19}

A written report shall be made to the superintendent of any arrest, indictment or conviction (including any plea bargaining agreement) of any control party, director, or employee of the licensee, for the violation of any law within 10 days after such arrest, indictment or conviction becomes known to the licensee.

3 CRR-NY 402.20 Reports of misconduct {#sec-3-crr-ny-402.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.20}

Every licensee shall submit a report to the superintendent immediately upon the discovery of any of the events listed in Part 300 of this Title. Such report shall be submitted as set forth in Part 300 of this Title.

3 CRR-NY 402.21 Books and records {#sec-3-crr-ny-402.21 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.21}

(a) Every licensee shall keep its books and records in a manner which will allow the superintendent to determine whether the licensee is complying with article 12-C of the Banking Law. Every licensee shall preserve its books and records for inspection for a minimum of six years. Specifically, every licensee shall establish and maintain the following to be kept readily available for review by the superintendent:

(1) all rejected debtor application files which shall contain all documentation relating to the applications. A list of rejected files shall be maintained;

(2) all cancelled debtor application files which shall contain all documentation relating to the applications. A list of cancelled files shall be maintained;

(3) a correspondence folder to contain all correspondence to and from the department, or copies thereof;

(4) a separate file for all written debtor complaints to contain the original complaint, documentation of actions taken and any related correspondence; and

(5) a current business plan which describes in detail the budgeting, educational and counseling services offered; the policies and procedures governing each service including the curriculum utilized that provides the educational and counseling services; the person(s) responsible for administering each such service and the training provided to employees engaged in the rendering of each such service.

(b) Ledgers.

Each licensee shall maintain a general ledger and such subsidiary ledgers as is necessary to accurately record all assets, liabilities, net assets, income and expenses, and contingencies. Such ledgers shall be posted at least monthly. As of the end of each month a trial balance shall be prepared and kept readily available for inspection by department personnel.

(c) In the event the licensee conducts business in more than one state, New York debtor files are to be kept separate from the individual client files of other states. Upon request, the New York client files are to be made readily available to the superintendent or the superintendent's duly appointed representative.

(d) In the event that books and records are maintained at a location that is not within the dominion and control of the licensee, the licensee shall provide the superintendent with a written authorization to examine, have access to, and retain copies of all its books and records relating to its budget planning business.

3 CRR-NY 402.22 Licensee's return of unused debtor funds {#sec-3-crr-ny-402.22 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.22}

The licensee must demonstrate a “good faith effort” to locate and refund any monies to the debtor that, for whatever reason, cannot be sent to a creditor.

3 CRR-NY 402.23 Effective date {#sec-3-crr-ny-402.23 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 402.23}

The effective date of these amendments to this Part shall be April 7, 2003.

Part 403 SALES FINANCE COMPANIES

3 CRR-NY 403.1 Books and records {#sec-3-crr-ny-403.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 403.1}

(a) Until payment in full, every licensee shall file each finance agreement or duplicate originals thereof, and all insurance documents relating thereto, except those papers returned to the buyer, so as to be readily available for inspection at any time. All such papers and instruments shall bear a common identifying number. (For the purpose of this Part, the term finance agreements shall include retail instalment contracts, obligations and credit agreements as defined in Personal Property Law, sections 301 and 401, and Banking Law, section 491.)

(b) Every licensee shall maintain a record which will readily disclose, at any time, the aggregate number and outstanding time balances of all finance agreements held by it.

(c) Every licensee shall maintain an individual ledger card or appropriate combination of records with respect to each finance agreement showing:

(1) The name and address of the buyer.

(2) The name and address of the seller.

(3) The date of the contract.

(4) The amount of the principal balance.

(5) The amount and date each installment is due.

(6) The amount and date each installment is paid.

(7) The number of installments due as set forth in the contract.

(8) The total credit service charge set forth in the contract.

(9) The amount, if any, charged for credit life insurance as set forth in the contract.

(10) The amount, if any, charged for any other insurance as set forth in the contract.

(11) The amount of any rebate granted for anticipation including the date rebated.

(12) The date and amount of late charge collected, identifying the installment for which it was imposed.

(13) The amount and date any extension or renewal charge is collected indicating the period extended or deferred.

(14) The amount, if any, charged to or paid by the buyer, for official fees.

(d) With respect to any finance agreement whether charged off or not, upon which legal proceedings have been taken, every licensee shall clearly indicate in permanent form on the buyer's ledger card or on a separate sheet or card or file bearing the identifying number, the following:

(1) The date of referral to an attorney for collection.

(2) The name and address of such attorney.

(3) The date and terms of any settlement agreed upon or the results of any legal or summary action taken for or against the licensee.

(4) The amount of attorney's fee incurred by the licensee in connection with litigation and charged to or paid by the buyer or other obligor.

(e) If any goods are repossessed, the licensee shall clearly indicate in permanent form on the buyer's ledger card or on a separate sheet or card or file bearing the identifying number, the following:

(1) Date of repossession.

(2) A record of letters or other communication sent to buyer indicating default or intention to retake.

(3) Itemized list of expenses incurred in the retaking, keeping and storing if charged to or paid by the buyer or other obligor.

(4) Name and address of agency or persons repossessing merchandise.

(5) If the repossessed merchandise is sold, the date, price obtained, and name and address of person or agency to whom sold.

(6) The name and address of auctioneer, if any.

(7) If the licensee is the buyer at sale, the date, price obtained and name and address of person or agency to whom merchandise is resold.

(f) Every licensee shall preserve such books, accounts and records, including cards used in a card system, if any, for at least six years after making the final entry in respect to any finance agreement recorded therein; provided, however, the preservation of photographic reproductions thereof or records in photographic form shall constitute compliance with this section.

3 CRR-NY 403.2 Filing of rate charts and agreements {#sec-3-crr-ny-403.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 403.2}

(a) Within three business days after a licensee issues, distributes, furnishes or makes available any form or forms of finance agreements to be used by retail sellers in connection with retail installment sales, such licensee shall file with the superintendent one copy of each such form.

(b) Any licensee which issues, distributes, furnishes or makes available any chart or charts setting forth rates or amounts for credit service charges, and/or insurance, to be used in connection with the installment sale of motor vehicles or other goods or services, for the convenience of a retail seller or otherwise, shall file with the superintendent one copy of each of such charts not later than three days after the issuance thereof.

(c) If, at any time, subsequent to filing, the existing charts are altered, amended or changed, or new charts are issued, one copy of the amendments, alterations, changes or new charts shall be filed with the superintendent not later than three days after the issuance thereof.

(d) The term “chart”, as used in this section, means all tables, formulae and instructions for the computation of credit service charges or service charges, including rates or tables for the incidental sale of insurance, and all variations thereof caused by or based upon class, geographic area, maturity or any other reason, and includes any and all printed material explaining or describing the manner in which such charts are to be utilized.

(e) Every form of finance agreement and every chart of which a copy is required to be filed with the superintendent pursuant to the provisions of this section shall bear thereon a date of issuance and an identifying symbol consisting of numbers or letters or a combination thereof.

3 CRR-NY 403.3 Advertising {#sec-3-crr-ny-403.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 403.3}

(a) No licensee shall represent, either orally or in writing, directly or indirectly, by any means whatsoever, including, but not limited to, the use of any office sign (except its duly issued license) or the use and circulation of any letterheads, billheads, blank forms, notes, receipts, certificates, circulars or any written or printed or partly written or printed matter whatever that it is licensed by or subject to the supervision of the superintendent or this State, except by use of the following phrase:

“Licensed, pursuant to Article 11-B of the Banking Law, only for the purpose of engaging in the business of acquiring agreements arising from retail instalment sales.”

provided that the use or use and circulation of any written or printed matter containing the foregoing phrase may only be in connection with the licensee's business as a sales finance company.

3 CRR-NY 403.4 Changes in directors, officers or stockholders {#sec-3-crr-ny-403.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 403.4}

(a) Every corporate licensee shall within 10 days after the occurrence of the event advise the superintendent, in writing:

(1) of the name and residence of each stockholder owning 20 percent or more of the stock of the licensee, and of each director and officer who terminates or alters his status with the licensee, and

(2) the name and residence of each person who becomes a stockholder owning 20 percent or more of the stock of the licensee, or a director or officer.

(b) If paragraph (2) above is applicable, advise the superintendent, in writing, whether or not:

(1) any such person has ever previously applied for a license to do business as a sales finance company in this State, and the disposition of such application;

(2) any such person, previously licensed under article 11-B of the Banking Law, has had such license revoked or suspended;

(3) any such person has ever applied to any other State for a license to engage in the business of acquiring retail installment contracts, obligations or credit agreements, and the disposition of such application;

(4) any license to engage in the business of acquiring retail installment contracts, obligations or credit agreements, issued by any other State to any such person, has ever been revoked or suspended;

(5) any such person has ever been found guilty of violating any of the provisions of article 11-B of the Banking Law or any other law regulating retail installment sales contracts, obligations or credit agreements;

(6) any such person has ever been responsible for any act or omission in consequence of which a license issued under article 11-B of the Banking Law to any person has been revoked or suspended.

3 CRR-NY 403.5 Report of arrests, indictments or convictions {#sec-3-crr-ny-403.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 403.5}

Every licensee shall make a written report to the superintendent of any arrests, indictment or conviction of such licensee, of any member of a partnership licensee, or of any stockholder owning 20 percent or more of any class of the outstanding capital stock of a corporate licensee, or of any director or officer thereof, or of any party in interest of any other type of licensee, for any crime in any jurisdiction. Such report shall be made to the superintendent within 10 days after the occurrence of the event becomes known to the licensee.

Part 404 BUDGET PLANNERS/DELEGATION OF CERTAIN ACTIVITIES

3 CRR-NY 404.1 Definitions {#sec-3-crr-ny-404.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.1}

For purposes of this Part:

(a) The term debtor shall mean an individual who enters into a contract with a licensee and is at that time a New York resident.

(b) The term licensee shall mean an entity licensed pursuant to article 12-C of the New York Banking Law.

(c) The term licensee service provider shall mean an entity licensed pursuant to article 12-C of the New York Banking Law that holds, or has access to, or can effectuate possession of, by any means, the monies of another licensee's debtors, or distributes, or is in the chain of distribution of such monies, to the creditors of such debtors, pursuant to an agreement or contract with the licensee. This term shall not include entities that solely provide the electronic routing and settlement of financial transactions and their sponsoring banks.

(d) The term non-licensee service provider shall mean an entity that holds, or has access to, or can effectuate possession of, by any means, the monies of a licensee's debtors, or distributes, or is in the chain of distribution of such monies, to the creditors of such debtors, pursuant to an agreement or contract with the licensee. This term shall not include entities that solely provide the electronic routing and settlement of financial transactions and their sponsoring banks.

(e) The term control party shall mean with respect to a licensee, any individual or entity that possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of a licensee. With respect to a non-licensee service provider it shall mean any individual or entity that has a 10 percent or more ownership interest in the non-licensee service provider and/ or any individual or entity that possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of a non-licensee service provider.

3 CRR-NY 404.2 Explanatory note {#sec-3-crr-ny-404.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.2}

Section 580.4 of article 12-C of the New York Banking Law requires licensees to obtain a surety bond, or in lieu of obtaining such a bond, maintain certain assets on deposit, which constitute a trust fund to be used to reimburse payments made by debtors that have not been properly distributed by the licensee to the creditors of the debtors. In circumstances in which a licensee uses a licensee service provider or a non-licensee service provider to hold, or have access to, or to effectuate possession of, by any means, the monies of a licensee's debtors, the services of such service providers shall be subject to the terms and conditions set forth in sections 404.3, 404.4, 404.5 and 404.6 of this Part, in order to provide the consumer protections afforded to licensees' debtors as mandated under article 12-C of the New York Banking Law. In complying with these terms and conditions, a licensee that obtains a surety bond pursuant to section 580.4 of the Banking Law and uses the services of a licensee service provider as described, is required to use a licensee service provider that either obtains a surety bond or maintains assets on deposit, in accordance with the provisions of Banking Law, section 580.4. Similarly, if the licensee obtains a surety bond and uses the services of a non-licensee service provider as described, the licensee is required to use a non-licensee service provider that maintains assets on deposit, in accordance with the provisions of section 404.4(c)(2) of this Part. If, however, a licensee elects to maintain assets on deposit pursuant to Banking Law, section 580.4 and uses the services of a licensee service provider or a non-licensee service provider as described, there is no requirement that the licensee service provider or the non-licensee service provider obtain a surety bond or maintain assets on deposit. The licensee service provider would, of course, be required to obtain a surety bond or maintain assets on deposit with respect to its own contracts with debtors for budget planning services, pursuant to Banking Law, section 580.4.

3 CRR-NY 404.3 Servicing by a licensee service provider {#sec-3-crr-ny-404.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.3}

(a) If a licensee seeks to utilize a licensee service provider to hold, or have access to, or to effectuate possession of, by any means, the monies of another licensee's debtors in contract with the licensee for budget planning services, or to distribute, or be in the chain of distribution of such monies to creditors of the licensee's debtors, the licensee shall give the superintendent 10 days written notice of its intention to do so.

(b) Notice to the superintendent shall contain the following information:

(1) name and address of the licensee service provider;

(2) a description of the services to be provided by the licensee service provider;

(3) a copy of the agreement or contract between the licensee and the licensee service provider with respect to the provision of any or all of the services described in subdivision (a) of this section; and

(4) the highest daily amount of debtor funds of the licensee to be held by the licensee service provider, or to which access is given to the licensee service provider, or to which possession can be effectuated, by any means, by the licensee service provider, or which are distributed by the licensee service provider, or are in the chain of distribution, to the creditors of the licensee's debtors.

(c) Unless the licensee maintains assets on deposit in lieu of a surety bond, pursuant to Banking Law, section 580.4, the superintendent, in his/her discretion, may require the licensee service provider to obtain a larger surety bond or maintain a greater amount of assets on deposit for the protection of debtors in accordance with the terms and conditions as set forth in sections 402.5, 402.6 and 402.7 of this Title in connection with the services being provided by the licensee service provider to the licensee as described in subdivision (a) of this section.

(d) A licensee shall not use a licensee service provider until the licensee receives written notice from the superintendent confirming that the superintendent has received a copy of the licensee service provider's bond or asset deposit agreement, if required under subdivision (c) of this section.

(e) Notwithstanding the provisions of subdivision (c) of this section, if a licensee maintains a surety bond and seeks to utilize a licensee service provider, as defined in section 404.1(c) of this Part, the superintendent, in his/her sole discretion, may permit the use of an alternate mechanism to the licensee service provider obtaining a larger surety bond or maintaining a greater amount of assets on deposit, consistent with the purposes of section 580.4 of article 12-C of New York's Banking Law and the requirements of this Part.

(f) If the use of an alternate mechanism pursuant to subdivision (e) of this section is proposed by a licensee, the licensee must provide a description of the alternate mechanism and a copy of all applicable documents and records, as well as any other information requested by the superintendent, in connection with obtaining and/or using the alternate mechanism, including all contracts/ agreements pertaining or related thereto.

(g) If a licensee proposes the use of an alternate mechanism to a licensee service provider obtaining a larger surety bond or maintaining a greater amount of assets on deposit, pursuant to subdivision (e) of this section, use of the alternate mechanism shall not be permitted until the licensee receives written notice from the superintendent that he/she has no objection to such alternate mechanism.

3 CRR-NY 404.4 Servicing by a non-licensee service provider {#sec-3-crr-ny-404.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.4}

(a) If a licensee seeks to utilize a non-licensee service provider to hold, or have access to, or to effectuate possession of, by any means, the monies of the licensee's debtors in contract with the licensee for budget planning services, or to distribute, or to be in the chain of distribution of such monies, to the creditors of the licensee's debtors, the licensee shall give the superintendent 10 days written notice of its intention to do so.

(b) Notice to the superintendent shall contain the following information:

(1) name and address of the non-licensee service provider;

(2) name, address, social security number and resume of the officers and directors of the non-licensee service provider, any other individual(s) who supervises the daily operations of the non-licensee service provider and any persons having a 10 percent or more ownership interest, directly or indirectly, in the non-licensee service provider. If an individual(s) has a 10 percent or more ownership interest in the non-licensee service provider and such individual is not a control party of the licensee with whom the non-licensee service provider is in contract to provide the services described in subdivision (a) of this section, such individual shall provide an affidavit attesting to that fact;

(3) a description of the services to be provided to the licensee by the non-licensee service provider;

(4) a copy of the agreement or contract between the licensee and the non-licensee service provider with respect to the provision of any or all of the services described in subdivision (a) of this section; and

(5) the highest daily amount of debtor funds to be held by the non-licensee service provider, or to which access is given to the non-licensee service provider, or to which possession can be effectuated, by any means, by the non-licensee service provider, or which are distributed by the non-licensee service provider, or are in the chain of distribution, to the creditors of the debtors.

(c) A licensee shall not use a non-licensee service provider for the services described in subdivision (a) of this section until:

(1) the non-licensee service provider gives the superintendent or his/her authorized representative written authorization to examine all books, records, documents and materials, including those maintained in electronic form, as they relate to the debtors monies held by, or distributed by the non-licensee service provider to the creditors of the debtors, as the superintendent in his/her discretion deems necessary to protect the interests of the debtors. The cost of such examination shall be borne by the licensee in contract with the non-licensee service provider; and

(2) unless the licensee maintains assets on deposit in lieu of a surety bond, pursuant to Banking Law, section 580.4, the non-licensee service provider shall maintain assets on deposit for the protection of the debtors whose monies it holds, or has access to, or can effectuate possession of, by any means, or which are distributed, or are in the chain of distribution, by the non-licensee service provider, to the creditors of the debtors. The maintenance of such assets shall be in accordance with the terms and conditions as set forth in sections 402.6 and 402.7 of this Title; and

(3) all information required in subdivision (b) of this section and a copy of the non-licensee service provider's asset deposit agreement, if required under paragraph (2) of this subdivision, have been provided to the superintendent, and the licensee receives written notice from the superintendent confirming that the superintendent has received all such information.

(d) Notwithstanding the provisions of paragraph (c)(2) of this section, if a licensee maintains a surety bond and seeks to utilize a non-licensee service provider, as defined in section 404.1(d) of this Part, the superintendent, in his/her sole discretion, may permit the use of an alternate mechanism to the non-licensee service provider maintaining assets on deposit, consistent with the purposes of section 580.4 of article 12-C of New York's Banking Law and the requirements of this Part.

(e) If the use of an alternate mechanism pursuant to subdivision (d) of this section is proposed by a licensee, the licensee must provide a description of the alternate mechanism and a copy of all applicable documents and records, as well as any other information requested by the superintendent, in connection with obtaining and/or using the alternate mechanism, including all contracts/ agreements pertaining or related thereto.

(f) If a licensee proposes the use of an alternate mechanism to a non-licensee service provider maintaining assets on deposit pursuant to subdivision (d) of this section, use of the alternate mechanism shall not be permitted until the licensee receives written notice from the superintendent that he/she has no objection to such alternate mechanism.

3 CRR-NY 404.5 Termination of agreements or contracts {#sec-3-crr-ny-404.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.5}

(a) Every agreement or contract between a licensee and a licensee service provider, or a non- licensee service provider, to hold, or have access to, or to effectuate possession of, by any means, the monies of the licensee's debtors in contract with the licensee for budget planning services, or to distribute, or be in the chain of distribution of such monies, to creditors of such debtors, shall provide that the agreement or contract shall not be terminated without at least 30 days written notice to the party against whom termination is being sought.

(b) A licensee shall immediately notify the superintendent, in writing, of such termination, upon the sending of by the licensee, or upon the receipt by the licensee, of the notice of termination.

3 CRR-NY 404.6 [Repealed] {#sec-3-crr-ny-404.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.6}

3 CRR-NY 404.7 to 404.14 to 404.14 [Repealed] {#sec-3-crr-ny-404.7-to-404.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 404.7 to 404.14}

Part 405 PREMIUM FINANCE AGENCIES

3 CRR-NY 405.1 Books and records {#sec-3-crr-ny-405.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.1}

(a) Until payment in full, every licensee shall file each premium finance agreement or duplicate originals, thereof, and all original documents relating thereto (except those papers returned to the insured) so as to be readily available for inspection at any time. All such papers and instruments shall bear a common identifying number.

(b) Every insurance premium finance agreement which originates with a broker or agent shall contain a statement of the amount of the charge under Insurance Law, section 2119, and a statement as to the services for which such charge is made. A statement that “the services for which the charge pursuant to Insurance Law, section 2119, is imposed are in connection with obtaining and servicing the policies listed hereon” will normally suffice. If such charge is not being financed, the amount thereof, if any, need not be set forth in the calculations required under Banking Law, section 567(3)(b), but may be set forth separately in the agreement with an appropriate indication that it is not being financed. An insurance premium finance agreement which does not originate with an agent or broker need not contain such statement unless the charge pursuant to Insurance Law, section 2119, is being financed. Unless such premium finance agreement contains a statement with respect to such charge, every premium finance agency, as defined in Banking Law, section 554(7), shall obtain from the insured at the time of entering into the premium finance agreement a separate statement, to be signed by the insured, stating that the insured has paid no such charge, or if such charge has been paid, the amount thereof. Nothing herein contained shall be construed to impose any duty upon a premium finance agency to verify whether a charge pursuant to Insurance Law, section 2119, has been imposed or, if so imposed the amount thereof or the reasons therefor.

(c) Every licensee shall maintain a register, ledger or combination of records containing a summary of premium finance agreements acquired, other than pursuant to a pledge, which can readily show;

(1) the date of acquisition;

(2) the name of the insured;

(3) the identifying number;

(4) the principal balance;

(5) the amount of service charge;

(6) the time balance;

(7) a distribution of proceeds showing the dates, amounts, purposes and names of the person to whom any part of the proceeds is distributed.

The record shall also show the application of any part of the proceeds to an unpaid balance due on an existing premium finance agreement which is terminated by a refinance agreement. For the purpose of this Part, the time balance shall mean the sum of the principal balance plus the amount of the service charge.

(d) Every licensee shall maintain a record which will readily disclose at any time, the aggregate number and outstanding time balances of all premium finance agreements held by it, other than pursuant to a pledge.

(e) Every licensee who is an insurance agent or broker and who holds a license pursuant to and restricted by Banking Law, section 566(1), shall keep a separate record which will readily disclose at all times the aggregate number and outstanding time balances of premium finance agreements reacquired by the agent or broker from a premium finance agency under an agreement, entered into as an incident to the bona fide sale or pledge thereof to the premium finance agency, to reacquire it in case of default by the insured.

(f) Every licensee shall maintain an individual ledger card or appropriate combination of records with respect to each premium finance agreement showing:

(1) the name and address of the insured;

(2) the identifying account number;

(3) the name of the producer;

(4) the amount of the principal balance;

(5) the date of acquisition;

(6) the name or names of the insurers and the policy numbers of the related insurance contracts;

(7) the date from which the service charge is payable and whether such date is the inception date of the insurance contract or the due date of the premium financed or neither;

(8) the service charge;

(9) the time balance;

(10) schedule of required payments.

(g) The ledger card shall also show all receipts setting forth their application to outstanding time balance, fines and other charges, if any, with the type of such charge clearly specified.

(h) With respect to cancellation of insurance the licensee shall record the effective date of such cancellation, the date of notice to the insured and the date of notice to the insurer. There shall also be recorded the amount of return premium, if any, received and the disposition thereof.

(i) In connection with the prepayment of a premium finance agreement the ledger card shall show the amount of service charge refund required to be made and the date such refund is made.

(j) With respect to any premium finance agreement, whether charged off or not, upon which legal proceedings have been taken, every licensee shall clearly indicate in permanent form on the insured's ledger card or on a separate sheet or card or file bearing the identifying account number, the following:

(1) the date of referral to an outside counsel for collection;

(2) the date and terms of any settlement agreed upon or the results of any legal or summary action taken for or against the licensee;

(3) the nature of any collection expense incurred by the licensee in connection with litigation and charged to or paid by the insured or other obligor.

Records bearing any notation made in conformity with this subdivision shall be kept in a binder or file separate from other records, provided that the record as to premium finance agreement which has been paid in full, or which is current as to payments, or concerning which a decision has been officially made to abandon collection efforts of every kind, may be placed elsewhere.

3 CRR-NY 405.2 Filing of rate charts and agreement forms {#sec-3-crr-ny-405.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.2}

(a) Within three business days after a licensee issues, distributes, furnishes or makes available any chart or charts setting forth rates or amounts for service charges to be used in connection with premium finance agreements for the convenience of agents or brokers, such licensee shall file with the superintendent three copies of each such chart.

(b) Within three business days after a licensee issues, distributes, furnishes or makes available any form or forms of premium finance agreements to be used by agents or brokers in connection with premium financing, such licensee shall file with the superintendent three copies of each such form.

(c) Every form of premium finance agreement and every chart of which a copy is required to be filed with the superintendent pursuant to the provisions of this section shall bear thereon a date of issuance and an identifying symbol consisting of numbers or letters or a combination thereof.

3 CRR-NY 405.3 Advertising {#sec-3-crr-ny-405.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.3}

No licensee shall represent, either orally or in writing, directly or indirectly, by any means whatsoever, including but not limited to the use of any office sign (except its duly issued license) or the use and circulation of any letterheads, billheads, blank forms, notes, receipts, certificates, circulars, or any written or printed or partly written or printed matter whatever that it is licensed by or subject to the supervision of the superintendent, except by use of the following phrase:

“Licensed, pursuant to article XII-B of the Banking Law, only for the purpose of engaging in the business of a premium finance agency.”

The use or use and circulation of any written or printed matter containing the foregoing phrase may only be in connection with the licensee's business as a premium finance agency.

3 CRR-NY 405.4 Changes in directors, officers or stockholders {#sec-3-crr-ny-405.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.4}

Every corporate licensee shall, within 10 days after the occurrence of the event:

(a) Advise the superintendent, in writing:

(1) of the name and residence of each stockholder owning 20 percent or more of any class of the outstanding capital stock of the licensee; and

(2) of each director and officer, who terminates or alters his status with the licensee, and the name and residence of each person who becomes a stockholder owning 20 percent or more of any class of the outstanding capital stock of the licensee, or a director or officer; and

(b) If paragraph (a)(2) of this section is applicable, advise the superintendent in writing whether or not:

(1) any such person has ever previously applied for a license to do business as a premium finance agency in this State, and the disposition of such application;

(2) any such person, previously licensed under article XII-B of the Banking Law, has had such license revoked or suspended;

(3) any such person has ever applied to any other state for a license to engage in the business of a premium finance agency, and the disposition of such application;

(4) any license to engage in the business of a premium finance agency, issued by any other state to any such person has ever been revoked or suspended;

(5) any such person has ever been found by the superintendent to have violated any of the provisions of article XII-B of the Banking Law or any rule or regulation of the superintendent; and

(c) Obtain from each person who becomes a stockholder owning 20 percent or more of any class of the outstanding capital stock of the licensee, or a director or officer, and transmit to the superintendent the following:

(1) an affidavit stating whether he has ever been indicted or convicted for any crime in any jurisdiction;

(2) a statement on the form required by the Department of Financial Services certifying to the financial condition of such person;

(3) a statement or resume of the occupational activities of such person during the previous 10-year period.

3 CRR-NY 405.5 Reports of arrests, indictments or convictions {#sec-3-crr-ny-405.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.5}

Every licensee shall make a written report to the superintendent of any arrest, indictment or conviction of such licensee or of any member of a partnership licensee, or of any stockholder owning 20 percent or more of any class of the outstanding capital stock of a corporate licensee, or of any director or officer thereof, or of any party in interest of any other type of licensee, for any crime in any jurisdiction. Such report shall be made to the superintendent within 10 days after the occurrence of the event becomes known to the licensee.

3 CRR-NY 405.6 No cancellation for financial hardship; prohibited practices {#sec-3-crr-ny-405.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.6}

(a) This section is promulgated pursuant to the Executive Order.

(b)

(1) When a premium finance agreement contains a power of attorney or other authority enabling the premium finance agency to cancel any insurance contract or contracts listed in the agreement, and an insured does not make an installment payment, the premium finance agency shall not cancel the insurance contract or contracts for a period of at least 60 days, including any contractual grace period, for a property/casualty insurance contract or for a period of at least 90 days, including any contractual grace period, for an insurance contract providing life insurance, if the insured can demonstrate financial hardship as a result of the COVID-19 pandemic, and subject to the safety and soundness of the premium finance agency.

(2) With regard to an insured who does not make a timely installment payment to the premium finance agency and can demonstrate financial hardship as a result of the COVID-19 pandemic, a premium finance agency:

(i) shall extend the due date for such installment payment by at least 60 days for a property/casualty insurance contract and at least 90 days for an insurance contract providing life insurance, and shall not impose any late fees relating to such installment payment; and

(ii) shall not report the insured to a credit reporting agency or refer the insured to a debt collection agency with respect to such installment payment.

(3) A premium finance agency shall, subject to the safety and soundness of the premium finance agency, permit an insured who did not make a timely installment payment to the premium finance agency due to financial hardship as a result of the COVID-19 pandemic, including an insured to whom the premium finance agency issued a non-payment cancellation notice prior to the effective date of the Executive Order, and who can still demonstrate financial hardship as a result of the COVID-19 pandemic, to pay such installment payment over a 12-month period.

(4) In the case of a property/casualty insurance contract where the property insured does not make the first installment payment to the premium finance agency after the conclusion of the 60-day period described in paragraph (1) of this subdivision and the premium finance agency cancels the property/casualty insurance contract based on such nonpayment at any time prior to the next succeeding installment payment, the property/casualty insurer shall return to the premium finance agency for the benefit of the property insured, in accordance with the terms of the property/casualty insurance contract but no later than 60 days after the effective date of such cancellation, the gross unearned premiums that are due under the property/casualty insurance contract on a pro rata basis, calculated as if the property/casualty insurance contract had been canceled 60 days prior to the effective date of such cancellation.

(c) Solely for the purposes of this section, a premium finance agency shall accept a written attestation from an insured as proof of financial hardship as a result of the COVID-19 pandemic.

(d) Nothing herein shall entitle an insured who demonstrated a financial hardship as a result of the COVID-19 pandemic and already obtained relief for an amount due under the prior regulation, to obtain under the Executive Order and this section further relief for an amount that comes due while this section is in effect.

(e) Nothing shall prohibit an insured from exercising any right the insured has to voluntarily cancel an insurance contract.

(f) This section shall not apply to a settled policy.

(g) For the purpose of this section:

(1) credit reporting agency means a reporting agency that regularly engages in the practice of assembling or evaluating and maintaining, for the purpose of furnishing credit reports to third parties bearing on a person’s credit worthiness, credit standing, or credit capacity, and credit account information from persons who furnish that information regularly and in the ordinary course of business;

(2) COVID-19 means the coronavirus disease 2019;

(3) debt collection agency has the meaning set forth in General Business Law section 600;

(4) Executive Order means Executive Order 202.13, as extended;

(5) insurance producer has the meaning set forth in Insurance Law section 2101(k);

(6) insured means a life insured or a property insured;

(7) insurer means a life insurer and an insurer that writes a property/casualty insurance contract, including an unauthorized insurer that sells insurance through a licensed excess lines broker and is subject to Insurance Law article 34;

(8) late fee means a fee associated with an installment payment to a premium finance agency that is made at a time later than the installment payment due date, but prior to both insurance contract cancellation and the time in which a premium finance agency may reject the installment payment;

(9) life insured means the person to whom a life insurance policy, annuity contract, or fraternal benefit society certificate is issued, including a certificate holder under a group insurance policy or annuity contract;

(10) life insurer means an insurer authorized to write life insurance or annuities and an authorized fraternal benefit society;

(11) person means an individual or business entity;

(12) prior regulation means this section was in effect between March 30, 2020 and June 28, 2020.

(13) property/casualty insurance contract means an insurance contract that provides a kind of insurance set forth in Insurance Law section 1113(a)(16), (17), (20), (21), (24), (26), or (30) or that is subject to Insurance Law section 1116 or articles 34, 53, 54, or 55 or Workers’ Compensation Law section 54 or 226;

(14) property insured means the individual or small business to whom a property/casualty insurance contract is issued, including a certificate holder under a group insurance contract;

(15) settled policy has the meaning set forth in Insurance Law section 7802(t);

(16) small business means any business that is resident in this State, is independently owned and operated, and employs 100 or fewer individuals.

3 CRR-NY 405.7 [Repealed] {#sec-3-crr-ny-405.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.7}

3 CRR-NY 405.8 [Repealed] {#sec-3-crr-ny-405.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 405.8}

Part 406 MONEY TRANSMITTERS

3 CRR-NY 406.1 Introduction {#sec-3-crr-ny-406.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.1}

This Part contains regulations relating to the transmission of money by licensees and their agents under article XIII-B of the Banking Law. For purposes of this Part, the business of transmission of money will be divided into three categories: the issuance and sale of travelers checks to the public, the sale and issuance of money orders to the public, and the transmission of money on behalf of the public by any and all other means or manner including but not limited to transmissions within this country or to locations abroad by wire, check, draft, facsimile or courier. Although a number of the subdivisions of this Part apply to all licensees and their agents and subagents, other subdivisions apply exclusively to those transmission activities that fall within the scope of the third category of transmission. As provided in Banking Law, section 641, the provisions contained in this Part shall not apply to an agent of a payee as defined in section 406.2(a) of this Part. Only agents of a payee which do not engage in any money transmission activities other than as an agent of a payee are exempt from the provisions of this Part.

3 CRR-NY 406.2 Definitions {#sec-3-crr-ny-406.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.2}

For purposes of this Part:

(a) The term money transmission shall include all instruments sold or issued including travelers checks, money orders, checks, drafts, orders, wire or electronic transfers, facsimile transfers and shipments by courier for the transmission or payment of money.

(b) The term travelers check means an instrument for the payment of money which:

(1) is designated on its face by the term travelers check or by any similar term or spelling or is commonly known and marketed as a travelers check, and not by the term money order or by any substantially similar term; and

(2) (i) if issued in United States currency, is in the sum of $10 or a multiple thereof, if less than $100, or in the sum of $100 or a whole multiple thereof; or

(ii) if issued in any foreign currency, is in an even denomination of such currency; and

(3) contains a provision for a specimen signature of the purchaser to be completed at the time of purchase; and

(4) contains a provision for a counter-signature of the purchaser to be completed at the time of negotiation.

(1) is designated on its face by the term money order or by any similar term or is commonly known and marketed as a money order, and not also by the term travelers check, official check, cashiers check, bank check or by any substantially similar term; and

(2) is customarily subject to a dollar limit stated on its face which has been set by the drawer; and

(3) requires the purchaser to sign its name, provide its address and to fill in the name of the payee.

(d) The terms person, licensee and check shall have the respective meanings specified in Banking Law, section 640.

(e) The terms agent and subagent means any person designated or appointed by the licensee to engage in money transmission at locations other than an office of the licensee as provided in Banking Law, section 648, but does not include licensed cashers of checks which act as agents of licensed money transmitters under applicable regulations.

(f) The term corporate licensee shall include any licensee, wherever organized, which is a corporation or association, having written articles of incorporation or association, but shall not include a partnership.

(g) The term principal officer means chairman of the board, president, chairman of the executive committee, executive vice-president, comptroller, and any other persons who perform similar functions.

(h) The term principal stockholder means any person (or group of persons acting in concert) who is the beneficial owner of 25 percent or more of outstanding voting shares of any class.

(i) The term control shall have the meaning specified in Banking Law, section 652-a.

(j) The terms fund, holder(s), New York instrument(s), New York traveler's check(s), purchaser(s) and uninsured money transmitter shall have the respective meanings specified in Banking Law, section 653.

(k) Notwithstanding the foregoing definitions, no person who issues or delivers a check, draft or other instrument or document for the transmission or payment of money or which evidences an obligation for the transmission or payment of money, shall be deemed to have issued or sold such check, draft, instrument or document, within the meaning of section 653(6), (9) or 640(4) of the Banking Law if such check, draft instrument or document:

(1) is sold or issued in connection with a loan or extension of credit other than a loan or extension of credit to purchase a money order or New York traveler's check; or

(2) is sold or issued to effect a withdrawal or transfer of funds from a credit balance maintained with the seller or issuer; or

(3) evidences or relates to a credit balance; or

(4) evidences an obligation of a banking institution insured by a Federal insuring agency; or

(5) evidences an obligation arising out of a letter of credit, borrowing or similar type of financing or arising out of the purchase or sale of securities; or

(6) is denominated in and arises out of a transaction involving a currency other than U.S. dollars, if the person purchasing such check, draft, instrument or document is engaged in the business of purchasing or selling such currency; or

(7) effects a transfer of funds between, among, or by order of banking institutions and clearinghouses, or is transferred in connection with the collection of such check, draft, instrument or document.

(l) The term agent of a payee means any person authorized by a payee to receive funds on behalf of the payee and to deliver such funds received from the payor to the payee.

3 CRR-NY 406.3 Conduct of business {#sec-3-crr-ny-406.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.3}

(a) Every licensee engaged in money transmission, except one engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall post and at all times display in full public view, at both its principal office and at each branch office in this State, where the general public is admitted and money transmission is carried out, a sign or signs in the English language and in any other predominant language spoken by the customers of the licensee each of which sign shall be no less than 20 inches wide and 12 inches high with letters at least one-half inch in height indicating the following:

(1) the name and principal address of the licensee, the type of transmission activity the licensee is authorized to engage in, and a telephone number established by the licensee to answer questions and register complaints; and

(2) that the licensee is licensed and regulated by the New York State Department of Financial Services and that unresolved consumer complaints may be mailed to the New York State Department of Financial Services, Consumer Services Division, as set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(b) Every licensee engaged in money transmission in this State, except one engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall affix a notice on the front window or entrance door of its principal office and at each branch office in this State, where the general public is admitted and money transmission activities are carried out indicating the following information:

(1) the name of the licensee; and

(2) the statement that the licensee is “Licensed as a Money Transmitter by the New York State Department of Financial Services.” Each such notice shall be no less than four inches by six inches.

(c) No licensee shall sell or issue any travelers check, money order, check, draft, or other instrument or order for the transmission or payment of money in or from this State unless the name of the licensee as maker, drawer, acceptor or otherwise as obligor shall clearly appear on the face of the instrument.

(d) No licensee shall engage in money transmission directly or through the use of agents in New York without having filed within 10 days of adoption the form of payment instrument with the superintendent. All internationally payable instruments or receipts therefore shall clearly show on the face thereof the name of the licensee as the person liable thereon.

(e) Every licensee which has appointed or designated agents in this State shall require each agent under its written agency contract to conduct the authorized money transmission activities through the licensee.

(f) A receipt, or other evidence of acceptance of funds shall be given to every person who utilizes a licensee to transfer funds. The receipt issued by the licensee shall contain the information required in subdivisions (a)(1) and (c) of this section and the following additional information:

(1) a statement of the liability of the licensee for nondelivery or delayed delivery;

(2) a statement of the refund policy of the licensee;

(3) the dollar amount of transmission; and

(4) the fee charged.

(g) Licensees are subject to supervision and regulation by the New York State Department of Financial Services and must exercise reasonable supervision over agents and subagents to insure compliance with applicable laws, rules and regulations with regard to money transmission.

3 CRR-NY 406.4 Agents and subagents of money transmitters {#sec-3-crr-ny-406.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.4}

(a) Each licensee must submit to the superintendent as of the close of business on December 31, 1989 a written description of the licensee's general procedures by which it intends to enter into agency contracts to engage in money transmission in this State. This description must include the licensee's policies and procedures and other details regarding the following matters:

(1) a brief summary of the proposed money transmission activities to be engaged in by the agents and subagents and a description of how money is to be transferred to the beneficiaries and an undertaking by the licensee to assume responsibility for consumer losses incurred through an agent's unauthorized activities or as a result of violations of any laws or regulations; and

(2) the number of agents and subagents and projected sales volume for travelers checks, money orders and all other transmission instruments sold; and

(3) the procedures for agent and subagent selection including the method of ascertaining the agent's and subagent's credit standing; and

(4) the procedures that agents and subagents shall follow relating to:

(i) recordkeeping;

(ii) safeguarding travelers checks, money orders and all other instruments or orders for the transmission or payment of money;

(iii) remittance of proceeds of sales of travelers checks, money orders and all other instruments or orders for transmission or for payment of money sold to the public (i.e., time within which such proceeds are required to be remitted to the licensee, and remittance procedures);

(iv) reporting procedures to be followed by agents and subagents when reporting to the licensee the sale of travelers checks, money orders and all other instruments or orders for the transmission or payment of money sold to the public including but not limited to the time within which such sales are to be reported to the licensee, and procedures for reporting such sales; and

(5) copies of any documentation which the licensee will require its agents and subagents to furnish the public in connection with the money transmission activities including but not limited to samples of travelers checks, money orders and all other instruments or orders for the transmission or payment of money sold, including forms and receipts; and

(6) procedures for distributing policies and procedures pertaining to agents and subagents and licensee's program to assure agent's and subagent's compliance; and

(7) compensation arrangement with agent and subagent; and

(8) bonding and insurance of agents and subagents; and

(9) the licensee's policy relating to loans to and investment in agents and subagents except loans and investments made by a regulated financial institution in the ordinary course of its business; and

(10) in the case of money transmissions other than by sale of money orders and travelers checks, the names and addresses of correspondents used to make delivery of money to beneficiaries; and

(11) such other information, and documentation as the superintendent may require.

Such information is to be provided within 45 days of December 31, 1989 and at such other times as the superintendent may require.

(b) In addition, each licensee shall submit to the superintendent as of the close of business on December 31, 1989 the following information:

(1) a listing in alphabetical order of its agents and subagents in this State showing their full names and addresses and licensee assigned identification number(s) if grouped by the category of transmission activity the licensee has authorized the agent and subagent to conduct on its behalf; and

(2) a specimen copy of the agency contract between the licensee and its agents and subagents including all attachments, amendments and supplements. Such information is to be provided within 45 days of December 31, 1989 and at such other times as the superintendent may require.

(c) Upon any change in any material aspect of a licensee's policies and procedures, including but not limited to the items enumerated under paragraphs (a)(3) through (11) of this section, the licensee shall file with the superintendent a written description of the change within 10 days of implementation.

(d)

(1) Every agent and subagent, other than a bank, which is engaged in money transmission, except one engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall post and at all times display in full public view, at both its principal office and at each branch office in this State a sign or signs in the English language and in any other predominant language spoken by its customers. Each sign shall be no less than 20 inches wide and 12 inches high with letters at least one-half inch in height prominently indicating the following:

(i) name, address and telephone number of the principal office of the agent and subagent and the type of money transmission activity which the agent and subagent has been authorized to conduct by the licensee; and

(ii) name and address of the licensee; and a telephone number established by the licensee to answer questions and register complaints; and

(iii) that the licensee is licensed and regulated by the New York State Department of Financial Services and that unresolved consumer complaints may be mailed to the New York State Department of Financial Services, Consumer Services Division, as set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(2) Every agent or subagents, other than a bank, which is engaged in money transmission, except one engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall be provided by the licensee with a notice no less than four inches by six inches to publicly display on the agent's and subagent's front window or entrance door containing the following information:

(i) the name of the licensee; and

(ii) the statement that the licensee is “Licensed as a Money Transmitter by the New York State Department of Financial Services”; and

(iii) its designation of the agent to act in such capacity.

(e) A receipt, or other evidence of acceptance of funds shall be given to every person who utilizes an agent and subagent of a licensee to transfer money. The receipt issued by the agent and subagent of the licensee shall contain the information required in section 406.3(f) of this Part and the following information:

(1) that the licensee is liable for the nondelivery or delayed delivery;

(2) the refund policy of the licensee;

(3) the dollar amount of transmission; and

(4) the fee charged.

3 CRR-NY 406.5 Agency contracts {#sec-3-crr-ny-406.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.5}

(a) All written contracts between licensees and agents and subagents entered into after the effective date of this Part shall provide the following:

(1) a description of the category or categories of money transmission activity the licensee is authorized to lawfully engage in under its license which it may do through an agent and subagent; and

(2) a prohibition in the licensee's agents and subagents acting on behalf of the consumer as a courier for the transmission of money which activity requires licensing as a money transmitter and a requirement that all money orders sold may not be retained by the agent and subagent but must be given to the purchasers of the instruments for their own delivery to the beneficiary; and

(3) an acknowledgment that the superintendent reserves the right to inspect, with or without prior notice to the licensee or agent and subagent(s), the books and records of agent and subagent(s) of the licensee and that the expenses incurred in making any such inspection shall be borne by the licensee; and

(4) that agents and subagents shall not sell any travelers check, money order or other money transmission instrument in this State unless the name of the licensee shall clearly appear on the face of the instrument and the licensee shall not condition its engagement as obligor under the payment instrument upon the remittance of the proceeds of sale from the agent and subagent; and

(5) that agents and subagents shall not sell any travelers check, money order or other money transmission instrument in this State, unless the agent and subagent has provided the superintendent with a written and irrevocable consent to examine, have access to, and retain copies of all of its books and records, wherever maintained, relating to these activities; and

(6) that agents and subagents in this State are under a duty to act only as authorized under the agency contract and that an agent and subagent who exceeds its authority is subject to cancellation of the agency contract and may result in further disciplinary action against the licensee by the superintendent.

(b) For each contract entered into prior to the effective date of this Part, a rider containing paragraphs (a)(1)-(6) of this section shall be sent by each licensee to each of its agents and subagents in New York within 45 days of the effective date of this Part.

3 CRR-NY 406.6 Advertising and solicitation {#sec-3-crr-ny-406.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.6}

(a) No licensee or agent or subagent engaged in money transmission, except one engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall advertise its money transmission services without including the name of the licensee and the legend that such licensee is “Licensed as a Money Transmitter by the New York State Department of Financial Services.”

(b) No licensee or agent and subagent who sells or issues travelers checks or money orders in this State shall advertise its business in New York without including the legend: “Licensed as a Money Transmitter by the New York State Department of Financial Services.”

(c) Every licensee and designated agent and subagent shall maintain a complete file of its advertisements (including commercial scripts of all radio and television broadcasts) for examination by the superintendent for a period of at least two years from the date of publication.

(d) The legend required in subdivisions (a) and (b) of this section shall apply only to advertising in New York State.

3 CRR-NY 406.7 Examinations {#sec-3-crr-ny-406.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.7}

The superintendent shall have the power to examine any licensee at any time when in the judgment of the superintendent such examination is necessary or advisable to determine:

(a) the financial condition of the licensee;

(b) the safety and soundness of the conduct of its business;

(d) whether the requirements of law have been complied with in the administration of its affairs;

(e) whether the licensee has policies and procedures sufficient to control the activities of any authorized agents; and

(f) such other matters, as the superintendent may determine, including but not limited to any activities of the licensee outside this State if in the opinion of the superintendent such activities may affect the licensee's money transmission business in this State.

3 CRR-NY 406.8 Revocation; possession {#sec-3-crr-ny-406.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.8}

(a) Licenses granted under article XIII-B of the Banking Law may be revoked for the grounds specified in section 642 of the Banking Law after notice and hearing conducted in accordance with the State Administrative Procedure Act and department regulations.

(b) The superintendent may take possession of the business and property of any licensee as provided in article XIII-A of the Banking Law for the reasons stated therein.

3 CRR-NY 406.9 Books and records {#sec-3-crr-ny-406.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.9}

(a) Each licensee shall make, keep and preserve its books and records in such form, in such manner and for such time as is in accordance with generally accepted accounting principles and in a condition which will allow the superintendent to determine whether the licensee and agent and subagent is complying with article XIII-B of the Banking Law. Preservation by photographic reproduction or in photographic form shall constitute compliance with the requirements of this Part.

(b) The books and records maintained by each licensee and agent shall include:

(1) a daily record of instruments sold by date;

(2) a general ledger containing all asset, liability, capital, income and expense accounts which general ledger shall be posted at least monthly;

(3) remittance reports received from agents and subagents;

(4) bank statements and bank reconciliation records which shall be kept for three years;

(5) outstanding money transmission instruments by year of sale shall be maintained for at least five years after the time which such instruments have been deemed, under the Abandoned Property Law, to be abandoned property;

(6) each money transmission instrument paid for a period of three years after the date of payment;

(7) a list of the names and addresses of all the agents who sell or issue its money transmission instruments and copies of its agency agreements thereunder.

(1) maintain the records relating to its money transmission instruments in New York; or

(2) provide the superintendent with a written and irrevocable authorization to examine, have access to, and retain copies of all its books and records, wherever maintained, relating to its money transmission instruments.

(d) Each licensee or agent and subagent which is engaged in any form of money transmission, as defined in section 406.2(a) of this Part, including any engaged exclusively in the sale or issuance of travelers checks and/or money orders, shall comply with Federal Bank Secrecy Act Regulations as set forth in 31 CFR part 103.28.

3 CRR-NY 406.10 Reports {#sec-3-crr-ny-406.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.10}

Each licensee shall file the following reports giving such information as may be required by the superintendent concerning its business and operations.

(a) Reports of locations.

A licensee engaging in money transmission in this State, either directly or through agents and subagents shall file with the superintendent, in connection with its application for license or license renewal, a statement showing the number of such locations within this State and the number of such locations elsewhere in the United States as of 30 days preceding such filing.

(b) Financial reports.

Every licensee shall file with the superintendent quarterly financial statements within 45 days following the close of the licensee's fiscal quarter and an annual financial statement, audited by an independent certified public accountant, within 120 days following the close of the licensee's fiscal year. Such financial statements shall include a balance sheet, a profit and loss statement, and a statement of retained earnings.

Every licensee shall submit a report to the superintendent immediately upon the discovery of any of the events listed in Part 300 of the superintendent's regulations. Such report shall be submitted as set forth in Part 300.

(d) Reports of business.

Every licensee shall submit a report to the superintendent within 45 days following the close of each calendar quarter reflecting in dollars the monthly sales of travelers checks, money orders, checks, drafts, wire or electronic transfers or other instruments or orders for the transmission or payment of money in or from this State by the licensee and its agents and subagents and the aggregate monthly sales of such instruments sold elsewhere in the United States by the licensee and its agents and subagents during the previous calendar quarter. Sales of money orders, travelers checks and all other such instruments sold should be reported separately for each instrument. In addition at the end of every calendar quarter every licensee should report the amount of the permissive investments (as defined in section 640.9 of the Banking Law) it holds and the amount of its outstanding liabilities reported separately for travelers checks, money orders and all other such instruments sold.

3 CRR-NY 406.11 Changes in control; reports; applications {#sec-3-crr-ny-406.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.11}

(a) As required under Banking Law, section 652-a, no person may acquire direct or indirect control (as defined in said section) of a licensee without the prior approval of the superintendent. In addition, an unauthorized acquisition of control may result in the voiding of the license to engage in the business of money transmission as provided therein.

(b) Without limiting the responsibilities of persons seeking to acquire control of licensees to make application to the superintendent under section 652-a of the Banking Law and subdivisions (d) and (e) of this section, licensees shall be required to report to the superintendent the following information within five days of the date the licensee becomes aware of such information:

(1) the name and residence of each person (or each member of a group of persons acting in concert) who becomes an owner of 10 percent or more of the outstanding shares of any class (voting or nonvoting) of the licensee; and

(2) the name and residence of each person who is to become a partner, director or principal officer of the licensee.

(c) Within 10 days after any principal officer of a licensee shall be appointed, the licensee shall, with respect to said officer, cause to be filed with the superintendent the information contained in subdivision (e) of this section.

(d) Prior to acquiring direct or indirect control (as defined in section 652-a of the Banking Law) of a licensee, the proposed acquirer shall make application for approval of the superintendent, said application to contain the information described in subdivision (e) of this section.

(e)

(1) Name and address of the applicant, if an individual or, if a partnership, of its partners or, if a corporation or association, of the directors, trustees and principal officers thereof and of any stockholder owning 10 percent or more of the outstanding shares of any class (voting or nonvoting) of the licensee and a description of the present employment or occupation and of all previous employment or occupation during the preceding 15 years (including a statement as to whether during such period the applicant has been discharged from employment, and if so, for what reason); and

(2) a description of:

(i) any criminal action brought against the applicant;

(ii) any civil action brought against the applicant (excluding any civil action in which the amount in controversy was less than $25,000 or which terminated more than 15 years previously and excluding any domestic relations action);

(iii) any proceeding brought to declare the applicant bankrupt;

(iv) any such criminal or civil action brought against, or proceeding to declare bankrupt, any partnership, corporation or association, other than the licensee, of which at the time the applicant was a partner, principal stockholder or principal officer, and the disposition of such action or proceeding; and

(3) whether the applicant or any partnership, corporation or association of which at the time the applicant was a partner, principal stockholder, director or principal officer has applied for a license in this State or any other state to engage in money transmission, the disposition of such application, and if such license was granted, whether it was ever suspended, revoked or its renewal refused; and

(4) the number (if any) of shares of each class of stock of the licensee and the amount (if any) of obligations (in excess of $5,000) of the licensee of which the applicant intends to be beneficial owner immediately after the transaction to which the report relates; and

(5) a description of any other partnership, corporation or association (excluding any corporation or association organized and operated exclusively for religious, charitable, scientific, literary or educational purposes or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual) of which the applicant is partner, principal stockholder, or principal officer; and

(6) any other information the superintendent may require.

(f) Obligation to inform.

Every corporate licensee shall inform in writing every person (and every member of any group of persons acting in concert) who to the licensee's knowledge is a principal stockholder of the licensee of the reporting requirements under this Part.

3 CRR-NY 406.12 Additional reporting {#sec-3-crr-ny-406.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.12}

As required under Banking Law, section 643.2 the licensee shall give notice to the superintendent by registered or certified mail of any action which shall be brought against the licensee and of any judgment which shall be entered against the licensee by such purchaser or holder of a New York instrument or a New York traveler's check, with details sufficient to identify the action or judgment, within 10 days after the commencement of any such action or notice to the licensee of entry of any such judgment. In addition every licensee shall, immediately after the occurrence of the event becomes known to the licensee, advise the superintendent in writing of:

(a) any criminal or civil action (excluding any civil action in which the amount in controversy is less than $25,000 and excluding any domestic relations action) brought against the licensee or any proceeding to declare the licensee bankrupt, and of any judgment or settlement entered in such an action or proceeding; and

(b) any criminal or civil action (excluding any civil action in which the amount in controversy is less than $25,000 and excluding any domestic relations action) brought against, or any proceeding brought to declare bankrupt, any person who is a partner, principal stockholder, director or principal officer of the licensee, or any partnership, corporation or association other than the licensee of which such person is a partner, principal stockholder, or principal officer, and of any judgment or settlement entered in such an action or proceeding.

3 CRR-NY 406.13 Provision for corporate surety bonds {#sec-3-crr-ny-406.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.13}

(a) Every person licensed to transmit money pursuant to Banking Law, section 641, shall file with the superintendent one or more corporate surety bonds, in form satisfactory to the superintendent in such principal amount as the superintendent shall have determined. Such corporate surety bond shall be issued by a bonding company or insurance company authorized to do business in this State.

(b) One such bond shall be in favor of the superintendent for the protection of the purchasers and holders of New York instruments sold by the licensee. The principal amount of such bond shall be not less than $500,000 and it shall contain substantially the following language:

“The proceeds of this bond shall constitute a trust fund for the exclusive benefit of the purchasers and holders of the licensee's New York instruments. In the event of the insolvency or bankruptcy of the licensee, the proceeds of the bond shall be paid to the Superintendent forthwith for disposition in accordance with the applicable provisions of the Banking Law; provided, however, if any New York instruments have been assigned to the fund, the proceeds of the bond shall constitute a trust fund for the benefit of, and shall be payable to, the fund to the extent of such assignment. As used herein, the terms “New York instruments”, “fund”, “purchasers,” and “holders” shall have the meanings ascribed to them in section 653 of the Banking Law.“

(c) If the licensee engages in the sale of New York traveler's checks, such licensee shall file with the superintendent a separate bond. Said bond shall be in favor of the superintendent for the protection of the purchasers and holders of New York traveler's checks sold by the licensee. The principal amount of such bond shall not be less than $750,000 and it shall contain substantially the following language:

“The proceeds of this bond shall constitute a trust fund for the exclusive benefit of the purchasers and holders of the licensee's New York traveler's checks. In the event of the insolvency or bankruptcy of the licensee, the proceeds of the bond shall be paid to the Superintendent forthwith for disposition in accordance with applicable provisions of the Banking Law. As used herein, the terms “New York Traveler's checks”, “purchasers” and “holders” shall have the meanings ascribed to them in section 653 of the Banking Law.”

3 CRR-NY 406.14 Deposit of securities {#sec-3-crr-ny-406.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.14}

A licensee who in lieu of filing a corporate surety bond elects to deposit securities pursuant to Banking Law, section 643(3), shall execute with the depository bank, trust company or national bank a deposit agreement in form satisfactory to the superintendent. An executed copy of this deposit agreement shall be filed with the superintendent.

3 CRR-NY 406.15 Payments by uninsured money transmitters to fund {#sec-3-crr-ny-406.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.15}

Upon receipt of notice of assessment issued pursuant to section 657 of the Banking Law, each uninsured money transmitter shall provide the superintendent, as administrator of the State Transmitter of Money Fund, within such reasonable time as shall have been specified in such notice, a statement certified by an executive officer, showing the dollar amounts of the New York instruments issued by the uninsured money transmitter that were outstanding at the end of each calendar quarter for the calendar year preceding that in which the assessment is made, and the average of said amount. (Said average shall consist of the quotient obtained when dividing the sum of such amounts by the number of calendar quarters involved.) Upon receipt of such statement, the superintendent shall notify the uninsured money transmitter of the percentage of said average constituting the assessment, and the uninsured money transmitter shall forthwith pay the resulting assessment to the superintendent. Said percentage shall be uniform as to all uninsured money transmitters. In no event shall the total amount assessed in any one year against any uninsured money transmitter pursuant to section 657 of the Banking Law exceed two per centum of the New York instruments of such uninsured money transmitter, which were outstanding at the end of the calendar year preceding the year in which such assessments were made or $125,000, whichever is less.

3 CRR-NY 406.16 Communications {#sec-3-crr-ny-406.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 406.16}

It is requested that licensees direct their department correspondence, reports, notices, statements and applications to the Licensed Financial Services Division of the Banking Division of the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

Part 407 LICENSING OF OUT-OF-STATE LENDERS WHO SOLICIT, BY MAIL, SMALL LOANS IN NEW YORK STATE

3 CRR-NY 407.1 Issuance of license {#sec-3-crr-ny-407.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 407.1}

(a) Application form.

Application for a license shall be made upon a form provided by the superintendent. Such form may be obtained at the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(b) Application procedure.

Applications shall be filed with the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, and must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Accompanying the application should be the following additional information:

(1) Copy of organizational chart, annual reports of last three years, and list of officers and directors of applicant and of all affiliated corporations, joint stock associations or business trusts.

(2) Copy of certificate of incorporation (with all amendments) of the applicant together with copy of qualification to do business in New York, both of which should be certified by the Secretary of State or such other governmental authority who controls such State records.

(3) If a new corporation, certified balance sheet of the applicant, certified list of stockholders and copy of minutes of the corporation from inception to date of filing of application. Minutes should reflect organization of corporation, appointment or election of directors and officers, and designation of bank depositaries.

(4) Confirmation that applicant has sufficient cash in bank or other acceptable assets to satisfy legal requirement of $25,000.

(5) Confirmation from applicant that it will conform to the provisions of section 352 of the Banking Law.

(6) Questionnaires and financial statements, on forms provided by the department, of each officer, director, manager, major stockholder or other party-at-interest in the applicant.

(7) If an established corporation, list of holders of one percent or more of any class of stock, bonds or other securities.

(8) Certified copy of the minutes of the board of directors of the corporation authorizing filing of the application.

(9) List of all states in which applicant and/or any affiliated company is licensed to operate in the field of finance including banking, insurance, sales finance, small loans, insurance premium financing, etc. together with the name of the operating company and the name, title and address of the State supervisor.

(10) Statement of how licensing of the applicant will promote public convenience and advantage. It should be noted that the population and other standards set forth in supervisory policy LL-1 will not be applicable.

(11) Letter from State regulatory agency in which parent corporation is headquartered and where licensee's records are domiciled agreeing to permit access to New York State Department of Financial Services personnel to the licensee's records pertaining to loans made to New York State residents.

3 CRR-NY 407.2 Loans, books and records {#sec-3-crr-ny-407.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 407.2}

(a) Every licensee must maintain records as provided in section 401.1 of the superintendent's regulations. All such records and supporting documents and any additional records which the superintendent may require relating to loans made to New York State residents must be kept separate and apart from any other records of the licensee and must be made available for examination at any time by representatives of the New York State Department of Financial Services. The licensee will be required to pay the cost of all examinations, including travel expenses for department personnel.

(b) Every licensee shall be subject to the relevant provisions of sections 401.4, 401.5 and 401.6 of the superintendent's regulations.

3 CRR-NY 407.3 Offices within New York State {#sec-3-crr-ny-407.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 407.3}

(a) No licensee may operate any place of business within New York State, except for the sole purpose of handling inquiries and complaints of existing borrowers of the licensee. At such an office, no loans may be made, no loan applications distributed to or received from the public and no monetary disbursements may be made to or received from the public.

(b) Every licensee must either:

(1) operate at least one office in New York State for the sole purpose of handling inquiries or complaints from existing borrowers, or

(2) establish either:

(i) a toll-free phone number; or

(ii) a phone number which may be called “collect” for the purpose of enabling borrowers to make inquiries of or complaints to the licensee.

Every person granted a loan must be informed, in writing, of this phone number at the time the loan is granted.

3 CRR-NY 407.4 Lock box for payments {#sec-3-crr-ny-407.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 407.4}

Every licensee shall maintain a lock box in New York State where borrowers may mail payments of principal, interest or other charges. Every person granted a loan must be informed, in writing, of this at the time the loan is granted. Payments from borrowers must be credited to the borrower's account as of the day the payment is received at the lock box if this is a business day or, if received on other than a business day, payment must be credited on the first business day thereafter.

3 CRR-NY 407.5 Provision in lieu of lock box {#sec-3-crr-ny-407.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 407.5}

In lieu of the lock box required to be maintained by section 407.4 of this Part, a licensee may provide in its loan agreements that the licensee shall not impose any fine, penalty or late charge in connection with any loan payment due and payable to the licensee from any borrower located in New York State if such payment is received by the licensee on or before the 10th calendar day following the due date of such payment. Any licensee discontinuing the maintenance of such lock box shall:

(a) include in all loan agreements thereafter written the provision called for by the preceding sentence; and

(b) within 30 days of the discontinuance of such lock box mail to all previous borrowers with loans outstanding in this State, notice of the availability of such “grace period” together with notice of a new address at which payment will be received.

Part 408 EXTENSION OF CREDIT ON A NONDISCRIMINATORY BASIS

3 CRR-NY 408.1 Inquiries concerning marital history, status, and number of dependents {#sec-3-crr-ny-408.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 408.1}

For purposes of Executive Law, section 296-a(1)(c), it shall not be considered an expression of limitation, specification or discrimination on the basis of sex or marital status if:

(b) where application is made for a mortgage and the creditor determines that the signature of the spouse is required in order to pass clear title in the event of a default, a creditor requests information concerning marital status, provided that the information disclosed by such inquiry is used solely for the purpose of perfecting title;

3 CRR-NY 408.2 Statement of reasons for rejection {#sec-3-crr-ny-408.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 408.2}

For purposes of Executive Law, section 296-a(4)(a), a statement of the specific reasons for rejection of an application for credit shall be deemed to be in compliance with this section if it is a clear and meaningful statement of all of the factors which justified rejection.

3 CRR-NY 408.3 Attribution of past joint obligations {#sec-3-crr-ny-408.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 408.3}

For purposes of Executive Law, section 296-a(4)(b), a response to a request for a separate credit history, made after July 15, 1974, shall include all obligations, whenever entered into, as to which the creditor or credit reporting bureau then has information in its files. In creating such a separate history, all obligations on which two parties were jointly liable shall be reported as the obligation of each irrespective of the actual source of payments.

Part 409 STUDENT LOAN SERVICERS

3 CRR-NY 409.1 Definitions {#sec-3-crr-ny-409.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.1}

(a) Applicant shall mean any person applying for a license under this Part.

(b) Borrower shall mean any resident of this State who has received a student loan or agreed in writing to pay a student loan or any person who shares a legal obligation with such resident for repaying a student loan.

(c) Borrower benefit shall mean an incentive offered to a borrower in connection with the origination of a student loan, including but not limited to an interest rate reduction, principal rebate, fee waiver or rebate, loan cancellation, or cosigner release.

(d) Exempt organization shall mean any banking organization, foreign banking corporation, national bank, Federal savings association, Federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state; any public postsecondary educational institution or private nonprofit postsecondary educational institution; the New York State Higher Education Services Corporation; and any entity that holds a license under articles 9 or 11-b of the Banking Law.

(e) NMLS means the Nationwide Multistate Licensing System and Registry and shall include all related computer systems, the Conference of State Bank Supervisors, and State Regulatory Registry LLC.

(f) Nonconforming payment shall mean an overpayment or a partial payment.

(g) Overpayment shall mean a payment on a student loan in excess of the total monthly amount due from a borrower on a student loan, also commonly referred to as a prepayment.

(h) Partial payment shall mean a payment on a student loan in an amount less than the monthly amount due from a borrower on a student loan, also commonly referred to as an underpayment.

(i) Person shall mean any individual, association, corporation, limited liability company, partnership, trust, unincorporated organization, government, or any other entity.

(j) Student loan servicer shall mean a person engaged in the business of servicing student loans owed by one or more borrowers.

(k)

(1) Servicing shall mean:

(i) receiving any payment from a borrower pursuant to the terms of any student loan; or

(ii) applying any payment to the borrower’s account pursuant to the terms of a student loan or the contract governing the servicing of any such loan; or

(iii) during a period where a borrower is not required to make a payment on a student loan, maintaining account records for the student loan and communicating with the borrower regarding the student loan on behalf of the owner of the student loan promissory note; or

(iv) in conjunction with performing the activities described in subparagraphs (i), (ii) and (iii) of this paragraph:

(a) providing any notification of amounts owed on a student loan by or on account of any borrower;

(b) performing other administrative services with respect to a borrower’s student loan; or

(c) interacting with a borrower with respect to or regarding any attempt to avoid default on the borrower’s student loan and facilitating the activities described in subparagraph (i) or (ii) of this paragraph.

(2) Servicing shall not include collecting, or attempting to collect, on a direct loan or FFELP loan for which no payment has been received for 270 days or more, a perkins loan in default, or on a private student loan in default according to the terms of the loan documents.

(l) Student loan shall mean any loan to a borrower to finance postsecondary education or expenses related to postsecondary education. The term shall not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.

(m) Federal student loan means:

(1) any direct loan;

(2) any FFELP loan, which was purchased by the government of the United States pursuant to the Federal Ensuring Continued Access to Student Loans Act and is presently owned by the government of the United States; and

(3) any other student loan which is owned by the government of the United States.

(n) Direct loan means any student loan made under the William D. Ford Federal Direct Loan Program, authorized under title IV of the Higher Education Act, as amended (20 U.S.C. section 1070, et seq.).

(o) FFELP loan means any student loan made under the Federal Family Education Loan Program, authorized under title IV of the Higher Education Act, as amended (20 U.S.C. section 1070, et seq.).

(p) Perkins loan means any Federal Perkins Loan, authorized under title IV of the Higher Education Act, as amended (20 U.S.C., section 1070, et seq.).

(q) Private student loan means a student loan which is not a direct loan, FFELP loan, or perkins loan but, rather, a private student loan made by a lender.

3 CRR-NY 409.2 Applicability {#sec-3-crr-ny-409.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.2}

(a) Except as provided in subdivision (b) of this section or as explicitly provided for in another section of this Part, all provisions of this Part shall apply to every student loan servicer.

(b) The following sections shall not apply to a student loan servicer that services only Federal student loans:

(1) section 409.3 of this Part;

(2) section 409.4 of this Part;

(3) section 409.5 of this Part;

(4) section 409.6 of this Part; and

(5) section 409.7 of this Part.

3 CRR-NY 409.3 Licensing {#sec-3-crr-ny-409.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.3}

(a) License required.

(1) Except as provided in paragraphs (2) and (3) of this subdivision, every person engaged in the business of servicing student loans owed must be licensed by the superintendent as a student loan servicer in accordance with this section.

(2) An exempt organization is not required to apply for or receive a license under this section to engage in the business of servicing student loans, provided that unless preempted by Federal law such exempt organization notifies the superintendent that it is servicing student loans in this State. In the event that a student loan servicer ceases to be an exempt organization, that person may not service student loans without first being licensed by the superintendent as a student loan servicer in accordance with this section.

(3) A student loan servicer that services only Federal student loans is not required to apply for or receive a license under this section to engage in the business of servicing student loans. In the event that a student loan servicer ceases to be a student loan servicer that services only Federal student loans seeks to begin servicing student loans which are not Federal student loans, that person may not service student loans other than Federal student loans owed by one or more borrowers residing in this State without first being licensed by the superintendent as a student loan servicer in accordance with this section.

(4) (i) A debt collector whose student loan debt collection business, and business operations, involve collecting, or attempting to collect, on a direct loan or FFELP loan for which no payment has been received for 270 days or more, a perkins loan in default, or on a private student loan in default according to the terms of the loan documents shall not be required to obtain a license under paragraph (1) of this subdivision.

(ii) Notwithstanding subparagraph (i) of this paragraph any debt collector who services non-defaulted student loans, as part of their business, and business operations, shall be deemed to be engaged in the business of servicing student loans and shall be required to obtain a license pursuant to paragraph (1) of this subdivision.

(b) Use of NMLS.

(1) Every application for a license under this section shall be filed through NMLS.

(2) Every applicant shall make such application in accordance with the checklist and instructions of NMLS for transmission to the department.

(3) An applicant that files an application through the NMLS shall comply with all of the filing requirements imposed by the NMLS and the department including the payment of all fees required by the NMLS and by the department. Fees payable to the NMLS shall be the sole property of the NMLS and shall not be deemed revenue of the department.

(4) Any information or documentation required to be submitted in connection with an application that cannot be filed through NMLS shall be transmitted to the department in a form and manner as required by the superintendent.

(1) Every application for a license under this section shall include all information required by the NMLS checklist and instructions for the application, including:

(i) a description of the business operations of the applicant;

(ii) an affirmation of financial solvency noting such capitalization requirements as may be required by the superintendent, and access to such credit as may be required by the superintendent;

(iii) a financial statement prepared by a certified public accountant, the accuracy of which is sworn to under oath before a notary public by an officer or other representative of the applicant who is authorized to execute such documents;

(iv) an affirmation that the applicant, or its members, officers, partners, directors and principals as may be appropriate, are at least 21 years of age;

(v) information as to the character, fitness, financial and business responsibility, background and experiences of the applicant, or its members, officers, partners, directors and principals as may be appropriate including but not limited to an affirmation setting forth whether the applicant, or its members, officers, partners, directors and principals:

(a) has, within the last 10 years prior to the date of application, committed any act involving dishonesty, fraud, deceit, or has been convicted of, or pleaded nolo contendere to, a crime directly related to the qualifications, functions, or duties related to servicing student loans, provided that any criminal conviction be evaluated consistent with article 23-A of the Correction Law;

(b) has had a license or registration revoked by the superintendent or any other regulator or jurisdiction;

(c) has been an officer, director, partner, member or substantial stockholder of an entity which has had a license or registration revoked by the superintendent or any other regulator or jurisdiction; and

(d) has been an agent or employee of an entity which has had a license or registration revoked by the superintendent or any other regulator or jurisdiction and the nature of the agency or employment at the time of the revocation; and

(vi) any additional detail or information required by the superintendent.

(d) Investigation fee.

No application shall be deemed submitted unless accompanied by a fee as prescribed pursuant to section 18-a of the Banking Law.

(e) Review of applications.

(1) Upon a complete application being submitted, the superintendent shall consider, in her sole discretion, whether the financial responsibility, experience, character, and general fitness of the applicant and, if applicable, the members, officers, partners, directors, and principals of the applicant are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of article 14-A of the Banking Law.

(2) If this review reveals that any matter requires, in the superintendent’s judgment, the submission of additional information from the applicant, the applicant shall be so notified and shall submit such supplementation as may be required, in a manner directed by the superintendent. Failure to submit the information required by the superintendent within 15 days after being notified of the need for supplementation, or such longer time as provided by the superintendent, shall be deemed a withdrawal of the application.

(3) If, after the application is submitted, but before the superintendent has made a determination thereon, any information in the application ceases to be true or correct, the applicant shall immediately file through NMLS an amendment correcting the information.

(4) Refusal to issue license.

(i) If, after consideration of the application, the superintendent, in her sole discretion, determines that the financial responsibility, experience, character, and general fitness of the applicant and, if applicable, the members, officers, partners, directors and principals of the applicant are not such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently, the superintendent shall refuse to issue the license.

(ii) Further, after consideration of the application, the superintendent may refuse to issue a license to any applicant if she finds that the applicant, or any person who is a director, officer, partner, agent, employee, member, or substantial stockholder of the applicant:

(a) within the last 10 years prior to the date of application, has committed any act involving dishonesty, fraud, deceit, or has been convicted of, or pleaded nolo contendere to, a crime directly related to the qualifications, functions, or duties related to servicing student loans, provided that any criminal conviction be evaluated consistent with article 23-A of the Correction Law;

(b) has had a license or registration revoked by the superintendent or any other regulator or jurisdiction;

(d) has been an agent, employee, officer, director, partner or member of an entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibility in connection with the revocation.

(iii) If the superintendent refuses to issue a license under this paragraph, the superintendent shall notify the applicant of such refusal.

(5) Issuance of a license.

(i) If after consideration of the application the superintendent, in her sole discretion, determines that the financial responsibility, experience, character, and general fitness of the applicant and, if applicable, the members, officers, partners, directors, and principals of the applicant are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently, and the superintendent determines that no other grounds to refuse to issue the license exist, the superintendent may cause the license to be issued.

(ii) Upon determining the license should be issued the superintendent shall cause the license to be transmitted in an electronic format to the applicant and shall cause a copy to be retained in the records of the department.

(iii) No application shall be considered approved until it is approved by the superintendent and the license is received by the applicant.

(f) Surrender of license.

(1) Any student loan servicer may surrender a license issued under this section by delivering to the superintendent written notice that it thereby surrenders such license, but such surrender shall not affect such student loan servicer’s civil or criminal liability for acts committed prior to such surrender. Further, such surrender shall not affect the jurisdiction of the department or the courts of this State over acts committed prior to such surrender.

(2) If such surrender is made after the issuance by the superintendent of a statement of charges and notice of hearing, the superintendent may proceed against the student loan servicer as if such surrender had not taken place.

(3) A student loan servicer that surrenders its license shall remain responsible for paying assessments under section 206 of the Financial Services Law for the year in which the surrender takes place.

(4) No surrender shall be effective during the conduct of an examination under this Part without the consent of the superintendent upon such conditions as she may deem necessary and appropriate in her discretion.

(5) A student loan servicer that surrenders its license shall preserve books and records in accordance with section 409.13 of this Part.

(g) Any license issued under this section shall continue in full force and effect until it is surrendered, revoked, or suspended.

(h) By filing an application under this section, a student loan servicer is deemed to have consented to the jurisdiction of the courts in this State and waives any defense to the contrary.

3 CRR-NY 409.4 Temporary license during transition period {#sec-3-crr-ny-409.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.4}

(a) Notwithstanding section 409.3 of this Part, any student loan servicer required to obtain a license under that section, that is engaged in the business of servicing student loans prior to October 9, 2019 and that on or before such date submits a complete application pursuant to that section, shall be deemed to possess a temporary license to continue its engagement in the business of student loan services subject to the conditions and limitations set forth in subdivision (b) of this section.

(b) Temporary license.

(1) The temporary license provided for in subdivision (a) of this section, shall be effective from October 9, 2019 and shall expire upon the superintendent’s issuance of a license, the superintendent’s refusal to issue a license, or the withdrawal of the application, whichever occurs first.

(2) A temporary license provided for in subdivision (a) of this section may be terminated without a hearing if the superintendent, in her sole discretion, finds that there is a risk of public harm or other good cause for such termination.

(3) A temporary license provided for in subdivision (a) of this section shall not be renewable.

(c) Any person that fails to obtain a temporary license under this section shall not commence or continue the business of servicing student loans without first obtaining a license pursuant to section 409.3 of this Part.

3 CRR-NY 409.5 Continuing duty to update licensing information; changes in officers and directors {#sec-3-crr-ny-409.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.5}

(a) Every student loan servicer required to obtain a license pursuant to section 409.3 of this Part, shall within five days of any change in any of its executive officers, directors, partners or members notify the superintendent of the change by executing an amendment in NMLS which contains the information required to be submitted by the checklist and instructions for such an amendment posted on NMLS.

(b) Every student loan servicer required to obtain a license pursuant to section 409.3 of this Part, shall file with NMLS an amendment as soon as practicable, but in no event more than 10 days, after any information contained in the application or the NMLS file, as the case may be, ceases to be true and correct or applicable.

3 CRR-NY 409.6 Change in control application; prior approval {#sec-3-crr-ny-409.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.6}

(a) Definition of control.

(1) As used in this Part the term control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a student loan servicer, whether through the ownership of voting stock of such student loan servicer, the ownership of voting stock of any person which possesses such power, or otherwise.

(2) Control shall be presumed to exist if any person, directly or indirectly, owns, controls, or holds with power to vote 10 percent or more of the voting stock of any student loan servicer or of any person which, directly or indirectly, owns, controls, or holds with power to vote 10 percent or more of the voting stock of any student loan servicer, but no person shall be deemed to control a student loan servicer solely by reason of being an officer or director of such student loan servicer. Such presumption may not be rebutted except by a determination of the superintendent on an application under subdivision (g) of this section.

(3) As used in this section the term person means individual, partnership, firm, association, corporation, joint-stock company, trust, any similar entity or any combination of the foregoing acting in concert.

(4) As used in this Part the term substantial stockholder means a person owning or controlling directly or indirectly 10 percent or more of the total outstanding stock of a corporation.

(b) Prior approval required.

(1) Any action which results in a change of control of the business of a student loan servicer shall be void unless the superintendent has given prior approval of the act before it is taken.

(2) Prior to taking any action which results in any change of control of a student loan servicer, the person desiring to acquire control shall make a proposed amendment through NMLS consistent with the checklist and instructions for making such an amendment posted in NMLS and pay an investigation fee as prescribed pursuant to section 18-a of the Banking Law. After receiving the proposed amendment, the superintendent may require the person desiring to acquire control to submit any other information she determines necessary as a supplement thereto.

(c) Without limiting the responsibilities of persons seeking to acquire control of a student loan servicer to make application to the superintendent pursuant to section 715 of the Banking Law and this section, every student loan servicer shall report to the superintendent within 5 days of the date the student loan servicer becomes aware of such information, the name and residence of each person (or each member of a group of persons acting in concert) who becomes an owner of 10 percent or more of the outstanding shares of any voting class of the student loan servicer and shall inform such person of the reporting requirements under this Part.

(d) Application for a determination of control.

(1) The superintendent may in her discretion, upon the application of a student loan servicer or any person who, directly or indirectly, owns, controls, or holds with power to vote or seeks to own, control or hold with power to vote any voting stock of such student loan servicer, determine whether or not the ownership, control, or holding of such voting stock constitutes or would constitute control of such student loan servicer for purposes of this section.

(2) Such an application shall be in the form of a letter, containing a sworn statement under penalty of perjury by the person making the application that the contents of the letter are true, that sets forth all the information necessary for the superintendent to make the determination. Such information must at a minimum include:

(i) name and address of the person seeking a determination;

(ii) a detailed narrative description of the manner in which the person owns, controls, or holds, or seeks to own, control, or hold, voting stock of a student loan servicer;

(iii) the number of shares of each class of stock of the licensee and the amount (if any) of obligations of the licensee of which the person seeking a determination owns or intends to be beneficial owner;

(iv) an organizational chart showing the structure or the proposed structure of the ownership of the student loan servicer now or immediately after the proposed transaction to which the application relates, including anyone who controls the person seeking the determination; and

(v) any other information required by the superintendent as deemed necessary under the circumstances of the particular application.

(3) The superintendent may require the person making the application to supplement the information contained in the application as she, in her sole discretion, deems necessary to render a decision.

(e) Applications for prior approval under this section shall be approved or disapproved in accordance with the provisions of section 713 of the Banking Law and section 409.3 of this Part.

(f) This section shall not apply to an exempt organization.

3 CRR-NY 409.7 Suspension and revocation of a license {#sec-3-crr-ny-409.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.7}

(a) After a hearing.

After notice and hearing, the superintendent may revoke or suspend any license to engage in the business of servicing student loans if she finds that:

(1) a student loan servicer has violated any provision of article 14-A of the Banking Law, any provision of this Part, or any other applicable law;

(2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the superintendent refusing originally to issue such license;

(3) a student loan servicer does not cooperate with an examination or investigation by the superintendent;

(4) a student loan servicer engages in fraud, intentional misrepresentation, or gross negligence in servicing a student loan;

(5) the competence, experience, character, or general fitness of the student loan servicer, a person controlling, directly or indirectly, 10 percent or more of the outstanding interests, or any person responsible for servicing a student loan for the student loan servicer indicates that it is not in the public interest to permit the student loan servicer to continue servicing student loans;

(6) the student loan servicer engages in an unsafe or unsound practice;

(7) the student loan servicer is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors;

(8) a student loan servicer has violated the laws of this State, any other state or any Federal law involving fraudulent or dishonest dealing, or a final judgement has been entered against a student loan servicer in a civil action upon grounds of fraud, misrepresentation or deceit;

(9) a student loan servicer fails to comply with any of the servicing standards set forth in section 409.8 of this Part; or

(10) a student loan servicer engages in a prohibited practice in violation of section 409.9 of this Part.

(b) Emergency suspension.

(1) The superintendent may suspend a student loan servicer license on an emergency basis for a period not exceeding 30 days if:

(i) the superintendent finds that there is a substantial risk of public harm; or

(ii) the superintendent finds that there is good cause for such a suspension on the basis that:

(a) the student loan servicer has defaulted or is likely to default in performing its financial engagements; or

(b) the student loan servicer has engaged, or is engaging, in dishonest or inequitable practices which may cause substantial harm to borrowers or the student loan servicer market, including by taking any action prohibited by section 409.9(a) of this Part.

(2) When the superintendent suspends a license pursuant to this subdivision she shall thereafter provide notice to the licensee.

(3) The superintendent may renew an emergency suspension under this subdivision if such additional emergency suspension is accompanied by notice of a hearing to be conducted under subdivision (a) of this section within the period of such additional suspension. If such a hearing is delayed at the request or with the consent of the licensee, the licensee shall be deemed to consent to the continuation of the emergency suspension during the ensuing period ending upon a determination on the hearing.

3 CRR-NY 409.8 Servicing standards {#sec-3-crr-ny-409.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.8}

(a) A student loan servicer shall not misrepresent or omit any material information in connection with the servicing of a student loan, including, but not limited to, misrepresenting or omitting:

(1) the amount, nature, or terms of any fee or payment due or claimed to be due on a student loan;

(2) the terms and conditions of a student loan or a borrower’s obligations under a student loan; or

(3) the availability of any program or protection specific to or applicable to military borrowers, borrowers working in public service, older borrowers, cosigners, or borrowers with disabilities.

(b) Nonconforming payments.

Except as provided in Federal law or required by a student loan agreement:

(1) a student loan servicer shall inquire of a borrower how to apply a borrower’s nonconforming payment, shall give a borrower not less than 10 business days to provide instructions, and shall follow the borrower’s instructions on how to apply a nonconforming payment. A borrower’s instructions on how to apply a nonconforming payment shall remain in effect for any future nonconforming payment during the term of a student loan until the borrower provides different instructions;

(2) if a borrower has multiple loans with a student loan servicer and does not provide instructions to the student loan servicer on how to apply a nonconforming payment, a student loan servicer shall:

(i) apply an overpayment in a manner that is in the best financial interest of the borrower. A student loan servicer shall be considered to meet the requirements of this subparagraph if the servicer applies the overpayment to the highest interest-rate loan on the borrower’s account;

(ii) apply a partial payment in a manner that minimizes late fees and negative credit reporting. If there are multiple loans on a borrower’s account with an equal stage of delinquency, a student loan servicer shall satisfy the requirements of this subparagraph by applying a partial payment to satisfy as many loans as possible on a borrower’s account.

(1) A student loan servicer shall not provide inaccurate information to a consumer reporting agency.

(2) If a student loan servicer regularly reports information to a consumer reporting agency, the student loan servicer shall accurately report a borrower’s payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis as defined in section 603 of the Federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a[p]), upon acceptance as a data furnisher by that consumer reporting agency.

(d) Sale, assignment, or other transfer of servicing.

(1) If the sale, assignment, or other transfer of the servicing of a student loan results in a change in the identity of the person to whom a borrower is required to send subsequent payments or direct any communications concerning a student loan, a student loan servicer shall transfer all information regarding the borrower, the borrower’s account, and the borrower’s student loan to the new student loan servicer servicing the borrower’s student loan within 45 days. Such information shall include, at a minimum:

(i) the borrower’s repayment status;

(ii) any borrower benefits associated with the borrower’s student loan;

(iii) a schedule of all transactions credited or debited to the student loan account;

(iv) a copy of the promissory note for the student loan;

(v) any notes created by student loan servicer personnel reflecting communications with the borrower about the student loan account;

(vi) a report of the data fields relating to the borrower’s student loan account created by the student loan servicer’s electronic systems in connection with servicing practices;

(vii) copies of any information or documents provided by the borrower to the student loan servicer;

(viii) usable data fields with information necessary to assess qualification for forgiveness, including public service loan forgiveness; and

(ix) any information necessary to compile a payment history.

(2) A student loan servicer shall adopt policies and procedures to verify that it has received all information regarding a borrower, a borrower’s account, and a borrower’s student loan, including at a minimum the information listed in paragraph (1) of this subdivision, when the student loan servicer obtains the right to service a student loan.

(3) If a student loan servicer sells, assigns, or otherwise transfers the servicing of a student loan to a new student loan servicer, the sale, assignment or other transfer shall be completed at least seven days before the borrower’s next payment is due.

(4) A student loan servicer that sells, assigns, or otherwise transfers the servicing of a student loan shall require as a condition of such sale, assignment, or other transfer that the new student loan servicer shall honor all borrower benefits originally represented as being available to a borrower during the repayment of the student loan and the possibility of such benefits, including any benefits that were represented as being available but for which the borrower had not yet qualified.

(5) A student loan servicer that obtains the right to service a student loan shall honor all borrower benefits originally represented as being available to a borrower during the repayment of the student loan and the possibility of such benefits, including any benefits that were represented as being available but for which the borrower had not yet qualified.

(e) A student loan servicer shall post, process, and credit student loan payments in a timely manner, including but not limited to:

(1) crediting a payment received on the date on which that payment is due as effective on the date on which the student loan servicer received the payment; and

(2) treating a payment received from a borrower on or before the borrower’s due date as an on-time payment.

(f) Customer service.

(1) A student loan servicer shall prominently post, on the homepage of the student loan servicer’s website, a toll-free telephone number a borrower may call to discuss their student loans with a live person.

(2) A student loan servicer shall fully train representatives who answer calls to the toll-free number described in paragraph (1) of this subdivision and shall ensure that such representatives are capable of informing and discussing with callers any available alternative repayment plans, loan forgiveness, cancellation, and discharge benefits. If a caller calls to inquire about repayment options, such student loan servicer representatives shall inform and discuss with callers any available alternative repayment plans, loan forgiveness, cancellation, and discharge benefits. Such student loan servicer representatives must also be trained in the differences among deferment, forbearance, and alternative repayment plans, and be able to answer caller questions regarding the differences.

(g) Loan repayment options and loan forgiveness benefits.

(1) To assist the prevention of borrower delinquency or default, a student loan servicer shall prominently post, on the student loan servicer’s website, clear and complete information, written in easily understandable language, about any available repayment options, including deferments and income-based alternative repayment plans, and forgiveness or discharge benefits. The posted information may appear on the student loan servicer’s homepage or be available through links on the homepage to specified web pages. Student loan servicers that service direct loans or FFELP loans shall include direct, live links to the following web pages, or successor or replacement web pages, of the Student Aid Office of the United States Department of Education website: How to Repay Your Loans, https://studentaid.ed.gov/sa/repay-loans; and https://studentloans.gov/myDirectLoan/repayOptions.action.

(2) At least once per calendar year, a student loan servicer shall send to borrowers a plain language notice, containing the information or links to information regarding repayment, loan forgiveness, and discharge options, required under this rule. This notice shall also include the toll-free telephone number described in paragraph (f)(1) of this section to call to discuss student loans with a live person.

(3) A student loan servicer shall establish policies and procedures, and implement them consistently, in order to facilitate disclosure of any available alternative repayment arrangements, including:

(i) providing accurate information regarding any alternative repayment arrangements that may be available to the borrower through the promissory note, that may have been marketed to the borrower though marketing materials, or that have been widely advertised or marketed by the servicer, original lender, or promissory note holder as available to similarly-situated borrowers; and

(ii) consistently presenting and offering any available alternative repayment arrangements to borrowers with similar financial circumstances.

(h) Borrower information and statements of account.

(1) A student loan servicer shall maintain and make available through its website, free of charge, clear and complete information and account records for each borrower. This information and accounting shall be accessible to the borrower only, through a secure log-in system. This information shall include a consolidated report for each borrower, and a loan history for each student loan serviced. This information and accounting shall be available to borrowers at all times, except for occasional, short periods of time when the student loan servicer’s system is not available because the system is undergoing routine maintenance or blocked for security reasons.

(2) The consolidated report required under paragraph (1) of this subdivision must include, at a minimum:

(i) borrower name;

(ii) number of student loan(s) serviced for each borrower;

(iii) loan number, for each student loan;

(iv) loan type, i.e., direct loan, FFELP loan, perkins loan, or private student loan;

(v) loan disbursement amount and date, for each student loan;

(vi) interest rate(s) and maturity date, or number of monthly payments required to repay the loan, for each student loan;

(vii) loan balance and status, for each student loan;

(viii) cumulative balance owing for each borrower;

(ix) whether the borrower has an application pending for, or is repaying under, an alternative repayment plan, listing the plan chosen; and

(x) whether the borrower has an application pending for any loan forgiveness cancellation, or discharge benefit.

(3) The loan history required under paragraph (1) of this subdivision must include, at a minimum, the following information, including the corresponding dates for each:

(i) disbursements;

(ii) interest accruals;

(iii) fees;

(iv) late charges;

(v) any other miscellaneous amounts charged to the borrower;

(vi) payments received;

(vii) payments toward loan forgiveness programs; and

(viii) the borrower’s repayment plan.

(i) A student loan servicer that services private student loans must provide on its website clear and complete information, written in easily understandable language, concerning the availability and criteria for a cosigner release.

(j) Consumer complaints and inquiries.

(1) A student loan servicer shall respond within 15 calendar days to a consumer complaint submitted to the student loan servicer by the department. A student loan servicer may request additional time to respond up to a maximum of 45 calendar days. Such a request for additional time must be accompanied by an explanation why such additional time is reasonable and necessary. The department may grant additional time to respond in its sole discretion.

(2) A student loan servicer shall not refuse to communicate with an authorized representative of a borrower who provides a written authorization signed by such borrower, including those transmitted to the student loan servicer by mail, facsimile, or electronically, provided that the student loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower.

(3) Complaints from a borrower or a borrower’s representative. A student loan servicer shall comply with the requirements of this section for any written complaint, including those transmitted by mail, facsimile, or electronically, from a borrower or an authorized representative of a borrower that enables the student loan servicer to identify the name and account of the borrower, the borrower’s student loan account, and the nature of the borrower’s complaint.

(i) Within 10 days of receiving a complaint, a student loan servicer shall acknowledge receipt of the complaint and inform the borrower or the authorized representative of the borrower of any additional information or documentation required by the student loan servicer to review and address the complaint.

(ii) A student loan servicer must conduct a reasonable investigation of the complaint and either:

(a) correct any error or other servicing-related issue identified and provide the borrower or the authorized representative of the borrower with a written notification of the correction and the effective date of the correction; or

(b) if the student loan servicer has determined that no error occurred or that no action is warranted to correct a servicing-related issue, inform the borrower or the authorized representative of the borrower, in writing delivered via mail unless the borrower has elected to receive this response in another format, of the results of the student loan servicer’s investigation and provide a statement of the reason or reasons for this determination.

(iii) A student loan servicer shall comply with the requirements of subparagraph (ii) of this paragraph within 30 days of receiving a complaint.

(4) A student loan servicer shall adopt policies and procedures permitting borrowers to escalate a complaint or inquiry to a senior representative if the borrower is dissatisfied with the outcome of the initial complaint or inquiry.

(k) All information listed in paragraph (d)(1) of this section, and all communications with borrowers shall be considered books and records of the student loan servicer and shall be preserved pursuant to the requirements of section 409.13 of this Part.

(l) A student loan servicer shall adopt policies and procedures permitting borrowers to obtain hard copies of information required to be disclosed by the student loan servicer, with particular focus on meeting the needs of borrowers without access to the internet.

3 CRR-NY 409.9 Prohibited practices {#sec-3-crr-ny-409.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.9}

(a) No student loan servicer shall undertake any unlawful action including:

(1) employing any scheme, device or artifice to defraud or mislead a borrower;

(2) engaging in any unfair, deceptive, abusive, or predatory act or practice;

(3) misapplying payments to the outstanding balance of any student loan or to any related interest or fees;

(4) making any false statement or make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the superintendent or another governmental agency;

(5) failing to respond within 15 calendar days to communications from the department, or within such other time as the department may provide in its communication;

(6) failing to provide a response pursuant to the requirements of this Part, to a consumer complaint submitted to the student loan servicer by the department or a consumer; or

(7) altering any license issued by the department.

(b) Unfair and abusive acts and practices.

(1) As used in this Part the term unfair shall include any act or practice that:

(i) causes or is likely to cause substantial injury to borrowers which is not reasonably avoidable by borrowers; and

(ii) such substantial injury is not outweighed by countervailing benefits to consumers or to competition.

(2) As used in this Part the term abusive shall include any act or practice that:

(i) materially interferes with the ability of a borrower to understand a term or condition of a student loan or other service or option thereunder; or

(ii) takes unreasonable advantage of:

(a) a lack of understanding on the part of the borrower of the material risks, costs, or conditions of a student loan or other service or option thereunder;

(b) the inability of the borrower to protect the interests of the borrower in selecting or using a student loan or other service or option thereunder; or

3 CRR-NY 409.10 Examinations {#sec-3-crr-ny-409.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.10}

(a) The superintendent may at any time, and as often as she may determine, either personally or by a person duly designated by the superintendent, investigate the business and examine the books, accounts, records, and files used therein of every student loan servicer.

(b) The superintendent and her duly designated representative shall have free access to the offices and places of business, books, accounts, papers, records, files, safes and vaults of all student loan servicers.

(c) The superintendent and any person duly designated by her may require the attendance of and may examine under oath all persons relative to the acts, operations, or business of a student loan servicer. Such attendance may be required at any office of the department or any office of the student loan servicer in the superintendent’s sole discretion.

(d) The superintendent and any person duly designated by her shall have authority to require the production of documents, or copies thereof, in hard copy or electronic form. Such production can be required to be made at any office of the department or any office of the student loan servicer in the superintendent’s sole discretion. The superintendent may permit such production by means other than personal delivery of the documents, including by electronic mail.

(e) No person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.

(f) An examination under this section may be used to determine any matter the determination of which in the judgment of the superintendent is necessary or advisable. Such matters shall include:

(1) the financial condition of the licensee;

(2) the safety and soundness of the conduct of its business;

(3) the policies of its management;

(4) whether the requirements of law have been complied with in the administration of its affairs; and

(5) such other matters, as the superintendent may determine, including any activities of the licensee outside this State if in the opinion of the superintendent such activities may affect the licensee's servicing business in this State.

(g) Assessment for the cost of examination.

The expenses incurred in making any examination pursuant to this section shall be assessed against and paid by the student loan servicer so examined. Upon written notice by the superintendent of the total amount of such assessment, the student loan servicer shall become liable for and shall pay such assessment to the superintendent.

(h) Without limiting any other power or responsibility of the superintendent, this section shall not apply to an exempt organization.

3 CRR-NY 409.11 Reporting requirements {#sec-3-crr-ny-409.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.11}

(a) Annual reporting.

(1) Each year by the first of February the superintendent shall publish instructions for the submission of an annual report by each student loan servicer on the website of the department, which instructions shall set forth the content of such report for the previous calendar year.

(2) Each student loan servicer shall, by the first of April of each year, submit an annual report, which complies with the instructions published pursuant to paragraph (1) of this subdivision, in the manner set forth in those instructions.

(3) Extensions.

(i) In an exercise of discretion, the superintendent may extend the dates established by this subdivision for such period as she determines is necessary.

(ii) A student loan servicer may request an extension to its time to file an annual report by making such request in writing at least 15 days prior to the date on which the annual report is due. Such request shall set forth the reasons such an extension is necessary and provide all information relevant to the request. Making such a request shall not stay the date on which the report is due. The superintendent may grant such a request in her discretion, but failure to respond to such a request within five days shall be deemed a denial.

(b) Special reports.

In addition to the regular reporting required by this section, the superintendent may address to any student loan servicer, or to any officer, director, member, or partner thereof, any inquiry necessary to the proper supervision of the student loan servicer or the servicing industry. Such inquiry shall be answered in writing within 15 days, unless the superintendent in her discretion provides for different period to answer, and such answer shall be affirmed as true under penalty of perjury by the person to whom the inquiry is addressed.

(c) Without limiting any other power or responsibility of the superintendent, this section shall not apply to an exempt organization.

3 CRR-NY 409.12 Confidential supervisory information {#sec-3-crr-ny-409.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.12}

(a) The following, including any duly authenticated copy or copies thereof, shall be deemed confidential communications under subdivision (10) of section 36 of the Banking Law:

(1) all communications between the department and any student loan servicer;

(2) any materials compiled by the department in the course of the supervision of any student loan servicer;

(3) any reports provided to the department by any student loan servicer;

(4) any reports of examinations or investigations, correspondence, and memoranda concerning or arising out of such examination and investigations.

(b) Such information shall not be subject to subpoena and shall not be made public. No student loan servicer or any other person in possession of such information shall make any disclosure or publication of such information.

(c) Notwithstanding subdivision (b) of this section, the superintendent in her discretion may determine that the ends of justice and the public advantage will be served by the disclosure or publication of any confidential communication and may publish or authorize the publication of a copy of any such confidential communication or any part thereof in such manner and subject to such conditions as the superintendent in her discretion deems proper.

3 CRR-NY 409.13 Books and records {#sec-3-crr-ny-409.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.13}

(a) Each student loan servicer shall keep and use in its business such books, accounts, and records as will enable the superintendent to determine whether such student loan servicer is complying with the provisions of this article and with the rules and regulations lawfully made by the superintendent.

(b) Every student loan servicer shall preserve such books, accounts, and records, for at least three years or such longer period as may be required by any other provision of law.

(c) In addition to the requirements of subdivision (b) of this section, each student loan servicer shall keep records of each student loan, including at a minimum all the information listed in section 409.8(d)(1) of this Part, and all communications with borrowers for not less than two years following the final payment on such student loan or the sale, assignment or other transfer of the servicing of the student loan to which they relate.

(d) A licensee who surrenders its license shall remain under the obligations of this section to maintain books, accounts, and records notwithstanding the surrender.

3 CRR-NY 409.14 Cybersecurity {#sec-3-crr-ny-409.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.14}

(a) Every student loan servicer, other than an exempt organization, is a covered entity under Part 500 of Title 23 and shall comply with that Part.

(b) A student loan servicer shall have until April 9, 2020 to comply with Part 500 of Title 23, except that a student loan servicer shall have until October 9, 2020 to comply with the requirements of sections 500.06, 500.08, 500.11, 500.13, 500.14 (a) and 500.15 of that Part.

3 CRR-NY 409.15 Notifications {#sec-3-crr-ny-409.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.15}

Any student loan servicer not required to obtain a license under section 409.3 of this Part that is required by section 711 of the Banking Law to notify the superintendent that it is servicing student loans shall make such notification by completing the form published on the department’s website for such purpose.

3 CRR-NY 409.16 Severability {#sec-3-crr-ny-409.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 409.16}

To the extent any portion of this Part is found by a court of competent jurisdiction to be preempted by Federal law, it is intended that such portion be reformed to narrow its applicability, to the minimum extent necessary, and that it shall continue to apply to any student loan servicer to whom its application is not preempted.

Part 410 MORTGAGE BANKERS: LICENSING REQUIREMENTS; MORTGAGE BROKERS: REGISTRATION REQUIREMENTS; BRANCH APPLICATIONS: NOTIFICATIONS: BOOKS AND RECORDS; ANNUAL REPORTS; SURETY BONDS; AND CONSULTANTS OF LICENSED MORTGAGE BANKERS AND REGISTERED MORTGAGE BROKERS

3 CRR-NY 410.1 Mortgage banking license; minimum standards {#sec-3-crr-ny-410.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.1}

(a) Purpose.

Section 592 of the Banking Law provides that the superintendent may issue licenses to engage in the business of mortgage banking if he shall find that the financial responsibility, experience, character and general fitness of the applicant are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently. Certain minimum standards to be met by applicants for a mortgage banking license are set forth in this section. Nothing contained herein shall limit the superintendent's authority to consider all relevant factors in determining whether or not to approve an application, or to require information in addition to that required by the application form provided to the applicant by the department.

(b) Financial responsibility.

Applicants for a license to engage in the business of making mortgage loans shall demonstrate and maintain:

(1) adjusted net worth of not less than $250,000;

(2) an existing line of credit in an amount of not less than $1,000,000 provided by an unaffiliated banking institution, insurance company or similar credit facility approved by the superintendent; and

(3) a corporate surety bond issued by a bonding company or an insurance company authorized to do business in New York or pledged deposit (valued at the lower of principal amount or market) in the amount set forth in section 410.9 of this Part.

Applicants shall provide the superintendent with evidence of their financial responsibility and submit an affirmation which states that the applicant meets the foregoing requirements. Adjusted net worth shall consist of stockholders equity per the statement of financial condition at the end of the reporting period less the following nonacceptable assets: any asset or portion thereof pledged to secure obligations of any person or entity other than that of the mortgage banker; any asset (except construction loans receivable, secured by first mortgages, from related companies) due from officers or stockholders of the mortgage banker or related companies; that portion of any marketable security (listed or unlisted) not shown at lower of cost or market, except for any shares of FNMA stock required to be held under a servicing agreement which should be carried at cost; any amount in excess of the lower of the cost or market value of mortgages in foreclosure, construction loans, or property acquired through foreclosure; any amount shown on the balance sheet in joint ventures, subsidiaries, affiliates, and/or related companies which is greater than the value of said assets at equity; Goodwill or value placed on insurance renewals or property management contract renewals or other similar intangibles; organization costs; the value of any servicing contracts not determined in accordance with FASB 65, Accounting for Certain Mortgage Banking Activities, or subsequent revisions thereto; and “other assets,” unless the financial statements are accompanied by a schedule prepared by the independent auditor or a schedule prepared by the mortgage banker and signed by an officer of the mortgage banker.

Applicants for a mortgage banking license shall demonstrate to the superintendent's satisfaction that they have five years verifiable experience in the business of making residential mortgage loans or similar lending and credit evaluation experience or that they have engaged or shall engage in their employ one or more persons having such experience. At the superintendent sole discretion, other relevant educational or business experience may be substituted for some of the lending and credit evaluation experience described in this subdivision.

(d) Community benefit.

Applicants shall demonstrate to the superintendent their character and fitness to operate a residential mortgage lending business in a manner which is honest, fair, efficient and free from deceptive and anticompetitive practices.

3 CRR-NY 410.2 Application procedure; licenses {#sec-3-crr-ny-410.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.2}

Application for a license to engage in the business of mortgage banking shall be made in such form as may be prescribed by the superintendent and may be obtained by written request addressed to the department, Attn: Mortgage Banking Division, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(a) Fee.

A completed application must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

(b) Application form.

The application for licensure as a mortgage banker shall be in writing, subscribed by the applicant under penalty of perjury, and shall contain the information and documents referred to in Supervisory Procedure MB 101 of this Title as well as any other information and documents deemed reasonable and necessary by the superintendent.

The applicant shall provide a set of fingerprints in such form as shall be accepted for processing by the New York State Criminal Justice System.

(d) Background information.

The applicant shall provide a report from a qualified investigatory firm detailing the personal and financial background of the applicant, or such officers or partners of the applicant as the superintendent may require.

3 CRR-NY 410.3 Mortgage broker registration; minimum standards {#sec-3-crr-ny-410.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.3}

(a) Purpose.

Section 592-a of the Banking Law provides that the superintendent may register applicants as mortgage brokers if he shall find that the financial responsibility, experience, character and general fitness of the applicant are such as to command the confidence of the community and to warrant belief that the business shall be operated honestly and fairly. This section sets forth certain minimum standards to be met by applicants for registration as mortgage brokers. Nothing contained herein shall limit the superintendent's authority to consider all relevant factors in determining whether or not to approve the application or to require information in addition to that required by the application form provided to the applicant by the department.

(b) Experience and educational background.

(1) Licensed real estate brokers, as defined in section 440 of the Real Property Law, who are in good standing with the Secretary of State, and attorneys-at-law shall not be required to demonstrate their experience to engage in the mortgage brokerage business.

(2) Licensed real estate salesmen, as defined in section 440 of the Real Property Law, must demonstrate two years active participation in the residential mortgage brokerage business, the nature and length of which experience shall be established by affidavit duly sworn to under penalty of perjury by the applicant.

(3) Applicants with a minimum of two years of credit analysis or underwriting experience with an exempt organization, mortgage banker, mortgage broker or licensed lender shall attach to their application a statement, verified under penalty of perjury, indicating:

(i) the specific duties and responsibilities of their employment;

(ii) the term of their employment; and

(iii) the name, address and telephone number of a business reference or a current or former supervisor.

(4) Applicants who have relevant business experience or have a relevant educational background must demonstrate that their experience or education qualifies them to be a registered mortgage broker. Such applicants shall attach to their application a statement, verified under penalty of perjury, indicating:

(i) If relevant business experience:

(a) the specific duties and responsibilities of their employment;

(b) the term of their employment; and

(ii) If relevant educational background, the specific courses taken and dates of completion.

3 CRR-NY 410.4 Application for registration {#sec-3-crr-ny-410.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.4}

Applications for registration shall be made in such form as may be prescribed by the superintendent and may be obtained by written request to the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(a) Fee.

A completed application must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

(b) Application form.

The application for registration as a mortgage broker shall be in writing, subscribed by the applicant under penalty of perjury, and shall include the information and documents referred to in Supervisory Procedure MB 102 of this Title as well as any other information and documents as the superintendent may require.

The applicant shall provide a set of fingerprints in such form as shall be accepted for processing by the New York State Criminal Justice System.

3 CRR-NY 410.5 Branch application; investigation fees {#sec-3-crr-ny-410.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.5}

(a) A mortgage broker or mortgage banker may apply to open and maintain one or more branches. A branch may be applied for by application containing the information and documents set forth in a form which may be obtained from the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. If an application is requested in writing, the address should indicate the following: Attn: Mortgage Banking Division.

(1) An application for a branch filed by a mortgage banker shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

(2) An application for a branch filed by a mortgage broker shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

(b) In the event the superintendent does not reject the application for a branch within 30 days of publication of the receipt of a completed application, the mortgage broker or mortgage banker may open the branch.

3 CRR-NY 410.6 Changes in officers, directors, or control of mortgage banker or mortgage broker {#sec-3-crr-ny-410.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.6}

(a) Change in control.

For purposes of this Part, a change in control shall be construed in accordance with section 594-b of the Banking Law.

(1) Minimum standards for control of a mortgage banker or a mortgage broker shall be in accordance with sections 410.1 and 410.3 of this Part, as applicable.

(2) Applications for change of control of a mortgage banker or mortgage broker shall be in writing, subscribed by the applicant under penalty of perjury, and shall contain the information and documents referred to in Supervisory Procedure MB 103 or MB 104 of this Title, as applicable, as well as any other information and documents as the superintendent may require.

(b) Change in officers and directors.

Every mortgage broker and mortgage banker shall within 10 days after a change of any of the directors or the three most senior executive officers or, if different, any officer(s) in charge of the New York operations of the licensed or registered entity submit to the superintendent, in writing:

(1) the name, address and occupation of such new executive officer or director; and

(2) provide such other information as the superintendent may require.

3 CRR-NY 410.7 Books and records; annual reports {#sec-3-crr-ny-410.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.7}

(a) Each mortgage banker and mortgage broker shall keep its books and records in a manner that will allow the superintendent to determine whether the mortgage banker or mortgage broker is complying with article 12-D of the Banking Law. Every mortgage banker and mortgage broker shall preserve its books and records for inspection for a minimum of three years. Every mortgage banker and mortgage broker shall establish and maintain the following:

(1) All rejected mortgage application files which shall contain all documentation relating to the applications. A list of rejected files shall be maintained and the files must be readily available upon request.

(2) A separate file for all written consumer complaints to contain the original complaint, documentation of actions taken and any related correspondence.

(3) A correspondence folder to contain all correspondence to and from the department, or copies thereof.

(4) A centralized application log for the principal office and all branch offices, updated daily, based on the date of receipt of the application, containing the following information:

(i) date application received;

(ii) name and address of applicant;

(iii) file number assigned;

(iv) address of property;

(v) source of application—if the source is a referral, the entry must include the name, address and a description of the entity making the referral. This information may be contained in the application log or set forth by file number or applicant name in one or more accounting records of sufficient detail;

(vi) all other fees collected and/or distributed prior to closing—include the amount of the fee, date paid, purpose (e.g., appraisal, credit report, etc.), and the name, address and description of the entity to whom each fee is paid and/or from whom a fee is received. This information may be contained in the application log or set forth by file number or applicant name in one or more accounting records of sufficient detail; and

(vii) final disposition of the application and the date thereof. Every mortgage broker shall also establish and maintain items listed in this subdivision. In addition, the application log shall also contain the entity with which the loan was placed and the amount of fees received for mortgage brokerage service directly from the applicant and all other sources (e.g., lenders, other brokers, etc.). Said fees shall be listed separately for each source. This information may be contained in the application log or set forth by file number or applicant name in one or more accounting records of sufficient detail.

(5) Branches must report their activity to the principal office on a daily basis not later than noon of the fifth business day after the activity takes place.

(b) Annual reports.

Each mortgage banker and mortgage broker shall file an annual report with the superintendent in such form as the superintendent shall prescribe. The annual report shall be in writing, subscribed by the mortgage banker or mortgage broker under penalty of perjury.

Each mortgage banker shall maintain a general ledger and such subsidiary ledgers as is necessary to accurately record all assets, liabilities, capital, income and expenses, and contingencies. Such ledgers shall be posted at least monthly. As of the end of each month a trial balance shall be prepared and kept readily available for inspection by department personnel. Mortgagors' escrow funds and corresponding amounts due from banks shall be set forth in the general ledger. Additionally, regular, periodic proofs shall be conducted.

(d) Financial statements.

As of the end of each fiscal quarter, each mortgage banker shall have prepared an unaudited financial statement consisting of a balance sheet, income statement, and a statement of changes in net worth. Such financial statement shall be kept readily available for inspection by department personnel.

(e) Audited financial statement.

Each mortgage banker shall have prepared an annual audited financial statement as of its fiscal year end which must be filed with the department within 90 days of the close of the fiscal year. The financial statement shall be prepared in accordance with generally accepted accounting principals and audited by an independent certified public accountant. Such audit shall be performed in accordance with generally accepted auditing standards and shall include a calculation of adjusted net worth as defined in section 410.1(b) of this Part and an opinion from the accountant. Any mortgage banker which is a consolidated subsidiary may comply with this provision by annually providing a consolidated audited financial statement of its parent company and a financial statement, which may be unaudited, of the mortgage banker which is prepared in accordance with generally accepted accounting principles. Such financial statement shall include a calculation of net worth as defined in section 410.1(b) of this Part and shall be attested to by the chief executive officer or chief financial officer of the parent company.

(f) Loan files.

Each mortgage banker shall maintain all documents relating to the credit, underwriting and pricing decisions of each loan file irrespective of whether the application has been denied, approved or withdrawn. Each mortgage broker shall maintain a copy of the HUD-1 in each loan file.

(g) Documentation relating to pricing and credit.

Each mortgage banker shall establish and maintain the following:

(1) if overages are charged, the lending policies and procedures pertaining to the imposition of overages. For purposes of this Part, an overage is a specific amount charged to a borrower in excess of the applicable amount indicated on the regular rate sheet utilized by the lender, whether in the interest rate or in the points, which serves to increase compensation to lenders and loan officers. Such rate sheet shall be maintained and available for review by the Banking Department. If such rate sheet is not maintained in the loan file, then each loan file shall contain information sufficient to identify which rate sheet was utilized to price that loan;

(2) the lending policies and procedures pertaining to the charging of discount and/or origination points, if any, irrespective of whether such points reduce the interest rate; and

(3) the lending policies and procedures pertaining to the payment, if any, of premium pricing to mortgage brokers.

(h) Other required documentation relating to pricing and credit.

Each mortgage banker shall establish and maintain the following documents for all loans, provided that such documents need not be maintained for federally related mortgage loan programs including, but not limited to, any loan purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, securitized by the Government National Mortgage Association or insured by the Federal Housing Administration, the Veterans' Administration or the Farmers' Home Administration or such loans that are prime no documentation/low documentation or alternative documentation loans:

(1) the lending policies and procedures pertaining to loan pricing and the conditions under which exceptions to such loan pricing policies and procedures can be made and by whom;

(2) documents reflecting pricing matrices; and

(3) documents reflecting the establishment of credit grades.

(i) Mortgage loan pipeline.

With respect to mortgage loans for which a commitment has been issued but the loan has not yet closed and funded, each mortgage banker shall maintain a report or reports, updated on a monthly basis, that provides the following information, both by state and in the aggregate:

(1) total number and dollar amount of such loans;

(2) type of loan, (i.e., purchase money, refinance, etc.);

(3) total number and dollar amount of all such loans having a locked-in interest rate and total number and dollar amount of such loans whose interest rate is not locked-in; and

(4) the date the commitment was issued and any fees collected from the borrower up to the date of commitment by any party to the mortgage transaction.

Such report(s) shall be retained for one year.

(j) Mortgage loans subject to a lock-in agreement.

For mortgage loans in which the loan applicant has entered into a lock-in agreement with respect to the interest rate, mortgage bankers shall maintain a report, updated monthly, regarding such loans that includes the date the interest rate was locked-in and the date and dollar amount of any fees collected by any party for the purpose of guaranteeing the lock-in rate. Such report shall be retained for one year.

(k) Lines of credit.

For each line of credit, a mortgage banker shall maintain a report, or equivalent documentation, updated weekly, listing each advancement of funds from the line of credit that reflects the date of the advancement, the name of the borrower, the date that the mortgage loan closed and the date the funds were forwarded to satisfy its obligation for the advancement from the line of credit.

(l) Closing agents.

Each mortgage banker shall maintain a list, by state, of the closing agents that it uses that contains, at a minimum, the name, address and telephone number of the closing agent.

(m) Quarterly reports.

Within 45 days of the end of each fiscal quarter, each mortgage banker shall file:

(1) an unaudited financial statement with the department that, at a minimum, includes a balance sheet, income statement, cash flow statement, statement of adjusted net worth and dollar amount of mortgage loans for which a commitment has been issued but the loan has not yet closed. In instances where a mortgage banker has more than one affiliated company, said mortgage banker shall submit such financial statements on both a consolidated and consolidating basis;

(2) with respect to mortgage loans for which a commitment has been issued but said loan has not yet closed and funded, a quarterly report with the department that provides the number and dollar amount of such loans, the average number of days from commitment to closing and the number of loans in the quarter that did not close within said average number of days.

(n) Compliance officer.

Each mortgage banker shall employ an in-house compliance officer who shall be responsible for ensuring that the mortgage banker operates its mortgage banking business in accordance with all applicable Federal and State laws and regulations. While the compliance officer may have other job responsibilities, the mortgage banker is responsible for ensuring that the compliance officer devotes sufficient time to the compliance function responsibilities. Alternatively, the mortgage banker may retain an unaffiliated third party to provide such compliance services.

(o) FNMA or FHLMC certified lenders.

Within 10 days of receipt, each mortgage banker certified by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation shall provide the department with:

(1) copies of any and all financial reporting on the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation forms;

(2) a copy of any audit letter issued on behalf of the mortgage banker in conjunction with the Uniform Single Audit Program for Mortgage Bankers and evidence of current certification by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, if applicable; and

(3) copies of any and all notices received from the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation relating to the withdrawal of said certification.

(p) Third-party audit reports.

Within 10 days of receipt, each mortgage banker shall provide the department with a certified copy of any report of an audit of the mortgage banker and/or its affiliates by any lender extending a line of credit to the mortgage banker, investor, party to a loan purchase agreement, any Federal agency or government service organization.

(q) Maintenance of certain mortgage loan data.

In order to allow the superintendent to ensure that all mortgage bankers are conducting their residential mortgage lending business in accordance with the provisions of section 296-a of the Executive Law, each mortgage banker exempt from the mortgage data reporting requirements of section 203.3(2) of Regulation C, 12 CFR203, issued by the Board of Governors of the Federal Reserve pursuant to the Federal Home Mortgage Disclosure Act, 12 USC 2801, et seq., shall maintain the same data as required by Regulation C for review by the Superintendent of Financial Services. Said data shall be compiled on an annual basis by March 1st of the following year in the manner required by Regulation C but need not be submitted to the department but must be available for examination for a minimum of three years. Mortgage bankers wishing to retain the above data in a form other than that required by Regulation C may apply in writing for a waiver from the superintendent.

3 CRR-NY 410.8 Corporate surety bonds for mortgage bankers {#sec-3-crr-ny-410.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.8}

(a) Every mortgage banker licensed pursuant to Banking Law, section 591 shall file with the superintendent a corporate surety bond in a principal amount of not less than $50,000 or more than $500,000 based on its volume of business. The amount of the bond required shall be as follows:

| | | | --- | --- | | Aggregate $ amount of NY loans closed | Required amount of surety bond | | $300,000,000+ | $500,000 | | $200,000,000 - $299,999,999 | $350,000 | | $100,000,000 - $199,999,999 | $250,000 | | $30,000,000 - $99,999,999 | $150,000 | | $10,000,000 - $29,999,999 | $100,000 | | $0 - $9,999,999 | $50,000 |

The amount of the surety bond shall be determined from information submitted in the annual Volume of Operations Report (VOOR). The 2004 bond will be based upon the 2002 VOOR figures reported to the department. Thereafter, adjustments to the amount of the bond shall be made within 30 days after filing the applicable VOOR. Moreover, a licensed mortgage banker may submit a sworn statement indicating the aggregate dollar amount of NY loans closed during the first half of the calendar year if such amount, on an annualized basis, would change the required amount of the surety bond. Such corporate surety bond shall be issued by a bonding company or insurance company authorized to do business in this State. If the superintendent determines, in his or her sole discretion, that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such licensee to post a surety bond, or keep on deposit, twice the amount of such bond or deposit as is required consistent with this subdivision.

(b) 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 it shall contain substantially the following language:

“In the event of the insolvency, liquidation or bankruptcy of such licensee, or the expiration, surrender or revocation of such mortgage banker's license, or where the Superintendent takes possession of such licensee, the proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees or other charges determined by the Superintendent to be improperly charged or collected and to pay past due Department examination costs and assessments charged to the licensee, unpaid penalties, or other obligations of the licensee. In the event of the insolvency, liquidation or bankruptcy of the mortgage banker, or the expiration, surrender or revocation of such mortgage banker's license, or where the Superintendent takes possession of such licensee, 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) In lieu of a corporate surety bond, the mortgage banker may elect to deposit assets pursuant to section 410.10 of this Part.

3 CRR-NY 410.9 Deposit of assets {#sec-3-crr-ny-410.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.9}

Pursuant to Banking Law, section 591(4), a mortgage banker may, in lieu of filing a corporate surety bond pursuant to section 410.9 of this Part, elect to deposit assets with a value of $50,000 to $500,000, in accordance with the requirements of section 410.9 of this Part, valued at the lower of principal amount or market value in a New York State chartered commercial bank, trust company, savings bank, savings and loan association or a national bank, Federal savings bank or Federal savings and loan association in the State of New York. Pursuant to Banking Law, section 591-a, a mortgage broker may, in lieu of filing a corporate surety bond pursuant to section 410.15 of this Part, elect to deposit assets with a value of $10,000 to $100,000, in accordance with the requirements of section 410.15 of this Part, valued at the lower of principal amount or market value in a New York State chartered commercial bank, trust company, savings bank, savings and loan association or a national bank, Federal savings bank or Federal savings and loan association in the State of New York. No such deposit shall be made until the deposit agreement referred to in section 410.11 of this Part has been approved by the superintendent.

3 CRR-NY 410.10 Deposit agreement; certificate of licensee or registrant {#sec-3-crr-ny-410.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.10}

Any mortgage banker or mortgage broker, which elects to deposit assets pursuant to section 410.10 of this Part, shall execute with the depository a deposit agreement on a form obtained from the Mortgage Banking Division of the department or such other form as is satisfactory to the superintendent. An executed copy of such deposit agreement shall be filed with the superintendent. As part of this deposit agreement, the mortgage banker or mortgage broker shall agree that prior to the release or substitution of any assets subject to the deposit agreement, the mortgage banker or mortgage broker shall file a certificate with the depository which shall specify the following:

(a) the complete title of each security being withdrawn;

(b) the complete title of each security being deposited in place thereof;

(c) the interest rate, series, serial number (if any), face value maturity date, call date, principal amount and market value of each replacement security;

(d) the aggregate principal amount of all such replacement securities;

(e) the amount, if any, of the funds being withdrawn or deposited; and

(f) 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 licensed mortgage banker or registered mortgage broker, based in the case of such securities upon the principal amount or market value, whichever is lower, is at least equal to the amount required in section 410.9 of this Part for mortgage bankers, or section 410.15 of this Part for mortgage brokers.

In addition, as part of this deposit agreement, the licensee 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.

3 CRR-NY 410.11 Assets that may be deposited {#sec-3-crr-ny-410.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.11}

In addition to the assets described in sections 591(4) and 591-a(3) of the Banking Law, the following assets are eligible for deposit for purposes of section 410.10 of this Part:

(a) commercial paper payable in dollars in the United States provided such paper is accorded the highest rating of a rating service designated by the superintendent pursuant to section 61.1 of this Title. In the event that an issue of commercial paper is rated by more than one designated rating service, it must have the highest rating of each;

(b) negotiable certificates of deposit that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation;

(c) banker's acceptances that are payable in the United States and issued by an unaffiliated domestic banking institution or a domestic office of an unaffiliated foreign banking corporation; and

(d) such other assets as approved by the superintendent upon written application. In determining whether to approve such other assets, the superintendent shall ascertain the following as applicable:

(1) if securities, whether the securities have an independently verifiable market value of at least 110 percent of the required amount of the deposit and are traded on a recognized exchange;

(2) if bonds, whether the bonds have an investment grade rating from either Moody's Investors Services, Inc., Standard & Poor's Corporation or Fitch Investors' Service, Inc.

If the superintendent determines than an asset which otherwise qualifies under subdivisions (a) through (c) of this section shall be valued for purposes of this Part at less than the amount otherwise required by this Part, the superintendent shall so notify the licensee which shall thereafter value such asset for purposes of this Part as directed by the superintendent.

3 CRR-NY 410.12 Retention of receipts or statements {#sec-3-crr-ny-410.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.12}

Each mortgage banker and mortgage broker shall retain until completion of its next examination the originals of any and all receipts and/or statements obtained from a depository pursuant to the deposit agreement referred to in section 410.11 of this Part as well as copies of any and all withdrawal requests and the certificate given to a depository pursuant to the deposit agreement referred to in section 410.11 of this Part.

3 CRR-NY 410.13 Miscellaneous provisions {#sec-3-crr-ny-410.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.13}

(a) Reliance on written communication of department.

For the purposes of the deposit agreement, the mortgage banker, mortgage broker and the depository shall accept and may rely upon, as an order of the superintendent, any written communication with the seal of the department affixed thereto, and signed:

(1) by the superintendent;

(2) by a Deputy Superintendent of Financial Services; or

(3) by any two employees jointly of the department whom the superintendent may specifically designate in writing, to the depository, the mortgage banker or mortgage broker (whichever is the addressee of such communication).

(b) Release from compliance with terms or conditions of deposit agreement.

The superintendent may by order relieve the mortgage banker, mortgage broker or the depository from compliance with any term or condition of the deposit agreement, including any term or condition prescribed by this Part, if the superintendent shall find such action necessary or proper to give effect to the purposes of sections 591(4) and 591-a(3) of the Banking Law or of this Part.

Written communication to the superintendent regarding this Part should be addressed to New York State Department of Financial Services, Attention: Mortgage Banking Division at the address set forth in section 1.1 of Supervisory Policy G1 of this Title.

3 CRR-NY 410.14 Corporate surety bonds for mortgage brokers {#sec-3-crr-ny-410.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.14}

(a) Every mortgage broker registered pursuant to Banking Law, section 591-a shall file with the superintendent a corporate surety bond in a principal amount of not less than $10,000 or more than $100,000 based on its number of applications. The amount of the bond required shall be as follows:

| | | | --- | --- | | Number of New York applications | Required amount of surety bond | | 600+ | $100,000 | | 300 - 599 | $75,000 | | 100 - 299 | $50,000 | | 25 - 99 | $25,000 | | 0 - 24 | $10,000 |

The amount of the surety bond shall be determined from information submitted in the annual Volume of Operations Report (VOOR). The 2004 bond will be based upon the 2002 VOOR figures reported to the department. Thereafter, adjustments to the amount of the bond shall be made within 30 days after filing the applicable VOOR. Moreover, a registered mortgage broker may submit a sworn statement indicating the number of applications taken during the first half of the calendar year if such number, on an annualized basis, would change the required amount of the surety bond. Such corporate surety bond shall be issued by a bonding company or insurance company authorized to do business in this State. If the superintendent determines, in his or her sole discretion, that a registrant has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such registrant to post a surety bond, or keep on deposit, twice the amount of such bond or deposit as is required consistent with this subdivision.

The term application shall have the same meaning as that term has in section 202.2(f) of Regulation B of the Federal Reserve System (12 CFR*202), including the interpretations thereof contained in Supplement 1 to Part 202—Official Staff Interpretations.

"In the event of the insolvency, liquidation or bankruptcy of such registrant, or the expiration, surrender or revocation of such mortgage broker's registration, or where the Superintendent takes possession of such registrant, the proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees or other charges determined by the Superintendent to be improperly charged or collected and to pay past due Department examination costs and assessments charged to the registrant, unpaid penalties, or other obligations of the registrant. In the event of the insolvency, liquidation or bankruptcy of the mortgage broker, or the expiration, surrender or revocation of such mortgage broker's registration, or where the Superintendent takes possession of such registrant, 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) Mortgage brokers that have been placed on inactive status pursuant to section 410.17 of this Part need not obtain a surety bond or deposit of assets. Should the mortgage broker seek to reactivate its registration, satisfactory proof of the surety bond or deposit of assets will be required before reactivation is granted.

3 CRR-NY 410.15 Release of corporate surety bond or deposit of assets {#sec-3-crr-ny-410.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.15}

If a claim is not made against the surety bond or deposit of assets held pursuant to sections 591(4) and 591-a(3) of the Banking Law within six months of the insolvency, liquidation, bankruptcy of the mortgage banker or broker, or the expiration, surrender or revocation of the mortgage banker's license or mortgage broker's registration, or where the superintendent takes possession of the mortgage banker or broker, the superintendent shall release any corporate surety bond or deposit of assets. Provided that the proceeds of the bond or deposit of assets shall have been first applied to:

(a) all consumer fees determined by the superintendent to be improperly charged or collected by said mortgage banker or mortgage broker; and

(b) all department examination costs and assessments outstanding against said mortgage banker or mortgage broker. Nothing contained herein shall prevent the superintendent from continuing to retain possession of the bond or its proceeds or the deposit of assets in the event of ongoing litigation involving the mortgage banker or mortgage broker.

3 CRR-NY 410.16 Application by a mortgage broker for inactive status {#sec-3-crr-ny-410.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.16}

Any mortgage broker which decides not to engage in the business of soliciting, processing, placing or negotiating mortgage loans for others, but wishes to maintain its registration as a mortgage broker may file an application to be placed on inactive status, subject to approval by the superintendent. Such approval shall be granted in the sole discretion of the superintendent. The application shall be in writing, subscribed by the applicant under penalty of perjury, and shall contain the information and documents referred to in Supervisory Procedure MB 105 of this Title as well as any other information and documents as the superintendent may require.

3 CRR-NY 410.17 Consultants, employees and independent contractors of licensed mortgage bankers and registered mortgage brokers {#sec-3-crr-ny-410.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.17}

(a) The term consultant shall mean an individual or entity involved in advising or directing management, performing management functions, or providing services to management of a licensed mortgage banker or registered mortgage broker on matters relating to the operation of the company, or an individual or entity that receives compensation, either directly or indirectly, from the licensed or registered entity, for advising potential applicants or borrowers with regard to the making of a mortgage loan. An individual or entity may be deemed a consultant regardless of whether that person or entity is receiving compensation. Consultant shall not include:

(1) an individual who is a W-2 employee of a licensee or registrant; or

(2) an individual with a professional license issued by this State or another state including, but not limited to, attorneys, accountants, real estate agents and appraisers, provided that the services provided by such individual to the licensee or registrant are the services for which such individual has a professional license; or

(3) an individual who is employed by an entity that is regulated by any local, State or Federal regulatory agency; or

(4) any 1099 independent contractor or other outside contractor that does not provide mortgage related services.

(b) The term employee shall mean any individual performing a service for either a mortgage broker, or mortgage banker for whom such entity would be liable for withholding taxes pursuant to title 26 of the United States Code.

(c) The term independent contractor shall mean any individual engaged in regulated activities as an independent contractor pursuant to title 26 of the United States Code on behalf of either a mortgage broker, or mortgage banker.

(d) Applicants for a license to engage in the business of mortgage banking and applicants for registration as a mortgage broker shall provide a list of its consultants at the time of application. A list of consultants must be filed with the superintendent by the licensee or registrant in such form as may be prescribed within 10 days of commencement of retainment. In addition, notification of the termination of any consultant shall be made to the superintendent within 10 days of such termination.

(e) An undertaking of accountability for each independent contractor must be filed with the superintendent by the licensee or registrant in such form as may be prescribed within 10 days of commencement of retainment. In addition, notification of the termination of any independent contractor shall be made to the superintendent within 10 days of such termination.

3 CRR-NY 410.18 Filings {#sec-3-crr-ny-410.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.18}

All filings under this Part may be submitted electronically in a format acceptable to the superintendent.

3 CRR-NY 410.19 [Repealed] {#sec-3-crr-ny-410.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.19}

3 CRR-NY 410.20 [Repealed] {#sec-3-crr-ny-410.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 410.20}

Part 412 DISSOLUTION OF FUND CREATED UNDER ARTICLE VI-B

3 CRR-NY 412.1 Purpose {#sec-3-crr-ny-412.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 412.1}

This regulation is promulgated under the authority of Banking Law, section 284 and in accordance with the provisions of section 2, article V of the Agreement for the Establishment of the Fund for Savings Bank dated January 20, 1965.

3 CRR-NY 412.2 General provisions {#sec-3-crr-ny-412.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 412.2}

The Fund for Savings Banks was created pursuant to article VI-B of the Banking Law and in accordance with a written agreement entitled “Agreement for the Establishment of the Fund for Savings Bank,” pursuant to article VI-B of the Banking Law, dated January 20, 1965. The agreement was approved by the superintendent on February 11, 1965. The fund then entered into a written agreement dated March 31, 1965 with a savings bank pursuant to which the members of the fund, by and through the fund, contributed capital to the initial surplus fund of a savings bank. The aforesaid contribution was evidenced by a written instrument held by the fund known as a “Transferable Certificate.” On November 18, 1986 the said transferable certificate was redeemed and cancelled by the payment from the savings bank representing full payment of principal and interest to the date of payment.

3 CRR-NY 412.3 Liquidation {#sec-3-crr-ny-412.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 412.3}

The Fund for Savings Banks may be liquidated upon occurrence of:

(a) the affirmative vote to liquidate, taken at a regular or a special meeting, of not less than 75 percent of total number of member banks representing not less than 662/3 percent of the total outstanding deposit liabilities of all the member banks;

(b) the payment of all liabilities incurred or assumed by the fund under the provisions of the agreement and article VI-B of the Banking Law; and

(c) the distribution of the balance thereof to the members pro rata according to their contribution under Banking Law, section 284 and in accordance with article V, section 2 of the agreement.

3 CRR-NY 412.4 Certification {#sec-3-crr-ny-412.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 412.4}

The secretary of the fund shall certify to the superintendent that the events referred to in section 412.3 of this Part have taken place. Thereafter, upon the filing of the superintendent's approval thereof in the office of the superintendent, the fund shall be dissolved.

Part 413 PROCEDURES AND REQUIREMENTS FOR MORTGAGE BROKERS TO ACT AS FHA MORTGAGE LOAN CORRESPONDENTS

3 CRR-NY 413.1 Authorization to act as an FHA mortgage loan correspondent {#sec-3-crr-ny-413.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.1}

Section 590(5-a) of the Banking Law and this Part constitute the exclusive authority for mortgage brokers registered pursuant to article 12-D of the Banking Law to act as FHA mortgage loan correspondents. Nothing in this Part shall prohibit mortgage bankers licensed pursuant to article 12-D of the Banking Law and exempt organizations from acting as FHA mortgage loan correspondents.

3 CRR-NY 413.2 Definitions {#sec-3-crr-ny-413.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.2}

For purposes of this Part:

(a) The term mortgage banker shall mean a mortgage banker as defined in section 590(1)(f) of the Banking Law.

(b) The term mortgage broker shall mean a mortgage broker as defined in section 590(1)(g) of the Banking Law.

(d) The term FHA mortgage loan correspondent shall mean a mortgagee approved by the Secretary of Housing and Urban Development which either:

(1) has as its principal activity the origination of mortgages for sale or transfer to a sponsor or sponsors; or

(2) satisfies the definition of a supervised mortgagee contained in the regulations promulgated by the Secretary of the Department of Housing and Urban Development.

(e) The term sponsor shall mean a mortgagee which holds a valid approval agreement, is approved to participate in the FHA direct endorsement program, and satisfies the sponsor net worth requirements contained in the regulations promulgated by the Secretary of the Department of Housing and Urban Development.

(f) The term HUD shall mean the Department of Housing and Urban Development.

(g) The term FHA shall mean Federal Housing Administration.

(h) The term FHA insured mortgage loan shall mean a loan made through an approved lender and insured by the Federal Housing Administration.

3 CRR-NY 413.3 Minimum standards required for approval {#sec-3-crr-ny-413.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.3}

(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 413.4 Application procedures for mortgage brokers to obtain the approval of the superintendent to make FHA insured mortgage loans {#sec-3-crr-ny-413.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.4}

Such application procedures are set forth in department Supervisory Procedure MB 106.

3 CRR-NY 413.5 Approval or denial of applications to make FHA insured mortgage loans {#sec-3-crr-ny-413.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.5}

(a) Upon approval of an application to make FHA insured mortgage loans, the superintendent shall issue a certificate stating that the mortgage broker may act as an FHA mortgage loan correspondent and may make FHA insured mortgage loans in this State.

(b) Upon denial of an application to make FHA insured mortgage loans, the superintendent shall so inform the applicant in writing. The superintendent may deny the application for any of the following reasons:

(1) the applicant fails to meet the minimum standards set forth in section 413.3 of this Part;

(2) the applicant fails to submit a complete application or any additional documentation reasonably requested by the superintendent;

(3) the applicant has a supervisory and/or consumer complaint record which warrants the belief that the public interest would not be served by approving such application; and

(4) the superintendent does not approve of at least one of the sponsors which has entered into a written agreement with the applicant to fund its FHA insured mortgage loans in which case the applicant shall have thirty days in which to submit a new sponsor to the superintendent for approval.

3 CRR-NY 413.6 Duties of a mortgage broker approved to act as an FHA mortgage loan correspondent {#sec-3-crr-ny-413.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.6}

A registered mortgage broker which has been approved by the superintendent to act as an FHA mortgage loan correspondent shall:

(a) within 48 hours after entering into a loan correspondent agreement with any sponsor, notify the superintendent in writing of its entering into any such agreement;

(b) within 48 hours after termination, notify the superintendent in writing of the termination of any loan correspondent agreement whether such agreement is terminated by the broker or by the sponsor;

(c) within 48 hours after suspension, withdrawal or surrender, notify the superintendent in writing if its HUD approval to act as an FHA mortgage loan correspondent has been suspended, withdrawn or surrendered;

(d) simultaneously with the issuance by the loan correspondent of an interest rate lock-in agreement or commitment to fund, whichever occurs first, notify consumers in writing of the name and address of the sponsor;

(e) within 72 hours after learning of any change in the sponsor, notify consumers in writing of such change;

(f) submit a report semi-annually to the superintendent. This report shall set forth the required information by sponsor for each calendar month of the period covered. The required information shall consist of the number and dollar amount of FHA loans made and the average rate and points charged; and

(g) within 90 days of its fiscal year end, submit to the superintendent a copy of its annual certified audit report required by HUD.

A licensed mortgage banker or exempt organization acting as a sponsor for an approved FHA mortgage loan correspondent shall:

(a) upon completion of its underwriting process, issue a written approval or denial of the mortgage loan to the FHA mortgage loan correspondent;

(b) whenever it approves an interest rate lock-in and/or commitment of a mortgage loan, issue a written confirmation to the FHA mortgage loan correspondent; and

(c) within 48 hours after termination, notify the superintendent in writing when an agreement to act as the sponsor for an FHA mortgage loan correspondent has been terminated. Such written notice shall include:

(1) specific reason(s) for the termination of its agreement to fund all FHA insured mortgages for the mortgage loan correspondent;

(2) a list of the outstanding loan commitments and interest rate lock-in agreements which the sponsor has approved on behalf of the FHA mortgage loan correspondent; and

(3) a list of any such interest rate lock-in agreements and loan commitments which the sponsor does not intend to honor and the reason(s) for this decision.

3 CRR-NY 413.8 Suspension or termination of approval to act as an FHA mortgage loan correspondent {#sec-3-crr-ny-413.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 413.8}

(a) The superintendent may suspend for 60 days the approval of a registered mortgage broker to act as an FHA mortgage loan correspondent if at any time he or she shall disapprove the sole sponsor or if the sole sponsor shall terminate its agreement with the FHA mortgage loan correspondent during which time the loan correspondent shall submit a new sponsor to the superintendent for approval.

(b) The superintendent may terminate the approval of a registered mortgage broker to act as an FHA mortgage loan correspondent if at any time:

(1) the 60-day suspension set forth in subdivision (a) of this section has expired without the loan correspondent having obtained approval from the superintendent for a new sponsor;

(2) the FHA mortgage loan correspondent fails to be in compliance with this Part or with any other law or regulation administered by the superintendent to which it is subject; or

(3) the FHA mortgage loan correspondent fails to remain in good standing with the Secretary of HUD.

(c) Within 72 hours after receipt of written notice from the superintendent of the termination of approval to act as an FHA mortgage loan correspondent, the mortgage broker shall return the certificate of registration indicating its authority to act as an FHA mortgage loan correspondent. Upon return of the certificate, the superintendent shall issue a standard mortgage broker certificate of registration.

Part 416 ANTI-MONEY LAUNDERING PROGRAMS FOR APPLICATIONS FOR LICENSES, BRANCHES AND ACQUISITIONS BY LICENSED CHECK CASHERS AND LICENSED MONEY TRANSMITTERS

3 CRR-NY 416.1 Anti-money laundering programs {#sec-3-crr-ny-416.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 416.1}

This Part is issued to assure ongoing compliance with the existing practice of the superintendent to require each applicant for a licensed check casher license or licensed money transmitter license (each a “licensee”), a branch office of a licensee or for approval to acquire licensee to demonstrate an anti-money laundering program that complies with applicable Federal anti-money laundering laws (31 U.S.C. chapter 53, subchapter II)and regulations promulgated by the United States Department of the Treasury (31 CFR part 103.125) (hereinafter, referred to as “31 CFR 103”). In addition, the Superintendent seeks to assure compliance with applicable regulations of the Office of Foreign Asset Control regulations issued by the United States Department of the Treasury (“OFAC”) (31 CFR part 500 et. seq.)*.

(b) For purposes of this Part, the required anti-money laundering program shall, at a minimum:

(1) incorporate policies, procedures, and internal controls reasonably designed to assure compliance with 31 CFR 103, including;

(i) policies, procedures, internal controls developed and implemented under this section shall include provisions for complying with the requirements of 31 CFR 103 including, to the extent applicable to the licensee, requirements for:

(a) verifying customer identification;

(b) filing reports;

(d) responding to law enforcement requests.

(ii) A licensee that has an automated data processing system should integrate its compliance procedures with such systems.

(2) designate a person to assure day to day compliance with the program and 31 CFR 103. The responsibilities of such person shall include assuring that:

(i) each licensee properly files reports, and creates and retains records, in accordance with applicable requirements of 31 CFR part 103;

(ii) the compliance program is updated as necessary to reflect current requirements of 31 CFR part 103, and related guidance issued by the Department of the Treasury; and

(iii) each licensee provides appropriate training and education in accordance with 31 CFR part 103.

(3) provide education and/or training of appropriate personnel concerning their responsibilities under the program, including training in the detection of suspicious transactions to the extent that the entity is required to report such transactions under applicable Federal law and regulations; and

(4) provide for independent review to monitor and maintain an adequate program.

(c) The anti-money laundering program shall be in writing and each licensee shall make copies of the anti-money laundering program available for inspection by the superintendent as appropriate.

(d) Each licensee will further be required to demonstrate that it has, or on the effective date of the transaction that is the subject of the application, will have, risk-based policies, procedures and practices to ensure, to the maximum extent practicable, that its transactions comply with OFAC requirements.

(e) Compliance with applicable federal requirements shall constitute compliance with the provisions of this Part.

3 CRR-NY 416.2 License applications {#sec-3-crr-ny-416.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 416.2}

All applications submitted for prior approval of the superintendent to become a licensed check casher or licensed money transmitter shall be accompanied by information demonstrating that the applicant will maintain an anti-money laundering program that satisfies the requirements set forth in section 416.1 of this Part.

3 CRR-NY 416.3 Branching applications {#sec-3-crr-ny-416.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 416.3}

All applications submitted for the prior approval of the superintendent to establish a branch or branches by any licensed check casher shall be accompanied by information demonstrating that the applicant has or will have an anti-money laundering program that satisfies the requirements set forth in section 416.1 of this Part.

3 CRR-NY 416.4 Acquisition applications {#sec-3-crr-ny-416.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 416.4}

All applications submitted for the prior approval of the superintendent to merge with, purchase and/or assume, or acquire control (as defined in the applicable provisions of the Banking Law) of, any licensed check casher or licensed money transmitter shall in every case be accompanied by information demonstrating compliance with, or a plan that would comply with, the requirements set forth in section 416.1 of this Part.

3 CRR-NY 416.5 Waivers {#sec-3-crr-ny-416.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 416.5}

In considering an application subject to this Part, the superintendent may determine, for good cause shown, that the lack of compliance with any of the requirements of this Part does not necessarily preclude approval of the application.

Part 417 MAINTENANCE OF ANTI-MONEY LAUNDERING COMPLIANCE PROGRAMS BY LICENSED CHECK CASHERS AND LICENSED MONEY TRANSMITTERS

3 CRR-NY 417.1 Covered entities {#sec-3-crr-ny-417.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 417.1}

This Part shall apply to all licensed check cashers and licensed transmitters of money (each a “licensee”).

3 CRR-NY 417.2 Anti-money laundering programs {#sec-3-crr-ny-417.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 417.2}

Each licensee, in order to guard against money laundering through their businesses, shall establish and maintain an anti-money laundering program that complies with applicable Federal anti-money laundering law (31 U.S.C. chapter 53, subchapter II), including the obligation to file suspicious activity reports (“SARS”) (31 U.S.C. section 5318[g]), and regulations promulgated by the Department of Treasury (31 CFR part 103.125)* (hereinafter referred to as “31 CFR part 103”), and, when ordered, such entities shall provide within 30 days a written report to the superintendent detailing the extent to which each such institution has established such a program. In addition, the superintendent seeks to assure compliance with applicable regulations of the Office of Foreign Assets Control promulgated by the United States Department of the Treasury (31 CFR part 500 et seq.)*.

(a) For purposes of this Part, the required anti-money laundering program shall, at a minimum:

(1) incorporate policies, procedures, and internal controls reasonably designed to assure compliance with this 31 CFR part 103, including;

(i) policies, procedures, internal controls developed and implemented under this section shall include provisions for complying with the requirements of 31 CFR part 103 including, to the extent applicable to the money services business, requirements for:

(a) verifying customer identification;

(b) filing reports;

(d) responding to law enforcement requests.

(ii) every licensee that has an automated data processing system should integrate its compliance procedures with such systems.

(2) designate a person to assure day to day compliance with the program and 31 CFR part 103. The responsibilities of such person shall include assuring that:

(i) the licensee properly files reports, and creates and retains records, in accordance with applicable requirements of 31 CFR part 103;

(ii) the compliance program is updated as necessary to reflect current requirements of 31 CFR part 103, and related guidance issued by the Department of the Treasury; and

(iii) the licensee provides appropriate training and education in accordance with 31 CFR part 103.

(4) provide for independent review to monitor and maintain an adequate program.

(b) The anti-money laundering program shall be in writing and each licensee shall make copies of the anti-money laundering program available for inspection as appropriate by the superintendent.

(c) Each licensee will further be required to demonstrate that it has in place risk-based policies, procedures and practices to ensure, to the maximum extent practicable, that it's transactions comply with OFAC requirements.

(d) Every licensee shall file SARS in accordance with applicable Federal law and regulations.

(e) Compliance with applicable Federal requirements shall constitute compliance with the provisions of this Part.

3 CRR-NY 417.3 Additional reports {#sec-3-crr-ny-417.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 417.3}

Each licensee shall provide such additional reports regarding its compliance with this Part as shall be directed by the superintendent.

Part 418 REGISTRATION REQUIREMENTS; FINANCIAL RESPONSIBILITY REQUIREMENTS

3 CRR-NY 418.1 Scope and application of this Part {#sec-3-crr-ny-418.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.1}

Article 12-D of the Banking Law requires certain persons (certain terms in this Part are defined in section 418.3 of this Part) engaged in the business of servicing mortgage loans to register with the superintendent. Sections 418.2 to 418.11 of this Part implement such registration requirements. Article 12-D of the Banking Law also provides exemptions from such registration requirements for certain exempted persons, provided that such persons notify the superintendent that they are servicing mortgage loans in this State and comply with any regulations applicable to persons so engaged. Sections 418.12 to 418.13 of this Part set forth financial responsibility requirements that are applicable to applicants for mortgage loan servicer registration as well as to both registered and exempt persons engaged in servicing mortgage loans in this State.

3 CRR-NY 418.2 Mortgage loan servicer registration; exemptions {#sec-3-crr-ny-418.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.2}

Section 590(2)(b-1) of the Banking Law provides that no person, partnership, association, corporation or other entity shall engage in the business of servicing mortgage loans with respect to any property located in this State without first being registered with the superintendent as a mortgage loan servicer. A person servicing mortgage loans made under the Power New York Act of 2011 (chapter 388 of the Laws of 2011) shall not thereby be deemed to be engaged in the business of servicing mortgage loans. All servicers, including third-party servicers, engaged directly or indirectly in servicing mortgage loans, are required to register hereunder. When a mortgage loan servicer delegates servicing of one or more mortgage loans to another servicer without transferring ownership of the mortgage servicing rights, it remains obligated to comply with all requirements of this Part with respect to the servicing of such loan mortgage loan(s). The sub-servicer likewise remains responsible under this Part. The registration provisions of this Part shall not apply to the following persons, provided that each such exempt person notifies the superintendent that it is servicing mortgage loans in this State and complies with the regulations applicable to mortgage loan servicers (other than those regarding registration):

(a) Exempt organization.

Any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the Comptroller of the Currency to transact business in this State, national bank, Federal savings bank, Federal savings and loan association, Federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state, or any instrumentality created by the United States or any state with the power to make mortgage loans.

(b) Mortgage banker.

Any person licensed pursuant to section 592 of the Banking Law to engage in the business of making mortgage loans.

Any person registered pursuant to section 592-a of the Banking Law to engage in the business of soliciting, processing, placing or negotiating mortgage loans for others, or offering to solicit, process, place or negotiate mortgage loans for others.

(d) Assisting in incidental activities.

No person shall be subject to the registration provisions of this Part if he or she is employed by an exempt organization, a mortgage banker or mortgage broker, or a mortgage loan servicer to assist in the servicing of mortgage loans for such employer. The preceding sentence shall not affect the obligation of any person to be licensed as a mortgage loan originator when required under article 12-E of the Banking Law.

(e) Exemptions approved by the superintendent.

Other persons may be exempted with the prior written approval of the superintendent for good cause.

3 CRR-NY 418.3 Definitions {#sec-3-crr-ny-418.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.3}

For purposes of this Part:

(a) Exempted person means a person, partnership, association, trust, corporation or other entity engaged in the business of servicing mortgage loans with respect to any property located in this State to which the registration requirement in section 590(2)(b-1) of the Banking Law does not apply.

(b) Mortgage loan means a loan to a natural person made primarily for personal, family or household use, secured by a mortgage or other consensual security interest on residential real property or certificates of stock or other evidence of ownership interests in, and a proprietary lease from, a corporation or partnership formed for the purpose of cooperative ownership of residential real property and, if determined by regulation, shall include such a loan secured by a security interest on a manufactured home.

(c) Mortgage loan servicer, servicer, or MLS means a person registered or required to be registered pursuant to Banking Law, section 590(2)(b-1) to engage in the business of servicing mortgage loans for property located in this State, or a person exempted from such registration requirement.

(d) Servicing mortgage loans means receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts under section 6-k of the Banking Law, title 3-A of article IX of the Real Property Tax Law or section 10 of 12 U.S.C. 2609, and making payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in section 6-h of the Banking Law, sections 280 and 280-a of the Real Property Law or 24 CFR 3500.2, servicing includes making payments to the borrower. The term includes a person who makes or holds a mortgage loan if such person also directly or indirectly is the holder of the mortgage servicing rights or has been delegated servicing functions for the mortgage loan.

(e) Person means any individual or legal entity, including any corporation, partnership, association or limited liability company.

(f) Residential real property means real property located in this State improved by a one-to-four family residence or residential unit in a building used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed.

(g) Third-party servicer means, with respect to particular mortgage loans, a servicer that does not own such mortgage loans or the servicing rights thereto but only performs servicing or sub-servicing for the owner of such loans or servicing rights or another third-party servicer, provided that for a person to be deemed to be a third-party servicer, the owner of the servicing rights must remain responsible for all advance and repurchase obligations related to the servicing.

3 CRR-NY 418.4 Application for registration {#sec-3-crr-ny-418.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.4}

(a) General.

Applications for registration shall be made in such form as may be prescribed by the superintendent. Instructions for submission of applications are available on the department’s website as set forth in section 1.1 of Supervisory Policy G 1 of this Title and may also be obtained by written request to the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title or at the address set forth in Supervisory Procedure MB 109 of this Title.

(b) Fee.

A completed application must be accompanied by payment of a non-refundable application fee. The amount of such fee is $3,000, as provided in section 18-a of the Banking Law.

The application for registration as an MLS shall be executed by the applicant under penalty of perjury and shall include the information and documents referred to in Supervisory Procedure MB 109 of this Title as well as any other information and documents as the superintendent may require to assist in reviewing the application.

(d) Fingerprints.

The applicant shall provide fingerprint cards and pay any related fees as specified in Supervisory Procedure MB 109 of this Title for such officers and other control persons of the MLS as shall be required by the superintendent.

3 CRR-NY 418.5 Branch application and fees {#sec-3-crr-ny-418.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.5}

(a) An MLS may apply to open and maintain one or more branches. A branch may be applied for by application containing the information and documents set forth in an application form prescribed by the superintendent. Instructions for submission of applications are available on the department’s website as set forth in section 1.1 of Supervisory Policy G 1 of this Title and may be obtained from the department as set forth above. If an application is requested in writing, the address should indicate the following: Attn: Mortgage Banking Division.

(b) An application for branch office filed by an MLS shall be accompanied by payment of the fee, if any, specified in section 18-a of the Banking Law.

(c) In the event the superintendent does not reject or deny the application for a branch within 60 days of publication in the Weekly Bulletin of the department of the receipt of a completed application, the MLS may open the branch.

3 CRR-NY 418.6 Calculation and collection of fees {#sec-3-crr-ny-418.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.6}

(a) Payment of fees.

An application to become a registered MLS and any other application by an MLS for an approval of the superintendent required under article 12-D of the Banking Law shall be accompanied by payment of the appropriate fee, if any, as set forth in section 18-a of the Banking Law. In addition to the amount prescribed by section 418.4(b) of this Part, such fees may include any processing fee charged by the Nationwide Mortgage Licensing System and Registry (“NMLSR”) (or any other entity with which the superintendent has entered into a written contract or memorandum of understanding to process applications and other submissions relating to mortgage loan servicing) and fingerprint processing fees collected by the Criminal Justice Services and/or the NMLSR. Such fees are nonrefundable.

(b) Fee amount.

The schedule of fees in effect from time to time shall be posted on the department’s website, as set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY 418.7 Approval or denial of application {#sec-3-crr-ny-418.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.7}

(a) Approval of application.

If the superintendent shall find that the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant is a co-partnership or association, and of the officers and directors thereof if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of article 12-D of the Banking Law, the superintendent shall thereupon in accordance with subdivision (c) of this section approve the application, register the applicant as a mortgage loan servicer on a list maintained for that purpose at the department and shall issue a certificate to the registrant attesting to such registration.

(b) Grounds for refusal.

The superintendent may refuse to register the applicant as a mortgage loan servicer upon any ground on which the superintendent could refuse to license the applicant as a mortgage banker under section 592 of the Banking Law or register the applicant as a mortgage broker under section 592-a of the Banking Law.

Upon registering any applicant as an MLS, the superintendent shall transmit notice of approval of the application, including the certificate described in subdivision (a) of this section, in such form as the superintendent deems appropriate, to the MLS.

(d) List of registrants.

The superintendent shall maintain upon the department’s website a list of registered mortgage loan servicers. The list shall indicate the following:

(1) name of each MLS; and

(2) the location of the principal office of such MLS.

(e) Registration certificate; change of location.

Each registration certificate issued under this regulation shall state the address or addresses at which the business is to be conducted, including any branches thereof, and shall state the full name of the registrant. The registrant shall notify the superintendent in writing at least 30 days prior to changing the location of the principal office at which the business of the registrant is to be conducted.

(f) Registration not transferrable.

A registration issued pursuant to this Part is not transferable or assignable.

(g) Notification of denial.

If the superintendent shall not make the finding required for registration as an MLS under this section, the superintendent shall notify, in writing, the applicant that the application was denied and that the applicant shall not engage in the business of servicing mortgage loans in this State.

3 CRR-NY 418.8 Changes in directors, officers or control of mortgage loan servicer {#sec-3-crr-ny-418.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.8}

(a) Change in control.

It shall be unlawful except with the prior approval of the superintendent for any action to be taken which results in a change of control of the business of a mortgage loan servicer.

(1) For purposes of this Part, a change in control shall have the same meaning with respect to an MLS that it has for a mortgage banker or mortgage broker under section 594-b of the Banking Law.

(2) For a period of six months from the date of qualification of a legal representative, and for such additional period of time as the superintendent may prescribe, in writing, the provisions of section 418.8 of this Part shall not apply to a transfer of control by operation of law to the legal representative, as defined in section 594-b(3) of the Banking Law, of one who has control of a mortgage loan servicer.

(3) Approval of a change of control of a mortgage loan servicer shall be governed by the same standards as an applicant for registration as an MLS under sections 418.2 and 418.7 of this Part, as applicable.

(4) Each application for change of control of a mortgage loan servicer shall be subscribed by the applicant under penalty of perjury and shall contain the information and documents referred to in Supervisory Procedure MB 110 of this Title, as well as any other information and documents as the superintendent may require to assist in reviewing the application.

(5) Fee. A completed application must be accompanied by payment of a non-refundable application fee. The amount of such fee is $3,000, as provided in section 18-a of the Banking Law.

(b) Change in officers and directors.

Every mortgage loan servicer shall within 10 days after a change of any of the directors or the three most senior executive officers or, if different, any officer(s) in charge of the New York operations of the servicer, submit to the superintendent, in writing:

(1) the name, address and occupation of such new executive officer or director; and

(2) such other information as the superintendent may require to assist in reviewing the application.

3 CRR-NY 418.9 Revocation, suspension, termination and surrender of registration {#sec-3-crr-ny-418.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.9}

(a) Grounds for revocation.

The superintendent may revoke any registration to engage in the business of servicing mortgage loans issued pursuant to this Part if he or she shall find that:

(1) the MLS has violated any applicable provision of article 12-D of the Banking Law, any applicable rule or regulation promulgated under article 12-D of the Banking Law or any other law, rule or regulation of New York State or the Federal government pertaining to servicing mortgage loans;

(2) any fact or condition exists which, if it had existed at the time of the original application for such registration, would have warranted the superintendent in refusing originally to issue such registration; or

(3) the MLS has committed a crime under the laws of New York or any other state or of the United States involving moral turpitude or fraudulent or dishonest dealing, or a final judgment has been entered against the MLS in a civil action on grounds of fraud, misrepresentation or deceit.

(b) Suspension without hearing; termination.

(1) The superintendent may, without notice or a hearing, for good cause or where there is a substantial risk of public harm, issue an order suspending any registration or delete the name of any registrant for a period not exceeding 30 days, pending investigation. ‘‘Good cause,’’ as used in this subdivision, shall exist when the registrant has defaulted or is likely to default in performing its financial engagements or engages in dishonest or inequitable practices which may cause substantial harm to the persons afforded the protection of article 12-D of the Banking Law.

(2) Any mortgage servicing registration may be suspended by order of the superintendent, without notice or a hearing, upon the registrant’s failure to pay the required assessment charged pursuant to section 17 of the Banking Law upon the date or dates such payment or payments are due. Such registration shall be reinstated if the registrant pays such assessment charged and any applicable late fees.

(3) The superintendent, in his or her sole discretion, without notice or a hearing, may issue an order suspending any registration issued pursuant to this Part:

(i) 30 days after the date the registrant fails to file any report required to be filed by it with the superintendent pursuant to the authority provided by this Part;

(ii) immediately upon any required surety or other bond being canceled or expiring, if the registrant has not provided the superintendent with proof of a replacement bond satisfactory to the superintendent;

(iii) immediately upon filing by the registrant of a petition in bankruptcy; or

(iv) 30 days after the registrant has had filed against it a petition in bankruptcy.

If the superintendent has issued an order suspending a registration pursuant to this paragraph (3) of this subdivision, such registration may be reinstated, if the superintendent determines, in his or her sole discretion, that the registrant has cured all deficiencies set forth in such order.

Except as provided in subdivision (b) of this section, a registration of an MLS may be revoked or suspended only after notice and a hearing as provided in Supervisory Procedure G 111 of this Title. Any hearing held pursuant to the provisions of this Part shall be noticed, conducted and administered in compliance with the State Administrative Procedure Act. Any order of suspension issued after notice and a hearing may include as a condition of reinstatement that the MLS make restitution of fees or other charges which have been improperly charged or collected, and of any funds that have been received by the MLS and not been properly and timely paid or credited to the proper person, as determined by the superintendent.

(d) Surrender of registration.

With the prior approval of the superintendent, any MLS may surrender its registration by delivering to the superintendent written notice that it thereby surrenders such registration, but such surrender shall not affect the civil or criminal liability of an MLS for acts committed prior to such surrender.

(e) Effect of suspension, revocation, etc.

No revocation, termination, suspension or surrender of any registration shall impair or affect the obligation of any pre-existing lawful contract between the MLS and any person.

(f) Duration of registration.

Every registration issued pursuant to this Part shall remain in force and effect until the same shall have been surrendered, revoked, terminated or suspended in accordance with any other provisions of this Part, but the superintendent shall have authority to reinstate a suspended registration or to issue a new registration to an MLS whose registration shall have been revoked if no fact or condition then exists which would have warranted the superintendent in refusing originally to issue such registration under this Part.

(g) Order revoking or suspending registration.

Whenever the superintendent shall revoke or suspend a registration, he or she shall forth with execute in duplicate a written order to that effect. The superintendent shall file one copy of such order in the office of the department and shall serve the other copy upon the MLS.

(h) Transfer of business upon suspension, revocation, etc.

In the event that the registration of an MLS shall be suspended, revoked, terminated or surrendered, such MLS shall immediately cease accepting any additional New York mortgage loan servicing business. In the event of any revocation, termination or surrender, such MLS shall within 90 days thereof transfer its New York mortgage loan servicing business to a successor MLS reasonably acceptable to the superintendent.

3 CRR-NY 418.10 Fines and penalties {#sec-3-crr-ny-418.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.10}

The superintendent may impose a fine against an MLS for any violation of the Banking Law, any regulation promulgated thereunder, any final or temporary order issued pursuant to section 39 of the Banking Law, any condition imposed in connection with the grant of any application or request or any written agreement entered into with the superintendent, or any conduct which would constitute grounds for revocation or suspension of the registration of such MLS.

3 CRR-NY 418.11 Business background and character and fitness requirements for mortgage loan servicer registration {#sec-3-crr-ny-418.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.11}

(a) Business background.

Applicants for registration to engage in the business of servicing mortgage loans shall demonstrate to the superintendent’s satisfaction that they have five years verifiable experience in the business of servicing mortgage loans or similar servicing experience or that they have engaged or shall engage in their employ one or more persons having such experience. At the superintendent’s sole discretion, other relevant educational or business experience may be substituted for some of the servicing experience described in this subdivision.

(b) General benefit.

Applicants shall demonstrate to the superintendent their character and fitness to engage in the business of servicing mortgage loans in a manner which is honest, fair, efficient, and free from deceptive and anticompetitive practices.

3 CRR-NY 418.12 Financial responsibility requirements for mortgage loan servicers and applicants, other than insured depository institutions covered by section 418.13 of this Part {#sec-3-crr-ny-418.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.12}

Each applicant for registration to engage in the business of servicing mortgage loans shall provide the superintendent with evidence acceptable to the superintendent of its financial responsibility. In particular:

(a) Net worth.

Each applicant shall demonstrate the ability to maintain, and a registered mortgage loan servicer or exempted person (other than an insured depository institution covered by section 418.13 of this Part) shall maintain net worth of at least $250,000 plus ¼ of one percent of the outstanding principal balance of aggregate mortgages serviced (whether or not in New York), provided, that, if such person is solely a third-party servicer, such net worth calculation shall be based upon the amount of the entity's New York mortgage loans serviced, and if such person is a third-party servicer with respect to certain mortgage loans and owns other mortgage loans or the servicing rights thereto, it shall maintain net worth of at least $250,000 plus ¼ of one percent of the outstanding principal balance of the non-third-party servicer loans and ¼ of one percent of the outstanding principal amount of the New York mortgage loans for which it is a third-party servicer. Net worth for purposes of this Part shall consist of total equity capital, determined in accordance with generally accepted accounting principles, at the end of the most recent reporting period for which financial results are available, less:

(1) good will and other intangible assets (excluding mortgage servicing rights);

(2) assets pledged to secure obligations of a person other than the servicer;

(3) any amounts due from officers or stockholders of the service or from a related company;

(4) any amount in excess of the lower of cost or market value of mortgages in foreclosure, construction loans or property acquired through foreclosure; and

(5) any other receivables that the superintendent determines are not collectable. At least 10 percent of the net worth required under this paragraph shall consist of cash, cash equivalents or readily marketable securities.

(b) Surety bond.

(1) Each MLS registered pursuant to this Part and each exempted person (other than an insured depository institution covered by section 418.13 of this Part) shall cause to be filed with the superintendent a corporate surety bond in a principal amount of not less than $250,000. Such corporate surety bond shall be issued and filed with the department by an insurance company licensed to do business in this State. If the superintendent determines, in his or her sole discretion, that an MLS has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct under applicable laws and regulations of the United States or this State, the superintendent may require such MLS to post a surety bond twice the amount of such bond as would otherwise be required by this subdivision.

(2) 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 it shall contain substantially the following language:

"In the event of the insolvency, liquidation or bankruptcy of such MLS, or the surrender or revocation of such MLS's registration, or where the Superintendent takes possession of such MLS pursuant to Section 636 of the Banking Law, the proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees and undisbursed consumer payments or other charges determined by the Superintendent to be improperly charged or collected and to pay past due Department examination costs and assessments charged to the MLS, unpaid penalties, or other obligations of the MLS under applicable laws and regulations of the United States or this State. In the event of the insolvency, liquidation or bankruptcy of the MLS, or the expiration, surrender or revocation of such MLS's registration, or where the Superintendent takes possession of such MLS, the proceeds of the bond, upon demand of the Superintendent, shall be paid immediately to the Superintendent for disposition in accordance with the applicable provisions of the Banking Law."

(1) Each MLS registered pursuant to this Part and each exempted person (other than an insured depository institution covered by section 418.13 of this Part) shall cause to be filed with the superintendent a fidelity bond and evidence of E&O coverage (each naming the superintendent as an additional loss payee) covering, in the case of the fidelity bond, losses arising from fraud, embezzlement, misplacement, forgery and similar events, and covering, in the case of the E&O coverage, negligence by the servicer with respect to the payment of real estate taxes, hazard and flood insurance or the maintenance of mortgage guaranty insurance, in each case in a principal amount as follows based on its volume of business:

| | | | --- | --- | | Required amount of bond and E&O coverage | Aggregate $ amount of NY loans serviced | | $300,000 | $100,000,000 or less | | plus .15% | of the next $500,000,000 | | plus .125% | of the next $400,000,000 | | plus .100% | of the amount over $1 billion |

(The amounts shown are the minimum required amounts for each of these policies.)

(2) The amount of the fidelity bond and E&O coverage shall be determined from information submitted in the annual Volume of Servicing Report ("VOSR") for the second year prior to the year covered by the fidelity bond or the E&O coverage. For example, the 2009 bond and policy would be based upon the 2007 VOSR figures reported to the department. Thereafter, adjustments to the amount of the bond shall be made within 30 days after filing the applicable VOSR. Moreover, a registered MLS may submit a sworn statement indicating the aggregate dollar amount of NY loans serviced during the first half of the calendar year, if such amount, on an annualized basis, would change the required amount of the fidelity bond and E&O coverage. Such fidelity bond and E&O coverage shall be issued and filed with the department by a bonding company or insurance company licensed to do business in this State. If the superintendent determines, in his or her sole discretion, that an MLS has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such MLS to post a fidelity bond and E&O coverage in amounts that are twice the amount as would otherwise be required by this subdivision.

(3) The fidelity bond and E&O coverage may provide for a deductible amount not to exceed the greater of $100,000 or five percent of the face amount of such bond or coverage.

(d) Modification or waiver of requirements.

Upon application as prescribed by the superintendent, the superintendent may reduce, waive, or modify the requirements under this section:

(1) for a person engaged in the business of servicing mortgage loans who services less than $4,000,000 in aggregate amount of mortgage loans and who does not collect money for the purpose of paying taxes or insurance on such loans; and

(2) in other cases, for good cause shown.

3 CRR-NY 418.13 Financial responsibility requirements for insured depository institutions {#sec-3-crr-ny-418.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.13}

(a) Net worth; surety bond.

An institution whose deposits are insured by the Federal Deposit Insurance Corporation and that is at least adequately capitalized as defined in section 38 of the Federal Deposit Insurance Act (12 U.S.C. section 1831o) shall be exempt from the net worth and surety bond requirements of section 418.12 of this Part.

(b) Fidelity bond; E&O coverage.

Each institution whose deposits are insured by the Federal Deposit Insurance Corporation and that services mortgage loans shall comply with the fidelity bond and E&O coverage applicable to exempted persons under section 418.12(c) of this Part, provided that the superintendent need not be named as an additional loss payee under each such bond or coverage.

3 CRR-NY 418.14 Transitional period {#sec-3-crr-ny-418.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.14}

If an MLS is doing business in this State on June 30, 2009 and has filed an application for registration by July 31, 2009, it shall be deemed in compliance with the registration requirements of this Part until it has been notified by the superintendent that its application has been denied, in which case it shall immediately transfer its servicing rights in this State to an authorized mortgage loan servicer. If a person is required to file an application for a license solely because of the amendments to this Part that were effective August 23, 2011, so long as it has filed an application that is substantially complete by the 30th day after such effective date and expeditiously provides such additional information as may be required by the superintendent, such person may continue to operate without a license, until it is notified by the superintendent that its application has been denied or until six months after such effective date, whichever is earlier.

3 CRR-NY 418.15-418.16 [Repealed] {#sec-3-crr-ny-418.15-418.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 418.15-418.16}

Part 419 SERVICING MORTGAGE LOANS: BUSINESS CONDUCT RULES

3 CRR-NY 419.1 Definitions {#sec-3-crr-ny-419.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.1}

For purposes of this Part, unless otherwise stated herein, terms shall have the same meaning as set forth in Part 418 of this Title.

(a) Affiliated relationships means a relationship between two or more entities where one such entity, directly, or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with another such entity.

(b) Authorized representative means a person, including an attorney, employee or agent of a government agency, not-for-profit housing counseling organization, or legal services organization, designated by a borrower in a written authorization signed by the borrower, or any other form of verifiable authorization, to share information and communicate with a servicer on behalf of the borrower.

(c) Billing cycle means the interval between the days or dates of regular periodic statements. These intervals shall be equal and no longer than a quarter of a year. An interval will be considered equal if the number of days in the cycle does not vary more than four days from the regular day or date of the periodic statement.

(d) Borrower means a natural person obligated to pay a mortgage loan and, if applicable, such person’s successor in interest or authorized representative when acting on behalf of such person.

(e) Business day means any day of the week except for Saturday, Sunday and any legal holiday.

(f) Complete loss mitigation application means a loss mitigation application for which a servicer has received the information that the servicer reasonably requires from a borrower to evaluate the loss mitigation options available to the borrower.

(g) Clearly and conspicuously means that the statement, representation or term being disclosed is of such size, color, and contrast and is so presented as to be readily noticed and understood by an ordinary consumer.

(h) Loss mitigation application means an oral or written request for a loss mitigation option that is accompanied by any information required by a servicer to evaluate the loss mitigation options available to the borrower.

(i) Loss mitigation option means an alternative to foreclosure, including, but not limited to, a loan modification, shared appreciation mortgage modification agreement, reinstatement, forbearance, deed-in-lieu, or short sale.

(j) Mortgagee shall mean the owner or assignee of a mortgage loan.

(k) 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 12 C.F.R. part 1024.

(l) 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 (2) of Banking Law section 590.

(m) Servicing mortgage loans means receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts under section 6-k of the Banking Law, title 3-A of article IX of the Real Property Tax Law or of RESPA of 1974 as amended (12 USC 2609), and making payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in section 6-h of the Banking Law, sections 280 and 280-a of the Real Property Law or 24 CFR 3500.2, servicing includes making payments to the borrower. The term includes a person who makes or holds a mortgage loan if such person also directly or indirectly is the holder of the mortgage servicing rights or has been delegated servicing functions for the mortgage loan.

(n) Settlement service means any service provided in connection with a prospective or actual settlement, including, but not limited to, any one or more of the following:

(1) origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of such loans);

(2) rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender);

(3) provision of any services related to the origination, processing or funding of a federally related mortgage loan;

(4) provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies;

(5) rendering of services by an attorney;

(6) preparation of documents, including notarization, delivery, and recordation;

(7) rendering of credit reports and appraisals;

(8) rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents prior to transfer of title;

(9) conducting of settlement by a settlement agent and any related services;

(10) provision of services involving mortgage insurance;

(11) provision of services involving hazard, flood, or other casualty insurance or homeowner's warranties;

(12) provision of services involving mortgage life, disability, or similar insurance designed to pay a mortgage loan upon disability or death of a borrower, but only if such insurance is required by the lender as a condition of the loan;

(13) provision of services involving real property taxes or any other assessments or charges on the real property;

(14) rendering of services by a real estate agent or real estate broker; and

(15) provision of any other services for which a settlement service provider requires a borrower or seller to pay.

(o) Single point of contact means an individual or designated group of servicer personnel each of whom has the ability and/or authority to perform the responsibilities described in section 419.7(b) of this Part.

(p) Third-party provider means any person or entity retained by or on behalf of the servicer, including, but not limited to, foreclosure firms, law firms, foreclosure trustees, and other agents, independent contractors, subsidiaries and affiliates, that provides insurance, foreclosure, bankruptcy, mortgage servicing, including loss mitigation, or other products or services, in connection with the servicing of a mortgage loan.

(q) Transferee servicer means a servicer that has agreed to obtain the right to service a mortgage loan pursuant to an agreement or understanding.

(r) Transferor servicer means a servicer that has agreed to, or informed that it must, transfer the right to service a mortgage loan to another servicer.

(s) Plain language means written in a clear and coherent manner using words with common and every day meanings, appropriately divided and captioned reflecting its various sections, and understandable to those parties that will be receiving the content.

3 CRR-NY 419.2 Escrow accounts {#sec-3-crr-ny-419.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.2}

(a) A shortage, surplus or deficiency in a borrower’s escrow account shall be addressed by a servicer in accordance with the provisions of RESPA, 12 C.F.R. section 1024.17(f). Alternatively, with the consent of the borrower, an escrow account surplus may be applied to the principal balance.

(b) If a servicer advances funds in paying a disbursement, which is not the result of a borrower's payment default under the underlying mortgage document, then the servicer shall conduct an escrow account analysis to determine the extent of the deficiency and shall provide a written explanation to the borrower. The servicer shall wait 30 calendar days after providing the written explanation to the borrower before seeking payment of the funds necessary to correct the deficiency from the borrower.

3 CRR-NY 419.3 Crediting of payments {#sec-3-crr-ny-419.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.3}

(a) In general.

All mortgage loan payments received by a servicer at the address where the borrower has been instructed in writing to make payments shall be 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 when inconsistent with Federal law or regulation or as provided in subdivision (d) of this section, such payments shall be credited by the servicer to the interest and principal due on the home loan before crediting the payments to taxes, insurance, or fees.

(b) Reasonable payment requirements.

Requirements imposed by a servicer for making payments must be reasonable. A cut-off time at the end of the business day for receipt of a mailed check at the location specified by the servicer for receipt of such check is deemed to be reasonable.

If a borrower fails to comply with a servicer’s reasonable payments requirements that have been provided to the borrower in writing, the servicer shall credit any payment accepted by the servicer as soon as commercially practicable, but in no event later than 5 days after receipt.

(d) Late payments.

Late payments must be credited to interest, principal, taxes, insurance and other fees before any late fee is collected.

(e) Scheduled method of accounting.

If a servicer uses the scheduled method of accounting, any regularly scheduled payment made prior to the scheduled due date shall be credited no later than the due date or 30 days from the date of receipt, whichever is earlier.

(f) Notice of noncredit.

If a servicer receives any payment on a mortgage loan and does not credit it or treat it as credited by the due date or within 30 days from the date of receipt, whichever is earlier, the servicer shall, within 10 business days of receipt, send the borrower notice by mail to the borrower’s last known address indicating the reason the payment was not credited or treated as credited to the account, and any actions the borrower needs to take to make the loan current. Such notice may instead be sent electronically in accordance with the requirements of article III of the Technology Law, if the borrower has previously opted for paperless billing.

(g) Payment overages and shortages.

A servicer shall establish written policies and procedures for payment overages and shortages, including unapplied funds and payments held in suspense accounts. If a servicer retains a partial payment in a suspense or unapplied funds account, the servicer shall, on accumulation of sufficient funds in any suspense or unapplied funds account to cover a periodic payment, treat such funds as a periodic payment and credit the periodic payment to the borrower’s loan.

(h) A servicer shall not apply funds from a suspense or unapplied funds account to pay fees until all unpaid principal, interest, and escrow amounts (if available) are paid and brought current or the loan is discharged or foreclosed.

3 CRR-NY 419.4 Statement of account {#sec-3-crr-ny-419.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.4}

(a) Annual statements.

At least once annually, within 30 days of the end of the escrow account computation year, a servicer shall deliver to each borrower a plain language statement of the borrower's account that lists the unpaid principal balance of the mortgage loan at the end of the immediately preceding 12-month period, the interest paid during such period, and the application of all payments during such period; and the amounts deposited into escrow and disbursed from escrow during the period. The escrow statement may be provided separately from the statement showing the unpaid principal and interest paid. The format and content of the annual escrow statement shall comply with the requirements of RESPA and 12 C.F.R. section 1024.17(i)(1) and (j).

(b) Payment histories.

Within 30 days of receipt of a request from the borrower, a servicer shall deliver to the borrower a payment history for the preceding 36 months (unless a different period is requested) of the borrower's account showing the date, amount, and application of all payments credited to the account and the total unpaid balance during this period. The servicer shall have 60 days to deliver a payment history when the request is for a period longer than the preceding 36 months and the servicing rights to the loan were transferred within that 36-month period.

A servicer shall provide each borrower, for each billing cycle, a periodic statement which shall include:

(1) The amount due, including, but not limited to:

(i) the payment due date;

(ii) the amount of any late payment fee, and the date on which that fee will be imposed if payment has not been received;

(iii) if the transaction has multiple payment options, the amount due under each of the payment options;

(iv) an explanation of the amount due, including:

(a) the monthly payment amount, including the amount, if any, that will be applied to principal, interest, and escrow and, if a mortgage loan has multiple payment options, a breakdown of each of the payment options along with information on whether the principal balance will increase, decrease, or stay the same for each option listed;

(b) the total sum of any fees or charges imposed since the last statement; and

(2) A past payment itemization, including:

(i) the total of all payments received since the last statement, including the amount, if any, that was applied to principal, interest, escrow, fees and charges, and the amount, if any, sent to any suspense or unapplied funds account; and

(ii) the total of all payments received since the beginning of the current calendar year, including the amounts, if any, that were applied to principal, interest, escrow, fees and charges, and the amount, if any, currently held in any suspense or unapplied funds account.

(3) A list of any transaction activity that causes a credit or debit to the amount currently due. This list must include the date of the transaction, a brief description of the transaction, and the amount of the transaction for each activity on the list.

(4) If a statement reflects a partial payment that was placed in a suspense or unapplied funds account, an explanation for how the borrower can have the funds applied to the loan balance. The explanation must be provided on the front page of the statement or, alternatively, may be included on a separate page enclosed with the periodic statement, or in a separate letter.

(5) Account information, including:

(i) the amount of the outstanding principal balance;

(ii) the current interest rate in effect for the mortgage loan;

(iii) the date after which the interest rate may next change; and

(iv) the existence of any prepayment penalty that may be charged.

(6) An escrow statement, including the amounts deposited into escrow and disbursed from escrow during the applicable period.

(7) If the borrower is more than 45 days delinquent, the following information:

(i) the date on which the borrower became delinquent;

(ii) a notification of possible risks, such as foreclosure, and expenses, that may be incurred if the delinquency is not cured;

(iii) an account history showing, for the previous six months or the period since the last time the account was current, whichever is shorter, the amount remaining past due from each billing cycle or, if any such payment was fully paid, the date on which it was credited as fully paid;

(iv) a notice indicating any loss mitigation program to which the borrower has agreed, if applicable;

(v) a notice of whether the servicer has fulfilled the pre-foreclosure notice requirements of Real Property Actions and Proceedings Law section 1304 or Uniform Commercial Code section 9-611(f), if applicable; and

(vi) a breakdown of the total payment amount needed to bring the account current, including a detailed breakdown of the actual fees and charges claimed, as well as, a date upon which the payment amount specific will expire and no longer be sufficient to bring the account current.

(d) Payoff balances.

A servicer shall provide a plain language statement of the total amount that is required to pay off the mortgage loan as of a specified date, within a reasonable time, but in any event no more than seven business days after receipt of a request from the borrower. A servicer shall not charge a fee for providing a payoff statement or for issuing a release upon full prepayment, provided that a servicer may charge a reasonable fee for providing a payoff statement after issuing five or more payoff statements to a borrower in any calendar year. The requirements of this section are in addition to the requirements of section 274-a of the Real Property Law regarding the written instrument to be provided by the holder of a mortgage upon real property in connection with a bona fide written demand as defined by section 274-a(2)(b)(iii) therein.

(e) Modified periodic statement for borrowers in bankruptcy.

The requirements of this section shall not apply to a borrower who is a debtor in bankruptcy under title 11 of the United States Code if doing so would violate the automatic stay provisions thereof.

3 CRR-NY 419.5 Fees {#sec-3-crr-ny-419.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.5}

(a) Schedule of fees.

A servicer shall maintain and keep current a schedule of standard or common fees that may be charged to a borrower. A servicer shall make its schedule available on its public website and to a borrower upon request. The schedule shall identify each fee, provide a plain language explanation of when and why the fee will be charged and state the amount of the fee or range of amounts or, if there is no standard fee, how the fee is calculated or determined.

(b) Authorized fees.

A servicer may only collect a fee if it is for a service that is actually rendered to the borrower, reasonably related to the cost of rendering that service, and it meets one of the following conditions:

(1) the fee is expressly authorized and clearly and conspicuously disclosed by the loan instruments and not prohibited by law;

(2) the fee is expressly permitted by law and not prohibited by the loan instruments; or

(3) the fee is not prohibited by law or the loan instruments and is for a specific service requested by the borrower that is assessed only after disclosure of the fee is provided to the borrower and the borrower expressly consents to pay the fee in exchange for the service.

In addition to the limitations in subdivision (b) of this section and Civil Practice Law and Rules section 3408(h), the following rules apply to attorneys’ fees charged in connection with a loss mitigation option, a reinstatement or loan satisfaction:

(1) the fee must be reasonable and customary for work that is actually performed by an attorney; and

(2) the fee and a breakdown of the tasks performed must be disclosed to the borrower prior to entering into the agreement governing the loss mitigation option, reinstatement or loan satisfaction.

(d) Late and delinquency fees.

(1) A servicer shall not impose any late or delinquency fee when the only delinquency is attributable to late or delinquency fees assessed on an earlier payment, and any subsequent payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period.

(2) Except for loans or forbearances insured by the Federal Housing Commissioner or for which a commitment to insure has been made by the Federal Housing Commissioner or to any loan or forbearance insured or guaranteed pursuant to the provisions of an act of congress entitled Servicemen's Readjustment Act of 1944, late fees shall be in accordance with and not exceed the two percent limit as specified in the Real Property Law section 254-b.

(3) Late fees shall not be:

(i) based on an amount greater than the past due amount;

(ii) collected from the escrow account or from escrow surplus without the approval of the borrower;

(iii) deducted from any regular payment; or

(iv) assessed if a borrower is making timely trial modification payments.

(e) Property valuation fees.

(1) Except as provided in paragraph (2) of this subdivision, a servicer shall not charge a property valuation fee to a borrower more than once in a 12-month period.

(2) A servicer may charge a reasonable fee for a property valuation to facilitate a borrower’s application for a loss mitigation option provided that the servicer has already provided without charging a fee one property valuation within preceding 12-month period.

(f) Statements.

A fee shall not be charged to a borrower for the annual escrow statement or for one payment history furnished to a borrower in a 12-month period.

3 CRR-NY 419.6 Borrower complaints and inquiries {#sec-3-crr-ny-419.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.6}

(a) Servicers shall establish and maintain:

(1) procedures and systems to respond to and resolve borrower complaints and inquiries in accordance with the requirements of this Part;

(2) a customer service department staffed by trained personnel to whom borrowers may direct complaints and inquiries; and

(3) a toll-free telephone number or collect calling service that enables borrowers to speak with a living person, during regular business hours, trained to answer inquiries and instruct borrowers on how to file written complaints.

(b) Every welcome packet and periodic statement, including as applicable either the monthly mortgage statement or annual coupon book, and annual statement pursuant to section 419.5(a) of this Part that is provided to a borrower, and any website maintained by the servicer, shall clearly and conspicuously state:

(1) an address to which borrowers can direct complaints and inquiries;

(2) the toll-free telephone number or collect calling services provided by the servicer;

(3) whether the servicer is registered with the superintendent;

(4) that the borrower may file complaints and obtain further information about the servicer by contacting the New York State Department of Financial Services Consumer Assistance Unit at 1-800-342-3736 or by visiting the department’s website at www.dfs.ny.gov.

(c) Within 10 days of receiving a request in writing from a borrower, a servicer shall provide the borrower with the name, address, phone number or email address, if available, and other relevant contact information for the mortgagee and the holder of the promissory note executed by the borrower.

(d) 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.

(e) Borrower complaints.

A servicer shall comply with the requirements of this section for any written complaint, including those transmitted electronically, from a borrower that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and the nature of the borrower’s complaint.

(1) Acknowledgement of complaint. Within five business days of receiving a complaint from a borrower, the servicer shall provide to the borrower a written response that:

(i) acknowledges receipt of the borrower’s complaint;

(ii) informs the borrower of any additional information or documentation required by the servicer to review and address the complaint; and, if applicable;

(iii) informs the borrower that the complaint has been reassigned to the borrower’s single point of contact or escalated to a supervisor.

(2) A servicer may request supporting documentation from a borrower in connection with the investigation of a complaint, but may not:

(i) require a borrower to provide such information as a condition of investigating a complaint; or

(ii) determine that no error occurred because the borrower failed to provide any requested information without conducting a reasonable investigation pursuant to paragraph (3) of this subdivision.

(3) Response to complaint.

(i) Upon receiving a borrower complaint, a servicer must conduct a reasonable investigation and either:

(a) correct any error or other servicing-related issue identified and provide the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or

(b) if the servicer has determined that no error occurred or that no action is warranted to correct a servicing-related issue, inform the borrower, in writing, of the results of the servicer’s investigation and provide a statement of the reason or reasons for this determination, a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.

(ii) Time limits.

(a) In general. A servicer shall comply with the requirements of subparagraph (i) of this paragraph:

(1) not later than seven business days after the servicer receives a complaint relating to the servicer’s failure to provide an accurate payoff balance amount in violation of section 419.5(d) of this Part;

(2) prior to the date of a scheduled foreclosure sale or within 15 business days after the servicer receives the complaint, whichever is earlier, for complaints relating to:

(i) the commencement of a residential foreclosure action against the borrower in violation of section 419.10(a)(4) of this Part; or

(ii) moving for a foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of section 419.10(a)(5) of this Part.

(3) for all other complaints, not later than 30 business days after the servicer receives the complaint.

(b) Extension of time limit. For complaints governed by the time limit in subclause (a)(3) of this subparagraph, a servicer may extend the time period for responding by an additional 7 business days if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the extensions in writing. A servicer may not extend the time period for responding to complaints set forth in subclause (a)(1) or (2) of this subparagraph.

(iii) If the servicer has determined that no error occurred or that no action is warranted to correct a servicing-related issue, the servicer shall provide a borrower with copies of documents and information relied upon by the servicer in making its determination that no error occurred or that no corrective action is warranted within 15 business days of receiving the borrower’s request for such documents. If a servicer withholds documents relied upon because it has determined that such documents constitute confidential, proprietary or privileged information, the servicer must:

(a) notify the borrower of its determination in writing within 15 business days of receipt of the borrower’s request for such documents; and

(b) include in such notification a reasonable description of the contents of the each withheld document and the basis for withholding the document.

(4) A servicer shall not charge a fee, or require a borrower to make any payment that may be owed on a borrower’s account, as a condition of responding to a complaint or to providing copies of documents and information relied upon by the servicer in determining that no error occurred or no corrective action was needed in response to a complaint.

(5) Supervisory review. A servicer shall have a process that enables borrowers to escalate complaints or pending loss mitigation matters for a supervisory level review.

3 CRR-NY 419.7 Residential mortgage loan delinquencies and loss mitigation efforts {#sec-3-crr-ny-419.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.7}

(a) In general.

A servicer shall make reasonable and good faith efforts, in accordance with the requirements set forth in Civil Practice Laws and Rules section 3408, to provide appropriate loss mitigation options to help borrowers avoid foreclosure consistent with usual and customary industry standards, the lawful terms of the note, mortgage or contract for the servicing of a mortgage loan, and subdivision (c) of this section.

(b) Single point of contact.

(1) Servicers shall assign a single point of contact to any borrower who is at least 30 days delinquent or has requested a loss mitigation application (or earlier at a servicer’s option).

(2) The single point of contact shall attempt to initiate contact with the borrower promptly following the assignment of the single point of contact to the borrower.

(3) The single point of contact shall have access to all records containing current information about the borrower’s account, including, but not limited to, records relating to loss mitigation applications, pending foreclosure actions, documentation requests, and details of missing or incomplete documentation.

(4) The single point of contact shall have primary responsibility for coordinating the servicer’s actions to resolve the borrower’s delinquency or imminent risk of delinquency until all available home retention and non-foreclosure liquidation options have been exhausted and for communicating those actions to the borrower. The single point of contact’s responsibilities shall include:

(i) communicating the loss mitigation options available to the borrower, the actions the borrower must take to be considered for loss mitigation, detailed information on the eligibility criteria for any given loss mitigation option, and the status of the servicer’s evaluation of the borrower for loss mitigation options;

(ii) coordinating tracking and maintenance of all documents associated with loan modification or loss mitigation activities so that the borrower will not be unreasonably required to resubmit the same documented information, and that the borrower is notified promptly of the need for additional information;

(iii) being knowledgeable about the borrower’s situation throughout the entire delinquency or imminent risk of delinquency resolution process; and

(iv) coordinating with other personnel (in-house or third-party provider) responsible for ensuring that a borrower is considered for all available loss mitigation options, including proprietary loss mitigation options.

(5) The single point of contact shall have direct and immediate access to personnel with the authority to stop foreclosure proceedings to comply with section 419.10(a)(4) and (5) of this Part, and an obligation to communicate immediately to such personnel any information received by the single point of contact indicating that it may be necessary or appropriate to stop a foreclosure proceeding as required by section 419.10(a)(4) and (5) of this Part.

(6) The single point of contact shall transfer a borrower to an appropriate supervisor upon the request of the borrower. Such transfer shall comply with section 419.6(e)(5) of this Part.

(7) The single point of contact shall remain assigned and available to the borrower until the borrower’s account becomes current or the servicer determines that all loss mitigation options offered by, or through, the servicer have been exhausted.

(8) A servicer may assign a group of people to be a borrower’s single point of contact provided that the servicer shall ensure that each member of the group is knowledgeable about the borrower's situation and current status in the loss mitigation process, including the content and outcome of any communication with the borrower.

(1) A servicer shall send a late payment notice to a borrower at the borrower’s last known address no later than 17 days after the payment becomes due and remains unpaid, provided that a servicer is not required to send another late payment notice until after the borrower becomes current on all payment obligations and then does not make another scheduled payment for 17 calendar days after it becomes due.

(2) No later than the 45th day of a borrower’s delinquency, a servicer shall provide the borrower with a written notice that informs the borrower of:

(i) the nature and extent of the delinquency;

(ii) the servicer’s loss mitigation protocols;

(iii) information on the availability of housing counseling services and that such information can be obtained by contacting the New York State Department of Financial Services Consumer Assistance Unit at 1-800-342-3736 or by visiting the department’s website at www.dfs.ny.gov;

(iv) the loss mitigation options and services offered by the servicer;

(v) all a list of documents and information that a borrower must submit to be considered for any given loss mitigation option;

(vi) a toll-free telephone number and at least one other method by which the borrower may directly contact the single point of contact; and

(vii) the preferred means by which documents should be delivered to the servicer.

(3) While any borrower on a mortgage loan is a debtor in bankruptcy under title 11 of the United States Code, a servicer is exempt from the requirements of this subsection with regard to that mortgage loan.

(d) Receipt of loss mitigation application.

(1) A servicer shall exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application, including but not limited to promptly following up with the borrower to obtain any information the borrower has not submitted that is necessary to make the application complete and to ensure that the servicer timely receives any necessary third-party information or approvals.

(2) If a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, the servicer shall:

(i) promptly review the loss mitigation application to determine if the loss mitigation application is complete; and

(ii) notify the borrower within five business days after receiving the loss mitigation application that the servicer has received the loss mitigation application. Such notice shall:

(a) state whether the loss mitigation application is complete or incomplete; and

(b) explain the key elements of the loss mitigation process, including, as appropriate, the following:

(1) third-party approvals that may be required for the servicer to evaluate and offer a loss mitigation option;

(2) the average length of time for a decision to be made regarding the borrower’s loss mitigation application; and

(3) a notification of the actions the servicer, lender or mortgagee of the mortgage may take during the loss mitigation process, such as whether the borrower may continue to receive collection letters or foreclosure notices, whether the foreclosure process will continue or whether, and to what extent collection and foreclosure will be stayed;

(c) if a servicer determines that the loss mitigation application is incomplete, the notice required by this subparagraph shall also:

(1) identify with specificity any additional documents or information that the borrower must submit to make the loss mitigation application complete and a reasonable date by which the borrower should submit the documents and information necessary to make the loss mitigation application complete;

(2) state the effect of the borrower’s failure to submit all required documentation, including potential denial of the loss mitigation application, commencement of a foreclosure action, or continuation of pending foreclosure action; and

(3) state the action that the servicer will take if the borrower does not submit the documents or information necessary to make the loss mitigation application complete within the time period specified in the letter.

(e) Evaluation of loss mitigation applications.

(1) Complete loss mitigation application. If a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving the complete loss mitigation application, a servicer shall:

(i) evaluate the borrower for all loss mitigation options available to the borrower;

(ii) review any initial determination to deny a loss mitigation option. Such a review shall be performed by supervisory personnel who were not involved in making the initial determination; and

(iii) if the servicer denies the borrower’s loss mitigation application, the servicer shall, upon the borrower’s request, provide to the borrower the result of any evaluation of the net present value of a loss mitigation option if the servicer performed such an evaluation.

(2) Incomplete loss mitigation application.

(i) In general. A servicer shall not evade the requirement to evaluate a complete loss mitigation application for all loss mitigation options available to the borrower by offering a loss mitigation option based upon an evaluation of information provided by a borrower in connection with an incomplete loss mitigation application.

(ii) Reasonable time. A servicer may evaluate an incomplete loss mitigation application only if, despite the servicer’s reasonable diligence to obtain necessary documents and information, the loss mitigation application remains incomplete for 30 days without the borrower making reasonable progress to complete the application. Any such evaluation and offer is not subject to the requirements of this section and shall not constitute an evaluation of a complete loss mitigation application for purposes of paragraph (1) of this subdivision.

(iii) Facially complete application. A loss mitigation application shall be deemed to be facially complete at the time that the borrower submits all the documents and information identified by the servicer pursuant to subparagraph (c)(2)(v) of this section or all of the documents and information specified in the notice required pursuant to subparagraph (d)(2)(ii) of this section. If the servicer reasonably determines that additional information or corrections to a previously submitted document are required to complete the application, the application shall be treated as complete for the purposes of section 419.10(a)(4) and (5) of this Part until the borrower has been given a reasonable opportunity to complete the application. If the borrower completes the application within this period, the application shall be considered complete as of the date it was facially complete for the purposes of section 419.10(a)(4) and (5) of this Part and subdivisions (f) and (g) of this section, and as of the date the application was actually a complete loss mitigation application for purposes of paragraph (1) of this subdivision. A servicer that complies with this paragraph will be deemed to have fulfilled its obligation to provide an accurate notice under subparagraph (d)(2)(ii) of this section.

(iv) Payment forbearance. Notwithstanding subparagraph (i) of this paragraph, a servicer may offer a short-term payment forbearance program to a borrower based upon an evaluation of an incomplete loss mitigation application. A servicer shall not commence a foreclosure action, and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of a payment forbearance program.

(f) Notice of loss mitigation application determination.

(1) Grant of a loss mitigation application. If a servicer grants a loss mitigation application, it shall provide the borrower with a notice, in writing, that clearly and conspicuously discloses:

(i) the nature of the loss mitigation option being offered to the borrower;

(ii) consistent with subdivision (g) of this section, the amount of time the borrower has to accept or reject the offered loss mitigation option;

(iii) the material terms, costs and risks of the loss mitigation option offered and any material changes the loss mitigation option would make to the borrower’s mortgage loan, including but not limited to:

(a) changes to the terms of the mortgage loan, to the extent such changes are known to the servicer, after due diligence by the servicer, at the time the notice is provided;

(b) a breakdown of the loan balance and an itemization of any fees or charges assessed; and

(2) Denial of a loss mitigation application. If a servicer denies a loss mitigation application, it shall provide the borrower with a notice, in writing, that clearly and conspicuously discloses:

(i) consistent with subdivision (h) of this section, that the borrower has the right to appeal the denial of any loan modification option, what the borrower has to do to appeal the denial, and the amount of time the borrower has to file an appeal;

(ii) the specific reasons for the servicer’s determination for each such loss mitigation option, instructions on how the borrower can appeal the denial, any other loss mitigation options for which the borrower may be considered, and the following statement, in boldface type and in print no smaller than the largest print used elsewhere in the main body of the denial: If you believe your loss mitigation request has been wrongly denied, you may file a complaint with the New York State Department of Financial Services at 1-800-342-3736 or http://www.dfs.ny.gov; and

(iii) the borrower’s right to obtain, upon the borrower’s request, the result of any evaluation of the net present value of a loan modification performed by the servicer.

(g) Borrower response to a servicer’s offer of a loss mitigation option.

(1) In general. Subject to subparagraphs (3)(ii) and (iii) of this subdivision, if a servicer receives a complete loss mitigation application 90 days or more before a foreclosure sale, the servicer may require that a borrower accept or reject an offer of a trial or permanent loss mitigation option no earlier than 30 days after the loss mitigation option is offered to the borrower. If a complete loss mitigation application is received less than 90 days before a foreclosure sale, but more than 37 days before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier than 7 days after the loss mitigation option is offered to the borrower.

(2) A servicer shall respond to a request for further information concerning a loss mitigation option the servicer offered to a borrower within five business days of receiving such a request.

(3) Rejection.

(i) In general. Except as set forth in subparagraphs (ii) and (iii) of this paragraph, a servicer may deem a borrower that has not accepted an offer of a loss mitigation option within the deadline established pursuant to paragraph (1) of this subdivision to have rejected the offer.

(ii) Trial loan modification plan. A borrower who does not satisfy the servicer’s requirements for accepting a trial loan modification plan, but submits the payments that would be owed pursuant to any such plan within the deadline established pursuant to paragraph (1) of this subdivision, shall be provided a reasonable period of time to fulfill any remaining requirements for acceptance of the trial loan modification plan beyond the deadline established pursuant to paragraph (1) of this subdivision. The servicer shall notify the borrower of any such remaining requirements within five business days of receiving such a payment.

(iii) Interaction with appeal process. If a borrower appeals a servicer’s determination to deny the borrower’s loss mitigation application for any loss mitigation option pursuant to subdivision (h) of this section, the borrower’s deadline for accepting a loss mitigation option offered pursuant to subparagraph (f)(1)(ii) of this section shall be extended until 14 days after the servicer provides the notice required pursuant to paragraph (h)(4) of this section.

(h) Appeal process.

(1) Appeal process required for loss mitigation denials. If a servicer receives a complete loss mitigation application 90 days or more before a foreclosure sale or before the servicer commences a foreclosure action against a borrower, a servicer shall process an appeal of the servicer’s determination to deny a borrower’s loss mitigation application for any loss mitigation option.

(2) Deadlines. A servicer shall permit a borrower to appeal a denial of a loss mitigation application within 14 days of the date on which the notice required by subparagraph (e)(1)(iii) of this section was postmarked.

(3) Independent evaluation. An appeal shall be reviewed by different personnel than those responsible for evaluating the borrower’s complete loss mitigation application.

(4) Appeal determination. Within 30 days of receiving a timely appeal, the servicer shall provide a notice to the borrower stating the servicer’s determination of whether the servicer will offer the borrower a loss mitigation option based upon the appeal and, if applicable, how long the borrower has to accept or reject such an offer or a prior offer of a loss mitigation option. A servicer may require that a borrower accept or reject an offer of a loss mitigation option after an appeal no earlier than 14 days after the servicer provides the notice to a borrower. A servicer’s determination under this paragraph is not subject to any further appeal.

(i) Borrower programs and counseling.

A servicer shall take reasonable steps to ensure that its staff is aware of programs designed to help borrowers avoid foreclosure or resolve delinquency. A servicer shall make available to borrowers who are at least 60 days delinquent and borrowers who the servicer has reason to believe are experiencing a financial hardship and are in imminent risk of delinquency a list of government approved not-for-profit housing counselors in the homeowner’s geographic area as listed on the Department of Financial Services website (www.dfs.ny.gov) or the Division of Homes and Community Renewal’s website (www.hcr.ny.gov).

(j) Waiver of legal claims and defenses.

A servicer shall not require a homeowner to waive legal claims and defenses as a condition of a loan modification, reinstatement, forbearance or repayment plan.

(k) Servicer protocols.

A servicer shall maintain a system for servicing delinquent loans that includes at a minimum the following:

(1) an accounting system that promptly alerts the servicer that a mortgage is delinquent;

(2) procedures for identifying and working with borrowers who are at risk of foreclosure or delinquency in order to help such borrowers, including procedures for making borrowers aware of programs and counseling as set forth above;

(3) procedures and controls for sending delinquency notices, assessing late fees, handling partial payments, maintaining collection histories, and reporting delinquencies to credit bureaus;

(4) guidelines for analyzing delinquencies and applicable loss mitigation options in a consistent and systematic manner; and

(5) procedures for management review and evaluation of decisions regarding appropriate loss mitigation options or commencement of foreclosure actions.

3 CRR-NY 419.8 Volume of servicing report {#sec-3-crr-ny-419.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.8}

The superintendent may require each servicer that is either registered or required to be registered with the superintendent or that is an exempt organization regulated by the superintendent to compile and submit, within 30 days of the end of each calendar quarter, a report in the format required by the superintendent, that contains information regarding the servicer’s mortgage loans servicing activities.

3 CRR-NY 419.9 Books and records and annual reports {#sec-3-crr-ny-419.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.9}

(a) In general.

This section applies to each servicer that is either registered or required to be registered with the superintendent or that is an exempt organization regulated by the superintendent. Each servicer shall:

(1) keep such books and records in a manner that will allow the superintendent to determine whether the servicer is complying with applicable laws and regulations; and

(2) preserve its books and records for at least three years after making the final entry with respect to any New York mortgage loan being serviced by the servicer, unless a longer period is provided by statute. At a minimum, books and records must provide information regarding:

(i) loan payments received, disbursements made and the dates of transactions for each account;

(ii) the principal balance of each loan account;

(iii) the amount and due date of each loan installment for each loan serviced;

(iv) the servicing history for all mortgage loans serviced by the servicer, including the servicing history of loans acquired from another entity, provided that the servicer is only required to maintain records of any prior servicer of a loan to the extent that such information is reasonably available; and

(v) the servicing of delinquent loans, including loans in foreclosure.

(b) Telephone and written communications.

The servicer must, for three years, maintain a log of all telephone calls and file of all written correspondence, including fax transmissions and e-mail correspondence, relating to the servicing of each mortgage loan, including, but not limited to communications and correspondence between it and:

(1) any previous loan servicer;

(2) the lender or mortgagee of such loan;

(3) the holder of the mortgage or person acting on the holder’s behalf;

(4) the borrower, including but not limited to all communication and information relating to a complaint and documentation reflecting the date the servicer received the complaint, the name(s) of the servicer personnel assigned to investigate the complaint, the nature of the complaint, the status of the complaint (e.g., open, resolved), and the action the servicer has taken with respect to the complaint; and

(5) a governmental entity.

The servicer must have internal controls (commensurate with the size and complexity of the servicing operations) which periodically assess the servicer’s loan servicing to ensure that servicing standards and procedures are being met. At least annually, the servicer shall conduct an internal risk assessment of all its servicing activity. The servicer shall also conduct periodic audits of payment processing functions to ensure payments are properly credited, including payments remitted to the servicer via certified mail.

(d) Delinquency and foreclosure reports.

In addition to the quarterly reports required pursuant to section 419.8 of this Part, the servicer shall collect, maintain and analyze appropriate data on delinquency and foreclosure rates, as well as, its loss mitigation activity to enable it to:

(1) evaluate the effectiveness of its collection efforts and overall performance of its servicing portfolio; and

(2) identify discriminatory trends.

The servicer shall further determine how this data compares with rates in reports published by the industry, investors and others and analyze significant variances between its data and that found in reports and publications and take appropriate corrective action.

(e) Quarterly financial report and net worth certification.

Within 45 days of the end of each fiscal quarter, the servicer must submit to the department, in a format, prescribed by the superintendent, a quarterly financial report and certification of net worth.

(f) Annual audited financial statements.

Unless the superintendent in his or her sole discretion determines that other financial information may be substituted, the servicer shall submit an annual audited financial statement as of its fiscal year end to the department within 90 days of the close of the fiscal year. The financial statement shall be prepared in accordance with generally accepted accounting principles and audited by an independent certified public accountant in accordance with generally accepted auditing standards.

(g) Annual and other reports.

The superintendent may require servicers to file other regular or special reports, including reports with respect to mortgage delinquencies and foreclosures, annually or as otherwise requested by the superintendent. Such reports shall be in a form prescribed by the superintendent and, except as permitted by the superintendent, shall be subscribed and affirmed as true under the penalty of perjury.

3 CRR-NY 419.10 Servicing prohibitions and the duty of fair dealing {#sec-3-crr-ny-419.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.10}

(a) A servicer is prohibited from:

(1) engaging in unfair, or deceptive or abusive business practices or misrepresenting or omitting any material information in connection with the servicing of a mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on the loan, the terms and conditions of the servicing agreement or the borrower’s obligations under the loan;

(2) requiring funds to be remitted by means more costly to the borrower than a bank or certified check or attorney’s check from an attorney’s account;

(3) refusing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided that the servicer may adopt procedures, not including the collection of the representative’s social security number, reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower;

(4) commencing a residential foreclosure action against a borrower:

(i) if a borrower submits a complete loss mitigation application to a servicer before the servicer has commenced a residential foreclosure action against the borrower, unless:

(a) the servicer has sent the borrower a notice pursuant to section 419.7(f)(2) of this Part that the borrower is not eligible for any loss mitigation option and the appeal process in section 419.7(h) of this Part is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;

(b) the servicer has complied with section 419.7(f)(1) of this Part and the borrower rejects all loss mitigation options offered by the servicer;

(d) the foreclosure is based on a borrower’s violation of a due on sale clause.

(ii) if a borrower submits an incomplete loss mitigation application to a servicer before the servicer has commenced a residential foreclosure action against the borrower, unless the borrower has not provided the servicer with the documents necessary for a complete loss mitigation application within 15 days (excluding legal public holidays, Saturdays and Sundays) after the servicer has provided the notice required by section 419.7(d)(2)(ii) of this Part. A servicer is only required to comply with the requirements of this subparagraph for a single incomplete loss mitigation application for a borrower’s mortgage loan;

(5) moving for a judgment of foreclosure and sale, or conducting a foreclosure sale when:

(i) a borrower is in compliance with the terms of a trial loan modification, forbearance, or repayment plan; or

(ii) a short sale or deed-in-lieu of foreclosure has been approved by all parties (including, for example, first lien investor, junior lien holder and mortgage insurer, as applicable), and proof of funds or financing has been provided to the servicer; or

(iii) a borrower has submitted a complete loss mitigation application after a servicer has commenced a residential foreclosure action against the borrower but more than 37 days before a foreclosure sale, unless:

(b) the servicer has complied with section 419.7(f)(1) of this Part and the borrower rejects all loss mitigation options offered by the servicer; or

(6) failing to provide the borrower with the notice required by Real Property Actions and Proceedings Law section 1304 at least 90 days before commencing legal action against the borrower or in the case of a residential cooperative, failing to provide the debtor with the notice required by Uniform Commercial Code section 9-611 at least 90 days before disposing of the debtor’s cooperative interest; and

(7) failing to make the filings with the superintendent as required by Real Property Actions and Proceedings Law section 1306 and in accordance with the rules prescribed by the superintendent.

(b) A servicer shall act in good faith and deal fairly in its course of dealings with each borrower in connection with the servicing of the borrower’s mortgage loan. However, nothing in this section shall be considered a derogation of the affirmative duty to negotiate in good faith mandated by New York Civil Practice Laws and Rules section 3408. This includes, but is not limited to, the duty to:

(1) safeguard and account for any payment made by or any money belonging to the borrower;

(2) follow reasonable and lawful instructions from the borrower consistent with the underlying note and mortgage;

(3) act with reasonable skill, care and diligence;

(4) consider alternatives to foreclosure when a borrower demonstrates that he or she is in imminent risk of delinquency on the mortgage loan as a result of a financial hardship or has experienced a financial hardship and is unable to maintain the payment at the current amount required under the mortgage loan or is unable to make up the delinquent payments;

(5) structure loan modifications to result in payments that are reasonably affordable and sustainable for the borrower at the time the modification is made.

3 CRR-NY 419.11 Oversight of third-party providers {#sec-3-crr-ny-419.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.11}

A servicer shall adopt and maintain policies and procedures to oversee and manage third-party providers, including:

(a) A servicer shall perform appropriate due diligence of third-party providers’ qualifications, expertise, capacity, reputation, complaints, information systems, document custody practices, quality assurance plans, financial viability, and compliance with licensing requirements and applicable rules and regulations.

(b) A servicer shall require third-party providers to comply with a servicer’s applicable policies and procedures and applicable New York and Federal laws and rules.

(c) A servicer utilizing third-party providers shall remain responsible for all actions taken by the third-party providers.

(d) A servicer shall clearly and conspicuously disclose to borrowers if it utilizes a third-party provider and shall clearly and conspicuously disclose to borrowers that the servicer remains responsible for all actions taken by third-party providers.

(e) A servicer shall conduct periodic reviews, not less than annually, of each third-party provider the servicer retains. The review shall be conducted by servicer employees who are separate and independent of employees who prepare foreclosure or bankruptcy affidavits, sworn documents, declarations, or other foreclosure or bankruptcy documents. The review shall include:

(1) a review of a sample of the foreclosure and bankruptcy documents prepared by the third-party provider for compliance with applicable New York and Federal laws and rules and the accuracy of the facts contained in such documents;

(2) a review of the fees and costs assessed by the third-party provider to provide that only fees and costs that are lawful, reasonable, and actually incurred are charged to borrowers and that no portion of any fees or charges incurred by any third-party provider for technology usage, connectivity, or electronic invoice submission is charged as a cost to the borrower;

(3) a review of the third-party provider’s processes to provide for compliance with the servicer’s policies and procedures;

(4) a review of the security of original loan documents maintained by the third-party provider;

(5) a review of customer complaints concerning third-party providers; and

(6) a requirement that the third-party provider disclose to the servicer:

(i) any instance where any party requests the imposition of sanctions or that professional disciplinary action be taken against the third-party provider for misconduct related to the services the third-party provider provides to the servicer; and

(ii) any imposition of sanctions or professional disciplinary action taken against the third-party provider for misconduct related to the services the third-party provider provides to the servicer.

(f) A servicer shall ensure that all third-party providers have appropriate and reliable contact information for servicer employees who possess information relevant to the services provided by the third-party provider. A servicer shall ensure that foreclosure and bankruptcy counsel have an appropriate servicer contact to assist in legal proceedings and to facilitate loss mitigation questions on behalf of a borrower.

(g) A servicer shall take appropriate remedial steps if a servicer identifies any problems through the review required by subdivision (e) of this section or otherwise, including terminating its relationship with a third-party provider.

(h) A servicer shall develop and implement policies and procedures detailing how the servicer will oversee and communicate with counsel and those with the authority to fully dispose of the case concerning foreclosure proceedings. Such policies shall, at a minimum:

(1) detail how notice will be provided to foreclosure attorneys and trustees regarding a borrower’s status for consideration of a loss mitigation option and whether the borrower is being evaluated for, or is currently in, a trial or permanent modification;

(2) ensure that its foreclosure attorneys comply with the requirements of New York Civil Practice Law and Rules section 3408 with regard to mandatory settlement conferences in residential foreclosure actions; and

(3) a servicer shall develop and implement policies and procedures to ensure that its foreclosure attorneys comply with all applicable legal requirements including all relevant Administrative Orders of the Chief Administrative Judge of the Courts of New York.

3 CRR-NY 419.12 Mortgage servicing transfers {#sec-3-crr-ny-419.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.12}

(a) The first monthly statement provided by a transferee servicer to a borrower shall include a copy of the transferee servicer’s welcome packet and a payment history containing the information detailed in section 419.4(b) of this Part.

(b) A transferee servicer shall allow a borrower that is complying with the terms of a trial loan modification as of the effective date of transfer of the servicing of the borrower’s mortgage loan to the transferee servicer to continue making existing trial loan modification payments for the remainder of the trial modification period.

(c) A transferee servicer shall allow a borrower who has successfully completed a trial modification prior to the effective date of transfer of the servicing of the borrower’s mortgage loan to the transferee servicer, but who has not yet received permanent modification documents from the transferor servicer, to continue making trial modification payments until the transferee servicer can provide permanent modification documents to the borrower.

(d) A transferee servicer shall not refuse to consider for a loss mitigation option a borrower who was previously denied for a loss mitigation option by a transferor servicer by sole reason of the denial by the transferor servicer.

3 CRR-NY 419.13 Affiliated relationships {#sec-3-crr-ny-419.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.13}

(a) Within 10 days of entering into an affiliated relationship, servicers must provide to each borrower whose mortgage loan is subject to such arrangement, a written disclosure of the nature of the relationship (explaining the ownership and financial interest) between the parties to the arrangement and of an estimated charge or range of charges generally made by such affiliate.

(b) All affiliated relationships must be negotiated at market rate and a servicer shall neither give nor accept any fee, kickback or other thing of value pursuant to any affiliated relationships other than payments listed in section 419.5 of this Part; and

(1) a return on an ownership interest which does not include:

(i) any payment which has as a basis of calculation no apparent business motive other than distinguishing among recipients of payments on the basis of the amount of their actual, estimated or anticipated referrals;

(ii) any payment which varies according to the relative amount of referrals by the different recipients of similar payments; or

(iii) a payment based on an ownership, partnership or joint venture share which has been adjusted on the basis of previous relative referrals by recipients of similar payments.

(2) bona fide dividends, and capital or equity distributions, related to ownership interest or franchise relationship, between entities in an affiliate relationship; or

(3) bona fide business loans, advances, and capital or equity contributions between entities in an affiliate relationship (in any direction), so long as they are for ordinary business purposes and are not fees for the referral of settlement service business or unearned fees.

3 CRR-NY 419.14 Transition period {#sec-3-crr-ny-419.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 419.14}

(a) For 180 days including and following the effective date of this Part, persons servicing mortgage loans shall not be in violation of this Part if they comply with this Part that was in effect, by emergency rulemaking, on the effective date of this regulation.

Part 420 MORTGAGE LOAN ORIGINATORS: LICENSING; EDUCATION REQUIREMENTS

3 CRR-NY 420.1 Mortgage loan originator license and revocation {#sec-3-crr-ny-420.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.1}

(a) Section 599-c of the Banking Law provides that no individual, unless exempt, shall engage in mortgage loan originating without first obtaining and maintaining a license from the Superintendent of Financial Services (formerly the Superintendent of Banks) pursuant to article 12-E of the Banking Law. This regulation implements the superintendent’s authority to license mortgage loan originators.

(b) Section 599-n of the Banking Law authorizes the superintendent to revoke a license to engage in mortgage loan originating. In addition, sections 599-i and 599-n set out the circumstances under which a license will be terminated by operation of law.

3 CRR-NY 420.2 Exemptions {#sec-3-crr-ny-420.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.2}

As provided in section 599-c(3) of the Banking Law, the following individuals are exempt from the licensing requirements otherwise applicable under article 12-E:

(a) Registered mortgage loan originators.

A registered mortgage loan originator (i.e. an individual who performs the functions of an MLO, who is employed by a depository institution, certain subsidiaries of a depository institution or an institution regulated by the Farm Credit Administration, and who is registered with the NMLS).

(b) Immediate family loans.

Any individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.

Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling or residential real property that served as the individual’s own residence.

(d) Certain attorneys.

A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator.

(e) Servicer employees.

Any individual employed by a mortgage loan servicer registered under article 12-D of the Banking Law, who negotiates any modification of an existing residential mortgage loan on behalf of such servicer, and does not otherwise act as a mortgage loan originator, unless licensing is required by a rule, regulation, guideline or interpretation issued by the U.S. Department of Housing and Urban Development under Public Law 110-289.

(f) Manufactured home sellers.

Any individual involved in the sale of manufactured homes, if exempted from licensing by a rule, regulation, guideline or interpretation issued by the U.S. Department of Housing and Urban Development under Public Law 110-289.

(g) Exemptions approved by the superintendent.

The provisions contained in this Part shall not apply to such other individuals as the superintendent may by order exempt for good cause.

3 CRR-NY 420.3 Definitions {#sec-3-crr-ny-420.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.3}

For purposes of this Part:

(a) Annual expiration date with respect to any MLO means December 31st of each year.

(b) Hour means a unit of time as defined by the NMLS.

(c) Immediate family member means a spouse, child, sibling, parent, grandparent, or grandchild. The term includes stepparents, stepchildren, stepsiblings and adoptive relationships.

(d) Individual means a natural person.

(e) Loan processor or underwriter.

(1) Loan processor or underwriter means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, an individual licensed, or exempt from licensing, under this Part, provided that such individual does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

(2) For purposes of this subdivision, clerical or support duties may include, subsequent to the receipt of an application:

(i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; or

(ii) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.

(f) Manufactured home means any manufactured home as defined in Uniform Commercial Code section 9-102(53) or mobile home included in the definition of dwelling as defined in section 1203(v) of the Truth in Lending Act.

(g) Mortgage loan originator (MLO):

(1) means an individual who for compensation or gain or in the expectation of compensation or gain:

(i) takes a residential mortgage loan application; or

(ii) offers or negotiates terms of a residential mortgage loan;

(2) MLO does not include:

(i) any individual engaged solely as a loan processor or underwriter except as otherwise provided in section 599-c(4) of article 12-E;

(ii) an individual who performs only real estate brokerage activities and is licensed or registered in accordance with applicable New York law, unless the individual is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; and

(iii) an individual involved solely in extensions of credit relating to timeshare plans, as that term is defined in section 101(53D) of title 11, United States Code.

(3) For purposes of this Part, real estate brokerage activity means any activity that involves offering or providing real estate brokerage services to the public, including:

(i) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(iii) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction);

(iv) engaging in any activity for which an individual engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and

(v) offering to engage in any activity, or act in any capacity, described in subparagraph (i), (ii), (iii), or (iv) of this paragraph.

(h) Nationwide Mortgage Licensing System and Registry (NMLS) means a mortgage licensing system and registry developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators.

(i) Originating entity means an individual or entity licensed or registered pursuant to article 12-D, an individual or entity engaged in the origination of residential mortgage loans secured by manufactured homes licensed under article IX or article 11-B or such other employer of mortgage loan originators as the superintendent may approve in writing.

(j) Prior version means article 12-E as in effect from January 1, 2008 to July 10, 2009.

(k) Residential mortgage loan shall mean a loan to a natural person made primarily for personal, family or household use, secured by either a mortgage, deed of trustor other equivalent consensual security interest on a dwelling (as defined in section 1203[v] of the Truth in Lending Act) or residential real property or any certificate of stock or other evidence of ownership in, and proprietary lease from, a corporation or partnership formed for the purpose of cooperative ownership of residential real property and shall include any refinance and, to the extent required by the secretary of the U.S. Department of Housing and Urban Development, modification of any such existing loan.

(l) Registered mortgage loan originator means any individual who:

(1) meets the definition of mortgage loan originator and is an employee of:

(i) a depository institution;

(ii) a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency; or

(iii) an institution regulated by the Farm Credit Administration; and

(2) is registered with, and maintains a unique identifier through, the NMLS under regulations adopted by the federal banking regulators;

(3) for purposes of this definition, the term depository institution shall have the same meaning as in section three of the Federal Deposit Insurance Act, and includes any credit union.

(m) Residential real property shall mean real property located in this State improved by a one-to-four family residence or residential unit in a building used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such residence is to be constructed.

(n) Unique identifier means a number or other identifier assigned by protocols established by the NMLS.

3 CRR-NY 420.4 Application procedure for initial license as an MLO {#sec-3-crr-ny-420.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.4}

(a) Effective date.

Effective July 11, 2009, no individual, unless exempt or permitted in accordance with the rules in subdivision (c) and subdivision (d) of this section, shall engage in mortgage loan originating without first being licensed by the superintendent as an MLO pursuant to article 12-E of the Banking Law. In order to facilitate an orderly transition to licensing and minimize disruption in the mortgage marketplace:

(1) each individual required under article 12-E to be licensed as an MLO, other than an individual described in paragraph (2) or (3) of this subdivision, shall be licensed pursuant to this Part not later than July 31, 2010, or such later date approved for mortgage loan originators in this State by the secretary of the U.S. Department of Housing and Urban Development, pursuant to the authority granted under Public Law 110-289, section 1508(a) and approved by the superintendent;

(2) each individual authorized as a mortgage loan originator under prior law not later than July 11, 2009, shall be licensed pursuant to this Part not later than January 1, 2011, or such later date approved for mortgage loan originators in this State by the secretary of the U.S. Department of Housing and Urban Development, pursuant to the authority granted under Public Law 110-289, section 1508(a) and approved by the superintendent; and

(3) notwithstanding paragraphs (1) and (2) of this subdivision, effective July 11, 2009, no individual shall act as a mortgage loan originator if such individual has been convicted of, or pled guilty or nolo contendere to, a felony of the types and during the time periods described in section 599-e(1)(b) of article 12-E.

(b) Submission of application.

Each applicant to become a licensed mortgage loan originator shall file an application in such form as shall then be required by the superintendent.

Each applicant described in this subdivision shall file an application as follows:

(1) an individual who was engaged in mortgage loan origination activities as of July 11, 2009, who filed an application pursuant to the prior version of article 12-E prior to such date, and whose application had not been approved, denied or withdrawn by the superintendent, shall file with the superintendent by November 30, 2009 all such additional information as the superintendent may reasonably require to comply with the informational requirements of article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E by May 31, 2010;

(2) an individual who was engaged in mortgage loan origination activities with respect to manufactured homes as of July 11, 2009 shall file with the superintendent by December 31, 2009 an application to be licensed as an MLO under article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E by May 31, 2010; and

(3) an individual authorized to act as an MLO as of July 11, 2009 shall file with the superintendent by November 30, 2009 all such additional information as the superintendent may reasonably require to comply with the informational requirements of article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E by August 31, 2010.

Unless precluded by paragraph (a)(3) of this section, all individuals covered by this subdivision may continue to engage in the activities of an MLO until the earlier of the date he or she receives notice that his or her license application under this Part has been denied or July 31, 2010 in the case of individuals covered by paragraphs (1) and (2) of this subdivision or January 1, 2011 in the case of individuals covered by paragraph (3) of this subdivision.

(d) New applications.

All individuals not covered by subdivision (c) of this section, but who are required to be licensed hereunder, shall file an application under this subdivision. Each applicant described in this subdivision shall file an application as follows:

(1) any new applicant who was engaged in the business of a mortgage loan originator as of July 11, 2009 as an employee or independent contractor of a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union organized under the laws of this State, another state or the United States, or a subsidiary or affiliate of such a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union and was not required to be authorized under the prior version of article 12-E, but who must be licensed under the new article 12-E, shall file with the superintendent by November 30, 2009 an application to be licensed as an MLO under article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E by May 31, 2010;

(2) any new applicant not covered by the paragraph (1) of this subdivision shall file with the superintendent an application to be licensed as an MLO under article 12-E at least 120 days prior to the date such person expects to engage in such activities and shall, if such application is filed before January 31, 2010, satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E by May 31, 2010; and

(3) all other applicants not covered by the paragraph (1) of this subdivision shall file with the superintendent an application to be licensed as an MLO under article 12-E at least 120 days prior to the date such person expects to engage in such activities, shall satisfy the pre-licensing testing and educational requirements and bonding requirements of article 12-E and shall be licensed hereunder prior to engaging in any MLO activities.

Any individual who applies prior to January 31, 2010, unless precluded by paragraph (a)(3) of this section, may engage in MLO activities when notified in writing by the superintendent that his or her application was informationally complete and had been accepted for processing. All such individuals must complete the pre-licensing testing and educational requirements and bonding requirements of article 12-E by the earlier of May 31, 2010 and be licensed by July 31, 2010.

(e) The application for initial license as an MLO under this Part shall be affirmed by the applicant and submitted electronically in such form and in such manner as may be prescribed by the superintendent. Instructions for submission of applications shall be available on the Department of Financial Services' (formerly the Banking Department) website (www.dfs.ny.gov).

(f) Fees.

Except for individuals covered by paragraphs (c)(1) and (3) of this section, a completed application shall be accompanied by payment of the following fees:

(1) an investigation and initial license fee;

(2) such fees as may be required for processing fingerprints; and

(3) a processing fee, all as described in section 420.17 of this Part.

No such fee will be refunded if the application is withdrawn or not approved. The schedule of fees shall be posted on the department’s website (www.dfs.ny.gov). For individuals covered by subdivision (c) of this section, if the NMLS develops the capacity to process fingerprints through the FBI, the superintendent may require the applicant to submit a new set of fingerprints in the form required by the NMLS and to pay any processing fees required by the FBI and the NMLS.

(g) Fingerprints and fingerprint certification.

An applicant shall provide two sets of fingerprints in such form as shall be acceptable to the New York State Division of Criminal Justice Services, together with a fingerprint certification in the form prescribed by the superintendent. When required by the superintendent, an applicant also shall submit his or her fingerprints through the NMLS, in which case the applicant shall provide the superintendent with only one set of prints.

(h) Information and documents required.

The application shall include the information and documents required by Supervisory Procedure MB 107 of this Title as well as such additional information and documents as the superintendent deems necessary to determine whether the applicant satisfies the standards set forth in section 599-e of the Banking Law. Nothing contained herein shall limit the superintendent’s authority to consider all relevant factors set forth in article 12-E in determining whether to approve a license application under this Part.

(i) In-person conferences.

In the absence of a showing of undue hardship, the superintendent may also require that the applicant and any officers, directors and/or representatives of the originating entity with which the applicant is employed or an independent contractor of to appear at the department to present information about the qualifications of the applicant.

3 CRR-NY 420.5 Originating entities permitted to engage or contract with certain mortgage loan originators on an interim basis {#sec-3-crr-ny-420.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.5}

(a) Notwithstanding section 420.4(a) of this Part, with respect to an individual who was engaged in mortgage loan origination activities as of July 11, 2009 and whose application pursuant to the prior version of article 12-E had not been approved, denied or withdrawn by the superintendent prior to such date, an originating entity may permit such individual to engage in mortgage loan originating until the earlier of:

(1) July 31, 2010; or

(2) the date the originating entity receives notice that the superintendent had denied such individual’s license application or the license application under this Part has been withdrawn.

(b) Notwithstanding section 420.4(a) of this Part, with respect to an individual who was engaged primarily in originating residential mortgage loans secured by manufactured homes as of July 11, 2009 and who has filed an application as required above, an originating entity originating residential mortgage loans secured by manufactured homes may permit such individual to engage in such mortgage loan originating activities until the earlier of:

(1) July 31, 2010; or

(2) the date the originating entity receives notice that the superintendent had denied such individual’s license application or the license application under this Part has been withdrawn.

(c) Notwithstanding section 420.4(a) of this Part, with respect to an individual authorized to act as an MLO before July 11, 2009, an originating entity may permit such individual to engage in mortgage loan originating until the earlier of:

(1) January 1, 2011; or

(2) the date the originating entity receives notice that the superintendent had denied such individual’s license application or the license application under this Part has been withdrawn.

3 CRR-NY 420.6 Notice of approval or denial of application; license; and internet listing {#sec-3-crr-ny-420.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.6}

(a) Upon licensing any applicant as an MLO, the superintendent shall:

(1) transmit notice of approval, in such form as the superintendent deems appropriate, to the originating entity that currently employs the MLO, or for which the MLO is an independent contractor;

(2) issue a license attesting to such approval;

(3) transmit one copy of such license to the applicant; and

(4) file another copy of such license in his or her office.

(b) The superintendent shall maintain upon the department’s website (www.dfs.ny.gov) a list of licensed MLOs. The list shall indicate the following:

(1) name of the MLO;

(2) license number of the MLO; and

(3) the originating entity that currently employs the MLO, or for which the MLO is an independent contractor.

(d) The superintendent must deny an application unless he or she finds that the applicant possesses the general character and fitness, the education qualifications, pre-license test results, bond requirements, absence of felony convictions, and other factors set forth in section 599-e of the Banking Law. In making such determination the superintendent may consider all relevant factors, including but not limited to, employment history; educational background; financial responsibility; history of complaints or consumer abuse relating to real estate transactions; regulatory fines and enforcement actions; revocation, suspension or denial of licenses, certifications, authorizations or registrations in this State or any other state.

(e) Upon denying an application for a license as an MLO, the superintendent shall notify, in writing, the applicant and the originating entity with which the applicant is employed or affiliated that the application was denied and that the applicant may not engage in mortgage loan originating in this State.

3 CRR-NY 420.7 Inactive status {#sec-3-crr-ny-420.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.7}

The license of an MLO is not effective during any period when the MLO is not employed by or affiliated with an originating entity. When an MLO ceases to be employed by or affiliated with an originating entity, the originating entity shall promptly notify the superintendent of the termination date of such employment or affiliation. The license of such MLO shall be placed in inactive status until the superintendent receives confirmation from an originating entity of the MLO’s new employment or affiliation. An MLO shall continue to pay the annual license fee and to take required education courses while in inactive status.

3 CRR-NY 420.8 Suspension and termination of license {#sec-3-crr-ny-420.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.8}

(a) Failure to pay annual license fee.

(1) All MLO licenses shall terminate on the annual expiration date unless the annual license fee is paid prior to or upon the date the payment is due.

(2) In the event such fee is not paid by the due date, the department shall notify the originating entity of the termination of the license.

(3) If such license expires because the annual fee has not been paid by the due date, the license may be reinstated if such fee is paid within 60 days after such due date.

(b) Failure to timely complete education requirements.

Each licensed MLO shall complete and provide evidence to the superintendent through the NMLS or otherwise as directed by the superintendent of the completion of his or her annual education requirements by the annual expiration date of such MLO’s license. Failure to timely complete and demonstrate such completion shall cause the MLO’s license to be terminated on such annual expiration date, irrespective of whether the MLO has made satisfactory payment of the annual license fee. The license may be reinstated if the MLO:

(1) demonstrates to the superintendent’s satisfaction that the applicable education requirements were completed within 60 days of the annual expiration date; or

(2) satisfies any conditions provided by the superintendent pursuant to section 420.12(b) of this Part.

The superintendent may, without notice or a hearing, issue an order suspending any license:

(1) 30 days after the date the mortgage loan originator fails to file any report required to be filed with the superintendent pursuant to the authority provided in article 12-E; or

(2) immediately upon termination of any required surety bond with respect to the licensee if the superintendent has not received evidence of a satisfactory replacement bond. If the superintendent has issued an order suspending a license pursuant to this authority, such license may be reinstated, if the superintendent determines, in his or her sole discretion, that the licensee has cured all deficiencies set forth in such order by the close of business 90 days after the date of such suspension order. Otherwise, unless the superintendent has, in his or her sole discretion, extended such suspension, the license of such mortgage loan originator shall be deemed to be automatically terminated by operation of law at the close of business on such 90th day.

(d) Notification of suspension or termination.

Whenever a license shall have been suspended or terminated in accordance with this section, the superintendent shall notify the MLO and the affected originating entity that the license has been suspended or terminated and that the MLO may not engage in mortgage loan originating in this State.

(e) Civil and criminal liability.

A suspension or termination of a license in accordance with this section shall not affect such MLO’s civil or criminal liability for acts committed prior to such suspension or termination or its obligations to the superintendent for assessments, fees or administrative actions with respect to the periods before such suspension or termination.

(f) Effect of suspension or termination.

No suspension or termination of an MLO license shall impair or affect the obligations under any preexisting lawful contract between any originating entity of such MLO and any person.

3 CRR-NY 420.9 Renewal of license {#sec-3-crr-ny-420.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.9}

(a) Annual expiration of license.

Each MLO license issued by the superintendent under the provisions of article 12-E of the Banking Law shall terminate annually on the annual expiration date, unless renewed.

(b) Submission of annual request for renewal.

An annual request for renewal of a license as an MLO shall be affirmed by the MLO and submitted electronically in such form and in such manner as may be prescribed by the superintendent. Instructions for annual renewal of a license shall be available on the department’s website (www.dfs.ny.gov).

A completed annual request for renewal shall be accompanied by an annual license fee, established by the superintendent, pursuant to article 12-E.

(d) Information and documents required.

The annual request for renewal shall include the information and documents referred to in Supervisory Procedure MB 107 of this Title as well as such additional information and documents as the superintendent deems necessary to determine whether the MLO continues to satisfy the standards set forth in section 599-e of the Banking Law.

3 CRR-NY 420.10 Surrender of license {#sec-3-crr-ny-420.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.10}

(a) Who may surrender.

With the prior approval of the superintendent, an MLO may surrender a MLO license by delivering to the superintendent written notice that he or she intends to surrender such license. A MLO license may be surrendered only by the licensed individual named on the license. An originating entity that employs an MLO or with which an MLO is affiliated may not surrender the license of such MLO.

(b) Form of surrender.

The instructions for surrender shall be posted on the department’s website (www.dfs.ny.gov).

Surrender of an MLO license shall not affect the civil or criminal liability of the MLO or the MLO’s originating entity for acts committed prior to such surrender or the obligations to the superintendent of the MLO or the MLO’s originating entity for assessments, fees or administrative actions with respect to the periods before such surrender.

(d) Effect of surrender.

No surrender of an MLO’s license shall impair or affect the obligation of any preexisting lawful contract between any originating entity of such MLO and any person.

3 CRR-NY 420.11 Pre-licensing education requirement {#sec-3-crr-ny-420.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.11}

(a) Condition to licenses.

Each MLO shall, as a condition of initial licensing under article 12-E:

(1) satisfactorily complete requirements as prescribed pursuant to section 599-f of article 12-E; and

(2) submit to the originating entity and the NMLS when directed by the superintendent proof of completion of the required number of hours of education courses.

(b) Required courses.

A person seeking a license under article 12-E shall complete at least 20 hours of pre-license education courses, including courses satisfying the following minimum requirements:

(1) three hours of Federal law and regulations;

(2) three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;

(3) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and

(4) three hours of training on applicable New York State law and regulations as may have been approved by the superintendent as pre-education courses.

(1) Inexperienced MLOs. An MLO with less than four years of experience as an MLO must take only pre-licensing education courses given in the following formats:

(i) a traditional live classroom setting;

(ii) fully interactive video or audio conferences, where there is an opportunity for students to ask questions; or

(iii) a format where the student cannot advance to the next course without demonstrating his or her comprehension of previous subjects.

(2) Experienced MLOs. In the case of an MLO with four or more years of experience as an MLO half of the required credit hours shall be in given in the following formats:

(i) a traditional live classroom setting;

(ii) fully interactive video or audio conferences, where there is an opportunity for students to ask questions; or

(iii) a format where the student cannot advance to the next course without demonstrating his or her comprehension of previous subjects. The remaining credit hours may be satisfied in any of the preceding formats or any of the following formats:

(a) online programs;

(b) webcasts;

(d) video conferencing;

(e) teleconferencing;

(f) computer based learning software; and

(g) live satellite broadcasts.

(d) Proof that MLO has completed pre-licensing education requirements.

No originating entity shall permit any MLO who is required to have completed pre-licensing education requirements pursuant to article 12-E of the Banking Law to engage in mortgage loan originating until it has received proof of completion of such requirements.

3 CRR-NY 420.12 Approved education providers and courses {#sec-3-crr-ny-420.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.12}

(a) Approved education courses.

For purposes of sections 420.11 and 420.14 of this Part and Banking Law sections 500-f and 599-j, pre-licensing education courses and continuing educational courses and the course provider thereof shall have been approved by the NMLS. Pre-licensing and annual educational courses approved by the NMLS for any state shall be accepted towards completion of the educational requirements of New York State, provided that such course, at a minimum, satisfies the requirements of section 420.11(b)(1), (2) and (3) of this Part for pre-licensing education courses, or section 420.14(b)(1), (2) and (3) of this Part for continuing educational courses.

(b) Variances and extensions.

Variances to, or extensions of, the pre-license or continuing education requirements prescribed pursuant to article 12-E of the Banking Law may be granted by the superintendent:

(1) for reasons of health certified by an appropriate health care professional;

(2) for extended active duty with the armed forces of the United States; or

(3) for other good cause deemed acceptable by the superintendent, in his or her sole discretion, which may prevent satisfactory or timely completion of such requirements.

The superintendent or his or her representative may audit at no cost each approved pre-license or continuing education course at anytime. If the superintendent finds that the course does not conform to the requirements of article 12-E and section 420.11 or 420.14 of this Part, the superintendent shall notify the NMLS of the deficiencies. If the course provider does not rectify such deficiencies in a timely fashion, the superintendent shall notify mortgage loan originators, via the department’s website, of the unacceptability of the particular course or courses for compliance with continuing education.

3 CRR-NY 420.13 Pre-license testing requirements {#sec-3-crr-ny-420.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.13}

(a) General requirements.

In order to meet the written test requirement referred to in article 12-E, an individual shall pass, in accordance with the standards established under section 599-g of the Banking Law, a qualified written test developed by the NMLS and administered by a test provider approved by the NMLS.

(b) Qualified test.

A written test shall not be treated as a qualified written test for purposes of subdivision one of this section unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including the following:

(1) ethics;

(2) Federal law and regulation pertaining to mortgage origination;

(3) New York State law and regulation pertaining to mortgage origination; and

(4) Federal and New York law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

Nothing in this section shall prohibit a test provider approved by the NMLS from providing a test at the location of the originating entity of the MLO or the location of any subsidiary or affiliate of such entity, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(d) Minimum competency.

The following conditions apply to individuals taking such competency tests:

(1) an individual shall not be considered to have passed a qualified written test unless the individual shall have achieved a test score of not less than 75 percent correct answers to questions;

(2) an individual may retake a test three consecutive times, with each consecutive taking occurring at least 30 days after the preceding test;

(3) after failing three consecutive tests, an individual shall wait at least six months before taking the test again; and

(4) a licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer, not taking into account any time during which such individual is a registered mortgage loan originator, shall retake the test.

3 CRR-NY 420.14 Continuing educational requirements {#sec-3-crr-ny-420.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.14}

(a) Required courses.

In order to meet the annual continuing education requirements referred to in article 12-E, a licensed mortgage loan originator shall:

(1) satisfactorily complete, beginning in the year after such individual is licensed, the educational requirements as prescribed pursuant to section 599-j of the Banking Law; and

(2) submit to the originating entity and the NMLS when directed by the superintendent proof of completion of the required number of hours of education courses by providing certificates of course completion in the form required by the superintendent.

(b) As a condition to renewing his or her license, an MLO interested shall on an annual basis complete at least 11 hours of continuing education courses, including courses satisfying the following minimum requirements:

(1) three hours of Federal law and regulations;

(2) two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;

(3) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and

(4) three hours of training on applicable New York State law and regulations as may have been approved by the superintendent as pre-education courses.

(1) Inexperienced MLOs. An MLO with less than four years of experience as an MLO must take all continuing education courses given in the following formats:

(i) a traditional live classroom setting;

(ii) fully interactive video or audio conferences, where there is an opportunity for students to ask questions; or

(iii) a format where the student cannot advance to the next course without demonstrating his or her comprehension of previous subjects.

(2) Experienced MLOs. In the case of an MLO with four or more years of experience as an MLO half of the required credit hours in continuing education courses shall be in given in the following formats:

(i) a traditional live classroom setting;

(ii) fully interactive video or audio conferences, where there is an opportunity for students to ask questions; or

(a) online programs;

(b) webcasts;

(d) video conferencing;

(e) teleconferencing;

(f) computer based learning software; and

(g) live satellite broadcasts.

(d) No repeat attendance.

No credit shall be earned for repeating any education course for which a student has already earned credit, even if the education course is in a different format or a subsequent time period. This restriction shall not apply to a course that has new content, such as updates to reflect changes in the law or regulations or new court interpretations, or where a course is geared to a more in-depth or advanced treatment of a subject.

(e) No course carryover.

Continuing education credit may only be earned in the year in which the course is taken. Pre-licensing education credit will not be counted towards continuing education credit.

(f) Instructor credits.

An MLO who is also approved as an instructor of an approved continuing education course may receive credit toward the continuing education requirement at the rate of two hours of credit for every one hour taught.

(g) Proof that MLO has completed continuing education requirements.

No originating entity shall permit any MLO who is required to have completed a continuing education requirement pursuant to section 599-j of the Banking Law to engage in mortgage loan originating after his or her annual expiration date unless it has received acceptable proof of completion of such requirements.

3 CRR-NY 420.15 Surety bonds {#sec-3-crr-ny-420.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.15}

(a) Each mortgage loan originator shall be covered by a surety bond in accordance with section 599-k of the Banking Law. The surety bond of an originating entity may be used to satisfy the mortgage loan originator’s surety bond requirement; provided that such surety bond contains coverage for each mortgage loan originator not otherwise covered by a qualifying surety bond in an amount prescribed in subdivision (b) of this section. The surety bond shall be in a form prescribed by the superintendent.

(b) The penal amount of the required surety bond shall be maintained in an amount that reflects the dollar amount of loans originated by the mortgage loan originator as determined by the following requirements:

| | | | --- | --- | | Required amount of bond | Aggregate $ amount of NY loans originated | | $10,000 | Less than $1,000,000 | | $15,000 | $1,000,000 to $7,499,999 | | $25,000 | $7,500,000 to $14,999,999 | | $50,000 | $15,000,000 to $29,999,999 | | $75,000 | $30,000,000 to $49,999,999 | | $100,000 | $50,000,000+ |

The amount of loans originated for this purpose shall be the volume of loans originated in the prior calendar year by the MLO. The MLO or originating entity shall provide proof of the existence of a bond in the requisite amount at the time of each annual renewal of an MLO’s license and such other times as requested by the superintendent. If an originating entity maintains a bond covering its MLOs, such bond shall be in an amount equal to the aggregate of the individual bonds required for all covered MLOs calculated as set forth above; provided, however, that any bond maintained by an originating entity to cover its MLOs is not required to be in excess of:

(1) $100,000 if the originating entity has less than 10 covered MLOs;

(2) $150,000 if the originating entity has 10 but no more than 15 covered MLOs;

(3) $250,000 if the originating entity has 16 but no more than 24 covered MLOs; and

(4) $500,000 if the originating entity has 25 or more covered MLOs.

Each originating entity obtaining a bond covering its MLOs also shall deliver to the department at such time a certification with respect to such bond in the form acceptable to the superintendent.

(c) The superintendent reserves the right to require the filing of a bond in a penal amount greater than set forth in subdivision (b) of this section if the nature or business of an MLO or originating entity requires in the reasonable judgment of the superintendent such additional protection for consumers.

(d) Immediately upon recovery on any claim or action on or under the bond, the mortgage loan originator or the originating entity as the case may be, shall file a new or supplemental bond restoring the face amount of the bond to the amount required by the superintendent.

3 CRR-NY 420.16 Reports; permissive challenges by licensees {#sec-3-crr-ny-420.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.16}

(a) Superintendent’s reports.

As provided for in section 599-l of the Banking Law, the superintendent is required to report to the NMLS at least annually all violations of article 12-E, as well as enforcement actions and other relevant information requested by the NMLS, subject to the provisions contained in the confidentiality provisions of section 599-q of the Banking Law.

(b) Permissible challenges.

MLOs may challenge in writing all information entered into the NMLS by the superintendent. The superintendent shall modify any such information if he or she in his or her sole discretion shall determine such information is incorrect.

Originating entities employing or having as independent contractors one or more MLOs shall, when required by the NMLS, submit such reports of condition as may be required by the NMLS.

(d) MLO reports.

Each MLO shall submit to the NMLS a report of condition in the format and within the time frame prescribed by the NMLS. An originating entity may file such report in aggregate form, if permitted by the NMLS, provided that such report contains information for all MLOs who originated loans for such entity during the reporting period.

3 CRR-NY 420.17 Calculation and collection of fees {#sec-3-crr-ny-420.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.17}

(a) Under section 599-d of the Banking Law, each applicant for an initial license as an MLO shall pay the fees set forth in paragraphs (1)-(4) of this subdivision and an applicant for a license renewal shall pay the fees set forth in paragraphs (4) and (5) of this subdivision, all as determined by the superintendent:

(1) an investigation fee determined in the reasonable estimate of the superintendent to be the actual cost to the department to investigate the applicant;

(2) an initial license fee as determined by the superintendent;

(3) the fingerprint processing fee charged by the State Division of Criminal Justice Services and established pursuant to article 35 of the Executive Law or such other fee or fees that may be imposed by any entity reviewing the fingerprint cards;

(4) a processing fee that may be charged and collected by the NMLS; and

(5) an annual licensing fee.

All fees, including fees payable to the department by an applicant or licensee, may be collected by the NMLS.

(b) The superintendent has established the following fees:

(1) an investigation fee equal to the superintendent’s reasonable estimate of the actual cost to the department to undertake the investigation of an applicant;

(2) an initial license fee based on the annual license fee set forth in paragraph (5) of this subdivision;

(3) the fingerprint processing fee charged by the State Division of Criminal Justice Services and established pursuant to article 35 of the Executive Law;

(4) any processing fee that may be charged and collected by the NMLS; and

(5) an annual license fee representing a pro rata share of the superintendent’s reasonable estimate of the cost to the department of administering this article.

(c) The schedule of fees in effect from time to time in accordance with article 12-E shall be posted on the department’s website (www.dfs.ny.gov).

3 CRR-NY 420.18 Duties of originating entity {#sec-3-crr-ny-420.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.18}

(a) Each originating entity shall:

(1) by the end of each calendar quarter submit to the superintendent in written or electronic form a report containing the following:

(i) the names and addresses of each MLO newly employed by, or affiliated as an independent contractor with, such originating entity during such quarter and the effective date of such employment or affiliation; and

(ii) each dismissal for cause of an MLO employed by, or affiliated as an independent contractor of, such originating entity during such quarter, which is due to or based upon an alleged violation of the Banking Law, this Part or any other violation of any applicable Federal or State law, rule or regulation and the effective date of such dismissal;

(2) determine that each individual who becomes employed by, or affiliated as an independent contractor of, such originating entity as an MLO has the character, fitness and education qualifications to warrant the belief that he or she will engage in mortgage loan originating honestly, fairly and efficiently. Each originating entity shall also obtain and maintain in its files such information about each such employee or affiliate upon which such determination was based;

(3) obtain documentation of the satisfactory completion of education courses, pursuant to sections 599-f and 599-j of the Banking Law, for each MLO employed by or affiliated with such originating entity, which documentation shall be:

(i) in a form acceptable to the superintendent;

(ii) retained by the originating entity for six years from the date of receipt of such documentation; and

(iii) provided to the department or the NMLS when directed by the superintendent;

(iv) ensure that any MLO employed by, or who is an independent contractor of, the originating entity has been duly licensed by the superintendent to engage in mortgage loan originating activities and that such license has not been terminated or suspended or revoked; and

(v) assign MLOs to locations licensed or registered by the superintendent, display the license for each MLO working at such location, and ensure that the unique identifier of each MLO performing mortgage loan origination services with respect to a mortgage application is recorded on such application.

(b) if an originating entity retains the original proof or record of completion of education courses by an MLO, the originating entity shall provide the original to the MLO, upon request, when the MLO terminates or has terminated his or her employment or affiliation with the originating entity.

3 CRR-NY 420.19 Duties of MLO {#sec-3-crr-ny-420.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.19}

(a) Except as may be permitted by the superintendent in writing, a MLO shall not be simultaneously employed or affiliated with more than one originating entity licensed, registered or exempt from licensing pursuant to the provisions of article 12-D of the Banking Law.

(b) Each MLO shall engage in mortgage loan originating activities in a manner such as to command the confidence of the community and to warrant belief that his or her activities are conducted honestly, fairly and free from deceptive practices.

(1) change of primary residence address;

(2) any felony conviction or pending felony charges; any charge of or conviction with respect to a misdemeanor involving financial services or a financial services related business; or any charge or conviction involving fraud, false statements or omissions, theft or wrongful taking of property, bribery, perjury; forgery; money laundering or extortion subsequent to initial licensure;

(3) termination of and/or resignation from employment with an originating entity;

(4) the initiation, settlement or resolution of any complaint, action or proceeding brought against him or her by a state or Federal governmental unit or self-regulatory organization in connection with a financial services-related activity or business or involving fraud, misrepresentation, consumer deception, larceny, money laundering or perjury; and

(5) the initiation, settlement or resolution of any other civil action or proceeding against him or her involving fraud, misrepresentation, larceny or perjury.

(d) Each MLO shall obtain course completion certificates evidencing satisfactory completion of the credit hour requirements for each annual renewal period and provide a copy thereof to his or her originating entity, or the NMLS when directed by the superintendent.

3 CRR-NY 420.20 Prohibited conduct {#sec-3-crr-ny-420.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.20}

(a) No MLO shall:

(1) engage in conduct prohibited under section 38.7 of this Title, as applicable;

(2) continue to engage in mortgage loan originating after receiving notice of the denial of his or her application for a license or notice of the revocation, suspension or termination of his or her license;

(3) misrepresent his or her license status, or persuade or induce a borrower to apply for a mortgage loan under the belief that such MLO is duly licensed as a mortgage banker or registered as a mortgage broker pursuant to article 12-D of the Banking Law or an entity exempt from the licensing provisions of article 12-D;

(4) publish, advertise or display his or her MLO license in any manner which implies that the MLO is licensed or registered with the New York State Department of Financial Services to engage in mortgage loan originating activities as a mortgage banker or mortgage broker pursuant to article 12-D of the Banking Law;

(5) conduct business with any entity or individual which he or she knows or should know is an unlicensed mortgage banker or unregistered mortgage broker not otherwise exempt from the licensing, registration and license requirements of articles 12-D and 12-E of the Banking Law;

(6) engage in any transaction, practice, or course of business that is not in good faith or does not constitute fair dealing as required by the character and fitness requirements of section 599-d of the Banking Law and sections 592 and 592-a of the Banking Law;

(7) download or remove borrowers’ or mortgage loan applicants’ loan files or other information from the premises or automated systems of an originating entity without permission of the originating entity;

(8) publish or advertise its MLO license or unique identifier in any manner which implies that such license or unique identifier can be shared or used by multiple individuals to engage in mortgage loan originating activities in this State;

(9) allow any individual or entity, regardless of whether such individual or entity is registered, or licensed pursuant to article 12-D or 12-E of the Banking Law, to utilize the MLO’s license or unique identifier to engage in mortgage loan originating activities; or

(10) except as may be approved in writing by the superintendent, simultaneously work for or be affiliated with more than one originating entity.

(b) No originating entity or exempt organization shall:

(1) permit any MLO who is subject to any education requirement pursuant to article 12-E of the Banking Law that is then required to have been completed to engage in mortgage loan originating until acceptable proof or record of completion has been obtained by such originating entity;

(2) permit any MLO subject to the provisions of this Part and article 12-E of the Banking Law to engage in mortgage loan originating activities when it knows or has reason to know that the MLO’s license has been terminated or has been suspended or revoked;

(3) pay compensation for mortgage loan originating activities to an individual who is then required to be licensed as an MLO but has not received such license, or, except as required by law or court order, pay the compensation of a MLO to a individual; other than the individual on the MLO license; or

(4) use the unique identifier of a licensed MLO to process or submit an application taken by any unlicensed individual.

3 CRR-NY 420.21 Administrative action and penalties {#sec-3-crr-ny-420.21 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.21}

(a) Revocation of License.

Pursuant to section 599-n of the Banking Law, the superintendent, in addition to the authority provided by subdivision (b) of this section, may revoke any license as a mortgage loan originator if he or she finds that:

(1) the licensee has violated any provisions of article 12-E or any rule or regulation prescribed by the superintendent under and within the authority of article 12-D or 12-E or of any other applicable law, rule or regulation of this State or the Federal government pertaining to mortgage banking, brokering or loan originating; or

(2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the superintendent to refuse to issue such initial license.

(b) Good cause suspension.

(1) The superintendent may, for good cause, or where there is a substantial risk of public harm, without notice or a hearing, issue an order suspending the license of any mortgage loan originator for a period not to exceed 90 days for investigation. "Good cause," as used in this subdivision, shall exist only when the mortgage loan originator has engaged or engages in dishonest or inequitable practices or practices which demonstrate incompetent mortgage loan originating, which practices may cause substantial harm to the persons afforded the protection of article 12-D or 12-E of the Banking Law, or the license of the mortgage loan originator was revoked in another state or jurisdiction participating in the NMLS.

(2) If the superintendent has issued an order suspending a license pursuant to this subdivision, such license maybe reinstated if the superintendent determines, in his or her sole discretion after investigation, that good cause therefor did not exist or no longer exists.

Except as provided in subdivision (b) of this section or section 420.8 of this Part, a license may be revoked or suspended only after notice and a hearing as provided in Supervisory Procedure G111 of this Title.

(d) Notification of suspension or revocation.

Whenever a license shall have been revoked or suspended in accordance with this section, the superintendent shall notify the MLO and the affected originating entity that the license has been revoked and that the MLO may not engage in the business of mortgage loan originating in this State.

(e) Restitution.

The superintendent may order a mortgage loan originator or any other person to pay restitution for violations of article 12-E or any rules of the superintendent promulgated hereunder.

(f) Civil and criminal liability.

A revocation of a license in accordance with this Part shall not affect the civil or criminal liability of an MLO or his or her originating entity for acts committed prior to such suspension or termination or its obligations to the superintendent for assessments, fees or administrative actions with respect to the periods before such suspension, revocation or termination.

(g) Fines.

Pursuant to section 44 of the Banking Law, the superintendent may impose a fine against an MLO for any violation of the Banking Law, any regulation promulgated thereunder, any final or temporary order issued pursuant to section 39 of the Banking Law, any condition imposed by the superintendent in connection with the grant of any application or request or any written agreement entered into with the superintendent.

(h) Grounds for disciplinary action.

An MLO may be subject to such disciplinary action as may be determined appropriate by the superintendent after notice and hearing, except as otherwise provided for in article 12-E, subject but not limited to the following grounds:

(1) fraud or bribery in securing a license;

(2) making false statements in an application for license, which false statements would have been grounds for rejection of the application;

(3) making of false statement on any form or document requested by the superintendent for examination or review pursuant to Banking Law and regulations promulgated thereunder;

(4) a pattern of conduct indicating incompetence or untrustworthiness;

(5) conviction of any crime which would have a bearing on the fitness or ability of an MLO to engage in mortgage loan originating activities; or

(6) failure to perform his or her duties and responsibilities in an honest, fair and reasonable manner.

(i) Administrative hearings.

Administrative hearings shall be conducted in accordance with Supervisory Procedure G111 of this Title.

(j) Examinations and investigations.

For the purpose of discovering violations of article 12-E or securing information lawfully required by him or her hereunder, the superintendent may at any time, and as often as he or she may determine, investigate the business and examine the books, accounts, records, and files of every licensee under article 12-E and any originating entity with which such individual is associated as an employee or independent contractor. For that purpose the superintendent shall have free access to the offices and places of business, books, accounts, papers, records, files, safes and vaults of all such entities. The superintendent shall have authority to require the attendance of and to examine under oath all persons whose testimony he or she may deem necessary or desirable relative to such business. The expenses incurred in making any examination pursuant to this section shall be assessed against and paid by the licensee so examined or his or her originating entity. Upon written notice by the superintendent of the total amount of such assessment, the licensee shall become liable for and shall pay such assessment to the superintendent.

3 CRR-NY 420.22 Effective date {#sec-3-crr-ny-420.22 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 420.22}

This Part will be effective immediately upon adoption.

Part 421 FINANCIAL AID AWARD INFORMATION SHEET

3 CRR-NY 421.1 Scope and application of this Part {#sec-3-crr-ny-421.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 421.1}

Section 9-w of the Banking Law authorizes the superintendent to adopt rules and regulations for the implementation of a standard financial aid award letter.

3 CRR-NY 421.2 Definitions {#sec-3-crr-ny-421.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 421.2}

(a) For purposes of this Part, unless otherwise stated herein, terms shall have the same meaning as set forth in section 601 of New York State Education Law.

(b) Financial Aid Award Information Sheet means standard financial aid award letter required by section 9-w of the Banking Law.

3 CRR-NY 421.3 Content and delivery of Financial Aid Award Information Sheet {#sec-3-crr-ny-421.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 421.3}

(a) In responding to an incoming or prospective undergraduate student’s financial aid application, a college, vocational institution or other institution that offers an approved program as defined in section 601 of the Education Law shall provide a Financial Aid Award Information Sheet. The Financial Aid Award Information Sheet shall be delivered in the same manner in which the school responds to a financial aid award application.

(b) The Financial Aid Award Information Sheet shall be in the form available at www.dfs.ny.gov/studentprotection. Colleges, vocational institutions or other institutions that offer an approved program as defined in section 601 of the Education Law may make reasonable changes to the language or design of the Financial Aid Award Information Sheet if necessary to more accurately reflect a student’s cost of education or financial aid award, provided that the information in the Financial Aid Award Information Sheet is of such size, color, and contrast and is so presented as to be readily noticed, read and understood by the recipient.

(c) For purposes of the Financial Aid Award Information Sheet, the term campus shall mean an institution affiliated with a single U.S. Department of Education Office of Postsecondary Education Identification code.

3 CRR-NY 421.4 [Repealed] {#sec-3-crr-ny-421.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 421.4}

Part 422 INSPECTING, SECURING AND MAINTAINING VACANT AND ABANDONED RESIDENTIAL REAL PROPERTY

3 CRR-NY 422.1 Preamble {#sec-3-crr-ny-422.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.1}

(a) As enacted by part Q of chapter 73 of the Laws of 2016, Real Property Actions and Proceedings Law (RPAPL) section 1308 requires certain holders of first lien mortgages to inspect, secure and maintain vacant and abandoned one to four family residential real property and section 1310 establishes a statewide vacant and abandoned property registry in the form of an electronic database to be maintained by the Department of Financial Services (the department).

(b) RPAPL sections 1308(12) and 1310(4) authorize the Superintendent of Financial Services (superintendent) to issue the rules and regulations necessary to implement RPAPL sections 1308 and 1310.

3 CRR-NY 422.2 Definitions {#sec-3-crr-ny-422.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.2}

As used in this Part:

(a) Mortgage means a lien upon residential real property as is commonly given to secure advances on, or the unpaid purchase price of, real property under the laws of this State, together with the credit instrument or instruments, if any, secured thereby.

(b) Mortgagee means the holder of a mortgage and/or note secured by residential real property, including, as applicable, the original lender under a mortgage, its successors and assigns, and the holders of credit instruments issued under a trust indenture, mortgage or deed of trust pursuant to which such holders act by and through a trustee therein named.

(d) Mortgage maintenance means the continued ownership of a mortgage and/or note by the person or entity that originated that mortgage.

(e) Mortgage origination means for compensation or gain, either directly or indirectly, advancing funds to an applicant for a mortgage loan or a mortgagor as a mortgage loan.

(f) Mortgage servicing means receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, subject to section 6-k of the Banking Law, title 3-A of article IX of the Real Property Tax Law or section 10 of 12 U.S.C. 2609. In the case of a reverse mortgage as referenced in section 6-h of the Banking Law, sections 280 and 280-a of the Real Property Law, servicing includes making payments to the borrower or having been delegated by the mortgagee as responsible for oversight and maintenance of the mortgage even though payments are no longer being made to the borrower. The term includes making or holding a mortgage loan if such activities directly or indirectly include holding the mortgage servicing rights or having been delegated servicing functions for the mortgage loan.

(g) Public official means a member of the New York State Legislature, a member of the elected governing body of a county, town, village or city, and in the City of New York, the city council, and the highest ranking elected executive official of a county, city, town or village.

(h) Residential real property means real property located in this State improved by any building or structure that is or may be used, in whole or in part, by not less than one nor more than four families.

(i) State or federally chartered bank, savings bank, savings and loan association, or credit union means one of the following:

(1) any corporation, organized under or subject to the provisions of article 3 of the New York Banking Law;

(2) any corporation organized under or subject to the provisions of article 11 of the New York Banking Law;

(3) any corporation organized under or subject to the provisions of article 6 of the New York Banking Law, including stock-form savings banks;

(4) any corporation organized under or subject to the provisions of article 10 of the New York Banking Law, including, but not limited to, stock-form savings and loan associations;

(5) a State-chartered branch and agency of a foreign bank subject to the provisions of article 5 of the New York Banking Law;

(6) any national banking association organized pursuant to the National Bank Act;

(7) any Federal savings association as such term is defined by the Federal Deposit Insurance Act, as amended (12 USC section 1813[b][2]);

(8) a Federal branch and agency of a foreign bank, as such terms are defined by the International Banking Act of 1978, as amended (12 USC section 3101); or

(9) a Federal credit union, as such term is defined by the Federal Credit Union Act, as amended (12 USC section 1752[1]).

(j) Servicer or mortgage loan servicer means an individual or entity engaged in mortgage servicing.

(k) Vacant and abandoned means residential real property as to which at least one of the following three conditions applies:

(1) at three consecutive inspections of such property by the mortgagee or its agent, with each inspection conducted 25 to 35 days apart and at different times of the day:

(i) no occupant was present and there was no evidence of occupancy on the property to indicate that any persons are residing there; and

(ii) the residential real property was not being maintained in a manner consistent with the standards set forth in New York Property Maintenance Code chapter 3, sections 301, 302 (excluding 302.2, 302.6, 302.8), 304.1, 304.3, 304.7, 304.10, 304.12, 304.13, 304.15, 304.16, 307.1 and 308.1; or

(2) a court or other appropriate State or local governmental entity has formally determined, following due notice to the borrower at the property address and any other known addresses, that such residential real property is vacant and abandoned; or

(3) each borrower and owner has separately issued a sworn written statement, expressing his or her intent to vacate and abandon the property and an inspection of the property shows no evidence of occupancy to indicate that any persons are residing there.

3 CRR-NY 422.3 Applicability and Exemption under RPAPL 1308 {#sec-3-crr-ny-422.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.3}

(a) Subject to the provisions of subdivisions (b), (c), and (d) of this section, the obligations imposed by RPAPL 1308 shall apply to every vacant and abandoned residential real property, irrespective of when the mortgage on the property was originated or became delinquent or when the property became vacant and abandoned.

(b)

(1) For each calendar year, the obligations imposed by RPAPL 1308 shall not apply during that calendar year to a mortgagee that is able to establish all of the following:

(i) it is a State or federally chartered bank, savings bank, savings and loan association, or credit union;

(ii) it engages in mortgage origination and mortgage ownership during the calendar year; and

(iii) it had less than three-tenths of one percent of the total loans in the state which the mortgagee either originated, owned, serviced, or maintained for the calendar year ending two years prior to the current calendar year.

(2) For purposes of subparagraph (iii) of this paragraph, whether a mortgagee had less than three-tenths of one percent of the total loans in the State during the calendar year ending two years prior to the current calendar year shall be calculated by dividing the number of mortgages issued in the State during that calendar year that the mortgagee originated, owned, serviced and/or maintained by the total number of residential real property mortgages originated in the State during the calendar year ending two years prior to the current calendar year.

(3) The “total number of residential real property mortgages originated in the State during the calendar year ending two years prior to the current calendar year” shall be determined by the superintendent, based on available data, and shall be published by the superintendent by November 15th of each year.

(c)

(1) The obligations imposed by RPAPL 1308 shall not apply to residential real property when the mortgage became delinquent before December 20, 2016, the effective date of RPAPL 1308, if a mortgagee is able to establish all of the following:

(i) it is a State or federally chartered bank, savings bank, savings and loan association, or credit union;

(ii) it engages in mortgage origination and mortgage ownership during the calendar year; and

(iii) it had between three-tenths of one percent and five tenths of one percent of the total loans in the state which the mortgagee either originated, owned, serviced, or maintained for the calendar year ending two years prior to the current calendar year.

(2) For purposes of subparagraph (1)(iii) of this subdivision, whether a mortgagee had between three-tenths of one percent and five-tenths of one percent of the total loans in the State during the calendar year ending two years prior to the current calendar year shall be calculated by dividing the number of mortgages issued in the State during that calendar year that the mortgagee originated, owned, serviced and/or maintained by the total number of residential real property mortgages originated in the State during the calendar year ending two years prior to the current calendar year.

(d) If, after being subject to the obligations imposed by RPAPL 1308, a mortgagee becomes exempt pursuant to subdivision (b) or (c) of this section, then the obligations imposed by 1308 shall continue to apply to all residential real property that became vacant and abandoned before the mortgagee became exempt and for which the mortgagee continues to own the mortgage, and, if applicable, to residential real property that becomes vacant and abandoned after the mortgagee ceases to be exempt.

(e) The burden of proving an exemption pursuant to this subdivision is upon the mortgagee claiming it. In order to establish an exemption from the requirements of RPAPL 1308, a mortgagee must submit to the superintendent by February 28, 2017 for the 2017 calendar year and for each calendar year thereafter, by December 31st of the year preceding the calendar year in which the exemption is being sought, on the form required by the superintendent, a statement providing the basis for which the mortgagee satisfies all three requirements of the relevant subsection. The statement shall also identify all real property that, by application of subdivision (d) of this section, will remain subject to the requirements in RPAPL 1308. If a mortgagee fails to timely provide the statement required by this subdivision, the mortgagee shall not satisfy the provisions of subdivision (b) or (c) of this section for that calendar year.

(f)

(1) Subject to paragraph (2) of this subdivision, for all mortgages that are 90 days or more delinquent on December 20, 2016, the initial inspection required by RPAPL 1308(1) must be made on or before February 1, 2017.

(2) For any residential real property that satisfies the definition of vacant and abandoned in RPAPL 1309 as of December 20, 2016, the requirements in RPAPL 1308(3) must be satisfied by February 1, 2017.

(g) Pursuant to RPAPL 1308(11), State or federally chartered banks, savings banks, savings and loan associations and credit unions that qualify for the exemption under subdivision (b) of this section, and that are parties to the department’s Industry Best Practices: Inspecting, Securing and Maintaining Vacant and Abandoned Properties in New York, issued in May 2015, shall continue to be subject to that agreement for so long as the terms and conditions of the agreement remain in effect.

3 CRR-NY 422.4 Vacant and abandoned property reporting {#sec-3-crr-ny-422.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.4}

(a) Within 21 business days of when a mortgagee or mortgage loan servicer of a property learns, or should have learned, that a property is vacant and abandoned, the mortgagee or mortgage loan servicer shall submit or cause to be submitted on the form prescribed by the department the following information:

(1) the address of the subject property;

(2) the current name, address and contact information for the lender, assignee or mortgage loan servicer responsible for maintaining the subject property;

(3) whether a foreclosure proceeding has been commenced as to the subject property, and, if so, the date the proceeding was commenced and the status of the proceeding;

(4) the name, last known address and contact information for the mortgagor(s) of record; and

(5) any additional information requested by the superintendent.

(b) A mortgagee or mortgage loan servicer of property learns, or should have learned, that a property is vacant and abandoned when the mortgagee or mortgage loan servicer knew or should have known one or more of the following:

(1) that three inspections of the subject residential real property conducted 25 to 35 days apart and at different times of the day indicated, or would have indicated, that:

(i) no occupant was present and there was no evidence of occupancy on the property to indicate that any persons were residing there; and

(ii) the residential real property was not being maintained in a manner consistent with the standards set forth in New York Property Maintenance Code chapter 3 sections 301, 302 (excluding 302.2, 302.6, 302.8), 304.1, 304.3, 304.7, 304.10, 304.12, 304.13, 304.15, 304.16, 307.1 and 308.1;

(2) that a court or other appropriate State or local governmental entity has formally determined, following due notice to the borrower at the property address and any other known addresses, that such residential real property is vacant and abandoned; or

(3) that each borrower and owner has separately issued a sworn written statement, expressing his or her intent to vacate and abandon the property and an inspection of the property shows no evidence of occupancy to indicate that any persons are residing there.

(c) A mortgagee is required to exercise due diligence to learn of the matters set forth in subdivision (b) of this section. Due diligence includes but is not limited to ensuring that all timelines and requirements set forth in the law and regulation are adhered to and exercising oversight of third parties hired to inspect and investigate.

(d) The information provided to the department pursuant to this section will be included in the statewide vacant and abandoned property registry established by RPAPL section 1310(1).

(e) At the time of a filing with the department pursuant to RPAPL 1306, the mortgagee or its agent shall state whether the relevant real property has been inspected and whether the mortgagee or any agent of the mortgagee has any reason to believe that the property is vacant and abandoned and the basis for that belief. The superintendent may prescribe the form for the submission of such information. All mortgagees subject to this requirement shall provide the quarterly reporting set forth in section 422.5 of this Part.

(f) For all residential real property previously reported to the department as vacant and abandoned, the mortgagee shall provide the information required by this section by February 1, 2017.

3 CRR-NY 422.5 Quarterly reporting {#sec-3-crr-ny-422.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.5}

(a) Every mortgagee that is not exempt from the obligations imposed by RPAPL 1308 shall file with the superintendent, on a form that may be prescribed by the superintendent, a quarterly report containing the following information:

(1) identification of all loans secured by a mortgage on residential real property held by the mortgagee where the borrower has been delinquent for 90 or more days;

(2) for each loan identified pursuant to paragraph (1) of this subdivision:

(i) the address of the subject property.

(ii) the date on which each inspection of the subject property to determine occupancy was conducted as required by RPAPL 1308(1);

(iii) the date on which a determination was made that the subject property was vacant and abandoned;

(iv) the date on which the notice required by RPAPL 1308(3) was posted on the subject property;

(v) identification of all actions to secure and maintain the subject property that have been taken, the date each action was taken, and the nature of each action;

(vi) whether a foreclosure proceeding has been commenced as to the subject property, and if so, the date the proceeding was commenced and the status of the proceeding;

(3) any additional information requested by the superintendent.

(b) The quarterly report shall be filed within 30 days of the end of the calendar quarter to which the report pertains, except that no quarterly report needs to be filed for the calendar quarter ending December 31, 2016.

(c) Every mortgagee that is not exempt from the obligations imposed by RPAPL 1308 shall maintain for production and inspection all books and records documenting all actions to secure and maintain the subject property that have been taken, the date each action was taken, the nature of each action, the identity and employer of the person who performed each action, and all other information necessary to evidence compliance with the statute.

3 CRR-NY 422.6 Applicability of RPAPL 1310 reporting requirements {#sec-3-crr-ny-422.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.6}

(a) The obligations imposed by RPAPL 1310 shall apply to both the mortgagee and the mortgage loan servicer of every vacant and abandoned residential real property located in the State, provided that only one filing shall in every case be required for each property.

3 CRR-NY 422.7 Federal law and Federal guidelines {#sec-3-crr-ny-422.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.7}

(a) Where a specific provision of RPAPL 1308 is directly inconsistent with a Federal law or court order, the inconsistent provision of RPAPL 1308 shall not be applied to the mortgagee. Instead, the mortgagee’s compliance with RPAPL 1308 shall be evaluated by reference to the applicable Federal law or court order.

(b) Where a specific provision of RPAPL 1308 imposes an obligation on a mortgagee that is greater than what is imposed by a provision in a Federal law or court order, the specific provision of RPAPL 1308 shall not be deemed to be directly inconsistent with the Federal law or court order.

(c) Where a specific provision of RPAPL 1308 imposes an obligation on a mortgagee and there is no similar provision in a Federal law or court order, the specific provision of RPAPL 1308 shall not be deemed to be directly inconsistent with the Federal law or court order

(d) Where the Federal National Mortgage Association requires that the servicing of a specific mortgage comply with the investor or insurer guidelines issued by Federal National Mortgage Association, compliance with the property preservation requirements included in such guidelines as they exist on December 20, 2016, shall be deemed to be in compliance with section 1308. If the property preservation requirements included in the investor or insurer guidelines issued by Federal National Mortgage Association change after December 20, 2016, compliance with such future property preservation requirements shall be deemed to be in compliance with section 1308 only if the future property preservation requirements impose the same or greater property preservation requirements as compared to the requirements included in guidelines in effect on December 20, 2016.

(e) Where the Federal Home Loan Mortgage Corporation requires that the servicing of a specific mortgage comply with the investor or insurer guidelines issued by Federal Home Loan Mortgage Corporation, compliance with the property preservation requirements included in such guidelines as they exist on December 20, 2016, shall be deemed to be in compliance with section 1308. If the property preservation requirements included in the investor or insurer guidelines issued by Federal Home Loan Mortgage Corporation change after December 20, 2016, compliance with such future property preservation requirements shall be deemed to be in compliance with section 1308 only if the future property preservation requirements impose the same or greater property preservation requirements as compared to the requirements included in guidelines in effect on December 20, 2016.

3 CRR-NY 422.8 Disclosure of information maintained in the statewide vacant and abandoned property registry {#sec-3-crr-ny-422.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.8}

(a) The information maintained in the statewide vacant and abandoned property registry shall be deemed and treated as confidential and shall therefore be exempt from disclosure pursuant to New York’s Freedom of Information Law, Public Officer Law, article 6.

(b) The superintendent may, in his or her sole discretion, release any information in the statewide vacant and abandoned property registry if the superintendent determines that such disclosure is in the best interest of the public.

(c) Upon written request in the form prescribed by the department, the superintendent shall release to a public official, as defined in this Part, the information maintained in the statewide vacant and abandoned property registry that is specific to the geographic scope of the public official’s district or political subdivision. The superintendent may require, in addition to any agreements or certifications required by subdivision (d) of this section, that a public official certify, as a condition to receiving information maintained in the statewide vacant and abandoned property registry, that the release of the requested information furthers the purposes of section 1307, section 1310, or article 18 of the RPAPL, or any other law, code, rule, regulation or ordinance that the superintendent determines to be related to section 1307, section 1310, or article 18 of the RPAPL.

(d) The superintendent may require any party receiving information maintained in the statewide vacant and abandoned registry pursuant to this section to execute, as a condition of receiving the information, a confidentiality agreement and/or periodic certifications affirming that the confidentiality of the information has been maintained.

3 CRR-NY 422.9 Enforcement {#sec-3-crr-ny-422.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.9}

RPAPL 1308 and 1310 and the rules in this Part will be enforced as provided under RPAPL section 1308(8), the Financial Services Law and the Banking Law.

3 CRR-NY 422.10 Effective date {#sec-3-crr-ny-422.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 422.10}

This Part shall be effective on December 20, 2016.

Subchapter C GENERAL REGULATIONS—BANKING AND NON-BANKING ORGANIZATIONS

Part 500 INVESTIGATION AND DOCUMENT FEES; BANKING AND NON- BANKING ORGANIZATIONS

3 CRR-NY 500.1 Fees; authority of the superintendent {#sec-3-crr-ny-500.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 500.1}

(a) Pursuant to section 18 of the Banking Law, the superintendent may establish by regulation the charges for copies of any paper filed in the Banking department and for any certification thereof. The charge for such copies shall be as specified in section 1.2 of Supervisory Policy G 1 of this Title.

(b) section 18-a of the Banking Law sets forth the fees to be charged for various applications by banking or non-banking organizations as required by the Banking Law. Subdivision six of such section grants discretion to the superintendent to waive or reduce the amount of any such fee, either on a case-by-case basis or generally, pursuant to regulations, with respect to a type of application if the superintendent determines one or more conditions, as specified by such subdivision six, are met. The application fees charged by the Banking department are set forth in section 1.2 of Supervisory Policy G 1 of this Title. Insofar as the fee specified in that section for a particular type of application is less than that set forth in section 18-a of the Banking Law, the superintendent has reduced or waived such fee.

Part 501 BANKING DIVISION ASSESSMENTS

3 CRR-NY 501.1 Background {#sec-3-crr-ny-501.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.1}

Pursuant to the Financial Services Law ("FSL"), the New York State Banking Department ("Banking Department") and the New York State Insurance Department were consolidated on October 3, 2011 into the Department of Financial Services ("department"). Prior to the consolidation, assessments of institutions subject to the Banking Law ("BL") were governed by section 17 of the BL. Effective October 3, 2011, assessments are governed by section 206 of the FSL, provided that section 17 of the BL continues to apply to assessments for the fiscal year commencing on April 1, 2011. Both section 17 of the BL and section 206 of the FSL provide that all expenses (including, but not limited to, compensation, lease costs and other overhead costs) of the department attributable to institutions subject to the BL are to be charged to, and paid by, such regulated institutions. These institutions ("regulated entities") are now regulated by the banking division of the department. Under both section 17 of the BL and section 206 of the FSL, the superintendent is authorized to assess regulated entities for its total costs in such proportions as the superintendent shall deem just and reasonable. The Banking Department has historically funded itself entirely from industry assessments of regulated entities. These assessments have covered all direct and indirect expenses of the Banking Department, which are activities that relate to the conduct of banking business and the regulatory concerns of the department, including all salary expenses, fringe benefits, rental and other office expenses and all miscellaneous and overhead costs such as human resource operations, legal and technology costs. This regulation sets forth the basis for allocating such expenses among regulated entities and the process for making such assessments.

3 CRR-NY 501.2 Definitions {#sec-3-crr-ny-501.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.2}

The following definitions apply in this Part:

(a) Total operating cost means for the fiscal year beginning on April 1, 2011, the total direct and indirect costs of operating the banking division. For fiscal years beginning on April 1, 2012, total operating cost means:

(1) the sum of the total direct and indirect costs and expenses of operating the maintaining the department that are solely attributable to regulated persons under the Banking Law; and

(2) the proportion deemed just and reasonable by the superintendent of the other expenses of the department which under section 206(a) of the Financial Services Law may be assessed against persons regulated under the Banking Law and other persons regulated by the department.

(b) Industry group means the grouping to which a business entity regulated by the banking division is assigned. There are three industry groups in the banking division:

(1) the depository institutions group, which consists of all banking organizations and foreign banking corporations licensed by the department to maintain a branch, agency or representative office in this State;

(2) the mortgage-related entities group, which consists of all mortgage brokers, mortgage bankers and mortgage loan servicers; and

(3) the licensed financial services providers group, which consists of all check cashers, budget planners, licensed lenders, sales finance companies, premium finance companies and money transmitters.

(c) Industry group operating cost means the amount of the total operating cost to be assessed to a particular industry group. The amount is derived from the percentage of the total expenses for salaries and fringe benefits for the examining, specialist and related personnel represented by such costs for the particular industry group.

(d) Industry group supervisory component means the total of the supervisory components for all institutions in that industry group.

(e) Supervisory component for an individual institution means the product of the average number of hours attributed to supervisory oversight by examiners and specialists of all institutions of a similar size and type, as determined by the superintendent, in the applicable industry group, or the applicable sub-group, and the average hourly cost of the examiners and specialists assigned to the applicable industry group or sub-group.

(f) Industry group regulatory component means the industry group operating cost for that group minus the industry group supervisory component and certain miscellaneous fees such as application fees.

(g) Industry financial basis means the measurement tool used to distribute the industry group regulatory component among individual institutions in an industry group. The industry financial basis used for each industry group is as follows:

(1) for the depository institutions group: total assets of all institutions in the group;

(2) for the mortgage-related entities group: total gross revenues from New York State operations, including servicing and secondary market revenues, for all institutions in the group; and

(3) for the licensed financial services providers group:

(i) for budget planners, the number of New York customers;

(ii) for licensed lenders, the dollar amount of New York assets;

(iii) for check cashers, the dollar amount of checks cashed in New York;

(iv) for money transmitters, the dollar value of all New York transactions;

(v) for premium finance companies, the dollar value of loans originated in New York; and

(vi) for sales finance companies, the dollar value of credit extensions in New York.

(h) Financial basis for an individual institution is that institution's portion of the measurement tool used in subdivision (g) of this section to develop the industry financial basis. (For example, in the case of the depository institutions group, an entity's financial basis would be its total assets.)

(i) Industry group regulatory rate means the result of dividing the industry group regulatory component by the industry financial basis.

(j) Regulatory component for an individual institution is the product of the financial basis for the individual institution multiplied by the industry group regulatory rate for that institution.

3 CRR-NY 501.3 Billing and assessment process {#sec-3-crr-ny-501.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.3}

The New York State fiscal year begins April 1st and ends March 31st of the following calendar year. Each institution subject to assessment pursuant to this Part is billed five times for a fiscal year: four quarterly assessments (each approximately 25 percent of the anticipated annual amount) based on the banking division's estimated annual budget at the time of the billing, and a final assessment (or "true-up"), based on the banking division's actual expenses for the fiscal year. Any institution that is a regulated entity for any part of a quarter shall be assessed for the full quarter.

3 CRR-NY 501.4 Computation of assessment {#sec-3-crr-ny-501.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.4}

The total annual assessment for an institution shall be the sum of its supervisory component and its regulatory component.

3 CRR-NY 501.5 Penalties/enforcement actions {#sec-3-crr-ny-501.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.5}

All regulated entities shall be subject to all applicable penalties, including late fees and interest, provided for by the BL, the FSL, the State Finance Law or other applicable laws. Enforcement actions for nonpayment could include suspension, revocation, termination or other actions.

3 CRR-NY 501.6 Effective date {#sec-3-crr-ny-501.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 501.6}

This Part shall be effective immediately. It shall apply to all State fiscal years beginning with the fiscal year starting on April 1, 2011.

Part 504 BANKING DIVISION TRANSACTION MONITORING AND FILTERING PROGRAM REQUIREMENTS AND CERTIFICATIONS

3 CRR-NY 504.1 Background {#sec-3-crr-ny-504.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.1}

The Department of Financial Services (the department) has been involved in investigations into compliance by regulated institutions, as defined below, with applicable Bank Secrecy Act/Anti-Money Laundering laws and regulations1 (BSA/AML) and Office of Foreign Assets Control of the Treasury Department (OFAC)2 requirements implementing Federal economic and trade sanctions.3 As a result of these investigations, the department identified shortcomings in the transaction monitoring and filtering programs of these institutions attributable to a lack of robust governance, oversight, and accountability at senior levels. Based on not only this experience, but also its regular examinations for safety and soundness, along with other factors, the department has reason to believe that financial institutions have shortcomings in their transaction monitoring and filtering programs. As a result, the department has determined to clarify the required attributes of a Transaction Monitoring and Filtering Program and to require that the board of directors or senior officer(s), as applicable, of each regulated institution submit to the superintendent annually a board resolution or compliance finding, as defined in this Part, confirming the steps taken to ascertain compliance by the regulated institution with this Part. This regulation implements these requirements.

3 CRR-NY 504.2 Definitions {#sec-3-crr-ny-504.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.2}

The following definitions apply in this Part:

(a) Annual board resolution or senior officer compliance finding means a board resolution or senior officer(s) finding in the form set forth in section 504.7 of this Title.

(b) Bank regulated institutions means all banks, trust companies, private bankers, savings banks, and savings and loan associations chartered pursuant to the New York Banking Law (the Banking Law) and all branches and agencies of foreign banking corporations licensed pursuant to the Banking Law to conduct banking operations in New York.

(c) Board of directors means the governing board of every regulated institution or the functional equivalent if the regulated institution does not have a board of directors.

(d) Nonbank regulated institutions shall mean all check cashers and money transmitters licensed pursuant to the Banking Law.

(e) Regulated institutions means all bank regulated institutions and all nonbank regulated institutions.

(f) Risk assessment means an on-going comprehensive risk assessment, including an enterprise wide BSA/AML risk assessment, that takes into account the institution’s size, staffing, governance, businesses, services, products, operations, customers, counterparties, other relations and their locations, as well as the geographies and locations of its operations and business relations.

(g) Senior officer(s) shall mean the senior individual or individuals responsible for the management, operations, compliance and/or risk of a regulated institution including a branch or agency of a foreign banking organization subject to this Part.

(h) Suspicious activity reporting means a report required pursuant to 31 U.S.C. section 5311 et seq. that identifies suspicious or potentially suspicious or illegal activities.

(i) Transaction Monitoring Program means a program that includes the attributes specified in section 504.3(a), (c) and (d) of this Part.

(j) Filtering Program means a program that includes the attributes specified in section 504.3(b), (c) and (d) of this Part.

(k) Transaction Monitoring and Filtering Program means a Transaction Monitoring Program, and a Filtering Program, collectively.

3 CRR-NY 504.3 Transaction Monitoring and Filtering Program requirements {#sec-3-crr-ny-504.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.3}

(a) Each regulated institution shall maintain a Transaction Monitoring Program reasonably designed for the purpose of monitoring transactions after their execution for potential BSA/AML violations and suspicious activity reporting, which system may be manual or automated, and which shall include the following attributes, to the extent they are applicable:

(1) be based on the risk assessment of the institution;

(2) be reviewed and periodically updated at risk-based intervals to take into account and reflect changes to applicable BSA/AML laws, regulations and regulatory warnings, as well as any other information determined by the institution to be relevant from the institution’s related programs and initiatives;

(3) appropriately match BSA/AML risks to the institution’s businesses, products, services, and customers/counterparties;

(4) BSA/AML detection scenarios with threshold values and amounts designed to detect potential money laundering or other suspicious or illegal activities;

(5) end-to-end, pre-and post-implementation testing of the Transaction Monitoring Program, including, as relevant, a review of governance, data mapping, transaction coding, detection scenario logic, model validation, data input and program output;

(6) documentation that articulates the institution’s current detection scenarios and the underlying assumptions, parameters, and thresholds;

(7) protocols setting forth how alerts generated by the Transaction Monitoring Program will be investigated, the process for deciding which alerts will result in a filing or other action, the operating areas and individuals responsible for making such a decision, and how the investigative and decision-making process will be documented; and

(8) be subject to an on-going analysis to assess the continued relevancy of the detection scenarios, the underlying rules, threshold values, parameters, and assumptions.

(b) Each regulated institution shall maintain a Filtering Program, which may be manual or automated, reasonably designed for the purpose of interdicting transactions that are prohibited by OFAC, and which shall include the following attributes, to the extent applicable:

(1) be based on the risk assessment of the institution;

(2) be based on technology, processes or tools for matching names and accounts4, in each case based on the institution’s particular risks, transaction and product profiles;

(3) end-to-end, pre- and post-implementation testing of the Filtering Program, including, as relevant, a review of data matching, an evaluation of whether the OFAC sanctions list and threshold settings map to the risks of the institution, the logic of matching technology or tools, model validation, and data input and program output;

(4) be subject to on-going analysis to assess the logic and performance of the technology or tools for matching names and accounts, as well as the OFAC sanctions list and the threshold settings to see if they continue to map to the risks of the institution; and

(5) documentation that articulates the intent and design of the Filtering Program tools, processes or technology.

(1) identification of all data sources that contain relevant data;

(2) validation of the integrity, accuracy and quality of data to ensure that accurate and complete data flows through the Transaction Monitoring and Filtering Program;

(3) data extraction and loading processes to ensure a complete and accurate transfer of data from its source to automated monitoring and filtering systems, if automated systems are used;

(4) governance and management oversight, including policies and procedures governing changes to the Transaction Monitoring and Filtering Program to ensure that changes are defined, managed, controlled, reported, and audited;

(5) vendor selection process if a third party vendor is used to acquire, install, implement, or test the Transaction Monitoring and Filtering Program or any aspect of it;

(6) funding to design, implement and maintain a Transaction Monitoring and Filtering Program that complies with the requirements of this Part;

(7) qualified personnel or outside consultant(s) responsible for the design, planning, implementation, operation, testing, validation, and on-going analysis of the Transaction Monitoring and Filtering Program, including automated systems if applicable, as well as case management, review and decision making with respect to generated alerts and potential filings; and

(8) periodic training of all stakeholders with respect to the Transaction Monitoring and Filtering Program.

(d) To the extent a regulated institution has identified areas, systems, or processes that require material improvement, updating or redesign, the regulated institution shall document the identification and the remedial efforts planned and underway to address such areas, systems or processes. Such documentation must be available for inspection by the superintendent.

3 CRR-NY 504.4 Annual board resolution or senior officer(s) compliance finding {#sec-3-crr-ny-504.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.4}

To ensure compliance with the requirements of this Part, each regulated institution shall adopt and submit to the superintendent a board resolution or senior officer(s) compliance finding in the form set forth in section 504.7 of this Part by April 15th of each year. Each regulated institution shall maintain for examination by the department all records, schedules and data supporting adoption of the board resolution or senior officer(s) compliance finding for a period of five years.

3 CRR-NY 504.5 Penalties/enforcement actions {#sec-3-crr-ny-504.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.5}

This regulation will be enforced pursuant to, and is not intended to limit, the superintendent’s authority under any applicable laws.

3 CRR-NY 504.6 Effective date {#sec-3-crr-ny-504.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.6}

This Part shall be effective January 1, 2017. Regulated Institutions will be required to prepare and submit to the superintendent annual board resolutions or senior officer(s) compliance findings under section 504.4 of this Part commencing April 15, 2018.

3 CRR-NY 504.7 Attachment A {#sec-3-crr-ny-504.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY 504.7}

(Regulated Institution Name)

APRIL 15, 20___

Annual Board Resolution or Senior Officer(s) Compliance Finding For Bank Secrecy Act/Anti-Money Laundering and Office of Foreign Asset Control Transaction Monitoring and Filtering Program

Whereas, in compliance with the requirements of the New York State Department of Financial Services (the department) that each Regulated Institution maintain Transaction Monitoring and Filtering Program in compliance with section 504.3 of this Part; and

Whereas, section 504.4 of this Part requires that the board of directors or a senior officer(s), as appropriate, adopt and submit to the superintendent a board resolution or senior officer compliance finding confirming its or such individual’s findings that the regulated institution is in compliance with section 504.3 of this Part;

NOW, THEREFORE, the board of directors or senior officer certifies:

(1) The board of directors (or name of senior officer[s]) has reviewed documents, reports, certifications and opinions of such officers, employees, representatives, outside vendors and other individuals or entities as necessary to adopt this board resolution or senior officer compliance finding;

(2) The board of directors or senior officer(s) has taken all steps necessary to confirm that (name of regulated institution) has a Transaction Monitoring and Filtering Program that complies with the provisions of section 504.3 of this Part; and

(3) To the best of the (board of directors) or (name of senior officer[s]) knowledge, the Transaction Monitoring and the Filtering Program of (name of regulated institution) as of ______ (date of the board resolution or senior officer(s) compliance finding) for the year ended ___ (year for which board resolution or compliance finding is provided) complies with section 504.3 of this Part.

Signed by each member of the board of directors or senior officer(s)(Name)__________ Date:

LEGAL INTERPRETATIONS LEGAL INTERPRETATIONS

LEGAL INTERPRETATIONS LI 1. BANKS AND TRUST COMPANIES LEGAL INTERPRETATIONS LI 1. BANKS AND TRUST COMPANIES

3 CRR-NY Legal Interpret. LI 1.1 Acceptance of warrants to purchase stock of corporate borrowers {#sec-3-crr-ny-legal-interpret.-li-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.1}

A State bank requested confirmation that a proposed loan transaction in which X, a New York business corporation, would issue warrants to purchase its common stock to several banks for exercise over a five year period would not violate any regulation or policy of the New York State Banking Department. The bank stated that it would not exercise the warrants issued to it in the transaction but that it intended to retain the warrants for its own account. Its letter included the following discussion of New York law:

“Regarding the applicable provisions of the Banking Law, it is submitted that the power to acquire warrants by a New York banking corporation in the manner contemplated derives from Section 96-1, the general banking powers clause, as an ‘incidental power * * * necessary to carry on the business of banking.’ Acquisition of the warrants is not prohibited by Section 97 relating to acquisitions by banks of stock of any corporation, because warrants are not ‘stock’. The bank will not exercise such warrants, and will thus never own stock in [X].

“Finally, the provisions of Section 108 of the Banking Law and Section 190.4 of the Penal Law regarding interest rates do not prohibit the proposed transaction. The warrants are in the nature of prepaid ‘interest’ as a ‘charge * * * incidental to * * * making any such loan,’ but their present value, together with the annual interest on the notes of ½% over the prime rate, will be substantially below the 25% usury ceiling applicable to corporate borrowers.”

The bank was advised that the transaction as outlined did not violate any present regulation or policy of the department. The bank was further advised that the department agreed with its view of the applicable provisions of the New York Banking Law.

The department stated its intention, however, to examine carefully all significant credits involving the issuance of warrants to purchase the common stock of a borrower, because equity arrangements of this kind are frequently made with prospective borrowers of less than adequate credit standing. In this regard, the department noted with satisfaction the bank's express statement that the credit-worthiness of the borrower in the proposed transaction and its ability to repay the principal amount of the loan had been determined “without reference to any value of the warrants” to be issued.

DATED: November 13, 1969

3 CRR-NY Legal Interpret. LI 1.2 Offer of free personal checking account to persons who maintain minimum savings deposits {#sec-3-crr-ny-legal-interpret.-li-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.2}

A State bank inquired whether the following offer would violate Banking Board General Regulation Part 20, which limits the interest rate which a bank may pay.

The bank would offer a free personal checking account to any person who either purchases a $1000 certificate of deposit or maintains a minimum balance of $1000 in a savings account with the bank. Interest would be paid on the certificates of deposit and on the savings accounts at the highest rate permitted by law.

The department observed that absorption by a bank of all or part of its cost in servicing a checking account of its depositor has not been deemed the payment of interest thereon in violation of the regulation which prohibits the payment of interest on demand deposit accounts.

Applying the foregoing principle, the department concluded that the bank's cost of the free personal checking account would not be regarded as interest within the meaning of Part 20 of the General Regulations and that the offer, therefore, did not violate the regulations.

DATED: March 25, 1970

3 CRR-NY Legal Interpret. LI 1.3 Trust company acting as agent of Department of Motor Vehicles {#sec-3-crr-ny-legal-interpret.-li-1.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.3}

The department was asked whether it would be permissible, under the New York State Banking Law, for a trust company to act as agent of the Department of Motor Vehicles for the purpose of issuing vehicle registration renewals.

The department responded that, in its opinion, under section 100-1 of the Banking Law it would be permissible for trust companies to engage in such activities.

DATED: January 31, 1969

3 CRR-NY Legal Interpret. LI 1.4 Investments in the National Corporation for Housing Partnerships and the National Housing Partnership {#sec-3-crr-ny-legal-interpret.-li-1.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.4}

A State bank inquired whether it would be permitted to invest in:

(a) the common stock of the National Corporation for Housing Partnerships (the corporation) and (b) a limited partnership interest in the National Housing Partnership (the partnership)—both the corporation and the partnership to be formed pursuant to the Federal “Housing and Urban Development Act of 1968”. The bank also asked what procedures it need follow in order to make such investments.

The department responded that each such investment was permissible provided that the bank first obtain Banking Board approval. It was noted that approval for investment in the common stock of the corporation is required by section 97(5) of the Banking Law and that approval for investment in real estate through the partnership vehicle is required by section 98(1)(d).

The State bank was further advised that a single letter application would suffice and that it would be unnecessary for the applicant to do more than forward a copy of the prospectus and recite the dollar amount which it intended to invest in each entity.

DATED: March 27, 1970

3 CRR-NY Legal Interpret. LI 1.5 Lending limit treatment of portions of letters of credit subject to participation agreements {#sec-3-crr-ny-legal-interpret.-li-1.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.5}

The department's opinion was requested as to whether a bank, which was to issue a letter of credit, could for purposes of computing lending limits under section 103(1) of the Banking Law, exclude those portions of its obligation under such letter of credit for which it held irrevocable participation agreements from other banking institutions. The letters of credit which were the subject of the inquiry were used to back up commercial paper issued by corporate borrowers.

The department noted that the primary purpose of the lending limits requirement is to prevent undue exposure to the credit risk of any one borrower, and that such exposure is effectively reduced by irrevocable participation agreements.

Accordingly, the department concluded that the lending limits need only apply to that part of a letter of credit commitment retained by the “lead” bank or trust company provided (i) the participation agreements with other banks are irrevocable and entered into at the same time as, or prior to, the issuance of the letter of credit, and (ii) all participating banks are also irrevocably committed to continue their participation in any “roll-over” of the letter of credit that the lead bank is obligated to undertake.

DATED: October 2, 1972

3 CRR-NY Legal Interpret. LI 1.6 Trust company—imposition of service charges on unclaimed dividends {#sec-3-crr-ny-legal-interpret.-li-1.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.6}

A trust company inquired whether it was permissible to impose service charges on dividends declared on its own capital stock but not claimed by stockholders. The department responded that it found no statutory provision allowing this practice. Moreover, a declared dividend is a debt owed by the trust company to its stockholders and, absent specific contractual authorization to reduce the debt by imposing charges, the trust company may not do so. Characterizing the trust company, once it segregates the dividend monies, as a trustee for the benefit of its stockholders does not alter the conclusion that the practice is impermissible.

The department was not asked to, and did not, express any opinion as to the legality of charges, by-law or other provision of prospective application attempting to exact such charges on unclaimed dividends.

DATED: August 24, 1973

3 CRR-NY Legal Interpret. LI 1.7 Charitable contributions by credit card {#sec-3-crr-ny-legal-interpret.-li-1.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.7}

The department was asked by a charitable organization whether credit cards issued by State banks could be used by the holders to make charitable contributions.

Section 96(1) of the Banking Law empowers such banks to “discount, purchase and negotiate __ obligations in writing to pay in installments or otherwise all or part of the price of personal property or that of the performance of services __” Retail installment credit agreements, the type commonly entered into between credit card holders and issuing banks, are defined in section 401(8) of the Personal Property Law as those “pursuant to which the buyer promises to pay, in installments, his outstanding indebtedness from time to time to a retail seller __ for one or more items of goods or services __” (emphasis supplied). Similar references to such agreements as intended for purchases or leases of property or services from retail sellers are found in section 413(11) of the same law.

The department observed that credit card transactions, other than those effecting cash borrowings, which do not discharge an enforceable indebtedness for goods or services would be improper under the quoted statutes. However, the department also noted that courts in this State have held that promises to contribute to charity may be enforceable—for example, where the charity has incurred liability in reliance on the promise; thus payments by credit card in respect of such obligations could be regarded as discharging indebtedness. Moreover, for purposes of the Personal Property Law, the department could see no grounds for opposing the further view, if the relevant parties in interest chose to adopt it, that consideration for the promise to contribute included not only reliance by the charity on receiving the amount pledged but also the rendering of goods or services or both by the charity to the objects of its beneficence, even if the same did not include the donor. It was a persuasive analogy between such a characterization and the enforceability, never questioned to its knowledge, of credit card obligations incurred by one person, in advance, for a gift of goods or services to another.

Thus the department concluded that it would interpose no regulatory objection to the practice in question insofar as legally enforceable promises to contribute to the rendering by charities of goods, services or both were concerned.

DATED: February 1, 1974

3 CRR-NY Legal Interpret. LI 1.8 Writing covered call options on trust accounts {#sec-3-crr-ny-legal-interpret.-li-1.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.8}

The department was asked by a trust company whether, under New York State Banking Law, it could write covered call options with respect to securities held by it as a trustee.

By writing covered calls the trust company would grant to the call's purchaser an option to buy from it a fixed number of shares at a fixed price within a stated time period usually not exceeding nine months. As consideration for the granting of this option the trust company would receive a premium which would be credited to the particular trust account. The trust company represented to the department that any sale by it of the underlying security during the option period would be preceded or accompanied by the purchase on an option exchange of a call option covering the same securities and expiring at the same time as the original call so as to prevent the trust account from being subject to an uncovered call at any time.

Under the above conditions, the writing of covered call options would be permissible in the department's view provided, however, that no option transactions of this nature would be effected for any account unless previously authorized by the particular account party.

DATED: March 1974

3 CRR-NY Legal Interpret. LI 1.9 Use of cash as consideration for an acquisition effected under § 143-a of the Banking Law {#sec-3-crr-ny-legal-interpret.-li-1.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.9}

The department was asked whether part of the consideration given to a shareholder of a bank to be acquired pursuant to section 143-a of the New York State Banking Law may consist of cash. Section 143-a reads, in relevant part, as follows:

“Such plan shall be in form satisfactory to the Superintendent, shall specify each corporation the stock of which is to be acquired by the company and shall prescribe the terms and conditions of the acquisition and the mode of carrying it into effect, including the manner of exchanging the shares of each of the corporations for shares or other securities of the company.” (emphasis added)

The department noted that the language quoted above does not refer to the payment of cash as consideration for any acquisition effected pursuant to this section. However, the purpose of the sentence is to detail the contents of the plan to be submitted to the Superintendent and not to prescribe the form of consideration that may be used in the acquisition.

The legislative history of section 143-a indicates that its purpose was to facilitate the acquisition of banks by the exchange of stock and to eliminate the need for the use of “phantom bank” procedures. Nothing in the legislative history of section 143-a suggests that the legislators intended to limit the form of consideration which could be used. Indeed, the reference to “other securities” would permit notes to be used, and there would be little, if any, reason to distinguish between cash and short-term notes in this context.

For the foregoing reasons, the department concluded that the consideration to be paid to the shareholders of a banking institution to be acquired pursuant to section 143-a of the Banking Law may consist of both cash and stock.

DATED: January, 1976

3 CRR-NY Legal Interpret. LI 1.10 Applicability of section 103(1)(a)'s loan limits to letters of credit issued to the Commodity Credit Corporation {#sec-3-crr-ny-legal-interpret.-li-1.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 1.10}

The Department was asked whether Section 1488.5 of the Regulations of the Commodity Credit Corporation (“CCC”) would remove the portion of a letter of credit which was issued to CCC by a foreign bank and which was confirmed by a domestic bank from the loan limitations of Section 103(1)(a) of the Banking Law. Section 103 limits unsecured loans to individuals and private corporations to 10% of the capital stock, surplus fund and undivided profits of the lending bank or trust company. The section requires any extension of credit to a person by means of the issue or confirmation of an irrevocable sight letter of credit upon the responsibility of such person to be deemed a loan to such person.

Subdivision 1(a) of Section 103 of the Banking Law excludes certain loans from the limitations on loans. The exclusion includes loans for which an agency or instrumentality of the United States, as designated by the Banking Board, “has agreed to pay the principal and interest thereof, or has guaranteed payment (by guaranty or commitment to purchase or otherwise) of such principal and interest, or is committed to supply, by loan, subsidy or otherwise, funds sufficient to pay such principal and interest, or has otherwise pledged its faith and credit for the payment of such principal and interest__”

The Banking Board, by General Regulation section 28, § 28.1(a)(3), has implemented Section 103(1)(a) by designating CCC as an instrumentality or agency of the United States for the purposes of Section 103(1)(a), but only to the extent that “a loan or extension of credit is secured by a guaranty, or by a commitment or agreement to take over or to purchase, made by such corporation, and such guaranty, agreement or commitment is unconditional and must be performed by payment of cash or its equivalent within 60 days after demand.”

Section 1488.5 of the CCC's regulations permits a United States bank to request a refund of the amounts paid under the confirmed portion of the letter of credit if the bank certifies that it is “unable to recover funds from the foreign bank due to a stipulated political risk which existed on the date payment was made to CCC under the draft. On approval by CCC of such request, the refund shall be promptly made, together with interest__”

Section 1488.2(s)(4) of the regulations defines “political risk” to include “failure of the foreign bank to make payment for any reason if it is an instrumentality of or is wholly owned by the foreign government.”

The department observed that the CCC's regulations characterize the application for a refund as a “request” and that they appear to permit CCC to review the facts and circumstances surrounding the foreign bank's failure to make the payment required by the letter of credit and the other remedies available to the domestic bank before determining whether to grant the bank's request for a refund. In addition, the regulations do not require the approval to be given within the 60-day period mandated by General Regulation, section 28.1(a)(3).

The department also observed that CCC owns the entire letter of credit and does not assume or purchase the confirmed portion of the letter of credit or agree to supply funds to the foreign bank to pay the confirmed portion of the letter of credit within the meaning of the Banking Board's Regulation. In light of the foregoing, the department concluded that the remedy available to the banks under Section 1488.5 of CCC's regulation does not constitute an “unconditional guaranty” or other undertaking within the meaning of Section 103 of the Banking Law and section 28.1(a)(3) of the General Regulations of the Banking Board.

DATED: July 6, 1976

LEGAL INTERPRETATIONS LI 3. FOREIGN BANKING CORPORATIONS LEGAL INTERPRETATIONS LI 3. FOREIGN BANKING CORPORATIONS

3 CRR-NY Legal Interpret. LI 3.1 Powers of branches and agencies of foreign banks with respect to the handling of securities {#sec-3-crr-ny-legal-interpret.-li-3.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 3.1}

Section 201-b of the Banking Law permits a branch, which has received a certificate from the Superintendent, to exercise fiduciary powers to act as fiscal or transfer agent for the foreign country of its incorporation or for any corporation organized under the laws of such foreign country or doing business there. Branches without such authorization, and all agencies, are precluded from so acting. Several requests were made for the department's view as to what functions may be performed by agencies and foreign-bank branches, without special authorization under section 201-b of the Banking Law, on behalf of corporations organized in, or otherwise related to, such bank's country of incorporation.

In principle the distinctions between what can be done by branches with fiduciary powers under section 201-b of the Banking Law as opposed to branches without fiduciary powers or agencies are practically identical to those applicable to trust companies, as opposed to banks without trust powers, under section 100(1) of the Banking Law. Specifically, banking entities lacking fiscal, transfer agent, or other fiduciary powers may nonetheless engage in the following types of business: (1) custody for safekeeping of customers' securities, pursuant to instructions by such customers; (2) receipt of dividends on the securities for the account of such customers, and disposition thereof in accordance with instructions; (3) placing of orders for the purchase or sale of securities in accordance with customers' instructions; (4) execution of voting and other rights in connection with custodian accounts and in accordance with customers' instructions; (5) transaction of such business through nominees; and (6) receipt of fees or commissions from customers in connection with such business.

More difficult questions arise, however, where an entity is acting primarily on behalf of or in respect of a particular issuer or issue of securities, not just with respect to securities (which will often be of widely varying types) owned by and held for customers as such. The department regarded it as clear that only authorized fiscal and transfer agents could receive from the issuer and disburse to security holders principal and interest on debt securities, dividends on equity securities, and similar sums such as withholding reimbursements. Only such agents, moreover, could validate and effect issuance, transfer, exchange, conversion (if any) and retirement (as, for instance, by random selection of debt instruments for prepayment) of such securities, or act as the issuer's agent for service of process, receipt of securities for forwarding, and like purposes.

The foregoing would be true even of so-called “private placements” and even if there is a disclaimer, accepted by all parties, of any fiduciary relationship between the entity and the security holders. The applicable statutes create no exception for issues of limited scope. Moreover, even in the absence of a formal “fiduciary” relationship the rights of institutional purchasers of securities, and ultimately of the small investors they usually represent, can be seriously prejudiced by faulty performance of fiscal and transfer duties, which specific departmental grant and supervision of fiscal-agency powers was designed to avoid.

However, the department did note in conclusion that New York agencies and branches without fiduciary powers, under their power to receive and transmit funds could, on a “wholesale” basis (i.e. in one or a few large transactions substantially without investor contact, except of an interbank nature) handle remittances of funds to and from issuers in respect of their securities issues, and of course, in respect of normal commercial transactions including customary collections and payments. Foreign-bank agencies in particular would not be expected to retain such remittances for any significant length of time before transmission lest they come to resemble deposits (as opposed to credit balances), which agencies are not allowed to receive.

DATED: August 5, 1974

LEGAL INTERPRETATIONS LI 4. SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS LEGAL INTERPRETATIONS LI 4. SAVINGS BANKS AND SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY Legal Interpret. LI 4.1 Leeway investments {#sec-3-crr-ny-legal-interpret.-li-4.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.1}

The department was asked whether mutual savings institutions may use the “leeway” investment authorization (Banking Law, § 235[29]) for the purpose of making investments which are specifically authorized under one of the other 28 subdivisions of section 235. The department took the position that since the opening sentence of subdivision 29 explicitly states that the “leeway” provision is applicable to “[i]nvestments which do not qualify under any of the preceding subdivisions,” such use of the authorization would be improper. Thus, the department concluded that a savings institution may not, for example, carry on its books, as a “leeway” investment, bonds and mortgages or notes and mortgages on improved and unencumbered real property which would satisfy the requirements of section 235(6) of the Banking Law, or preferred, guaranteed or common stock of a corporation which would meet the requirements of section 235(26).

The department was also asked whether “leeway” may be used for investments which do not “qualify” under preceding subdivisions of section 235 of the Banking Law because the limitation on the aggregate amount of the investment, recited in the subdivision under which the investment would otherwise be authorized, has already been met. The department stated that such use of the “leeway” authorization, too, would be improper, because paragraph (d) of subdivision 29 provides that “[t]his subdivision shall not be deemed to alter any provision of this chapter limiting the aggregate amount which may be invested in any class of loan or investment.” Accordingly, the department stated that a savings institution may not, for example, exceed the subdivision (9)(a)(1) limitation on its bank premises account by carrying bank premises real estate on its books as a “leeway” investment.

3 CRR-NY Legal Interpret. LI 4.2 Savings bank not permitted to remove trustee automatically upon his separation from his position as an officer {#sec-3-crr-ny-legal-interpret.-li-4.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.2}

A savings bank was advised that a proposed by-law providing for automatic removal of a trustee who is also an officer, upon separation of the trustee from the office he holds, would be inconsistent with section 248, and, therefore invalid.

In limine, the department noted that section 248(2) sets forth the instances when it is mandatory that the office of a trustee becomes vacant; that section 248(1) sets forth the circumstances under which a trustee may be removed at the discretion of the other trustees; and that there is no provision in either of those subdivisions or any other part of the Banking Law for removal of a trustee who is also an officer, upon his separation from such office. The department reasoned that discretionary removal by the board of trustees is limited to the conditions described in subdivision 1 of section 248. The department observed that besides providing the substantive grounds for discretionary removal, the subdivision also set forth procedural requirements which must be satisfied. The department rejected the idea that these procedural safeguards could apply to situations other than those set forth in the subdivision, and did not believe that it would make sense to apply less stringent standards to non-statutorily prescribed grounds for removal. Under the circumstances, it was clear to the department that the Legislature did not contemplate discretionary removal of trustees for other than the statutorily prescribed grounds.

Considering that officers are appointed or elected by the board of trustees and may be removed, with or without cause, by the trustees, the department concluded that a trustee who is an officer would not be able to function as a trustee with total independence from the influence of the other members of the board, so long as he must act with the knowledge that his colleagues on the board might remove him as trustee by terminating his employment as an officer of the savings bank.

The department emphasized that its policy is to prevent a situation where certain members of a board may exercise undue or excessive influence upon other members of the board. Just as the influence of officer-trustees is restrained by the limitation of their number on the board, so too should the influence which other members of the board might exercise upon an officer-trustee be restrained.

Lastly, it was recognized that certain officers may be elected to the board of trustees so that their special knowledge will be readily available to the board and that when such officer-trustees no longer serve as officers their value to the board would, understandably, be diminished. Nevertheless, the department concluded that the potential danger of the proposed by-law required its prohibition.

DATED: September 3, 1968

3 CRR-NY Legal Interpret. LI 4.3 Crediting dividends on date of deposit—date of withdrawal accounts {#sec-3-crr-ny-legal-interpret.-li-4.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.3}

A savings bank inquired whether section 245(3)(b) of the Banking Law may fairly be read to allow the crediting of dividends on date of deposit—date of withdrawal (DOD/DOW) accounts during, rather than after the close of, business on the last day of the bank's regular dividend period.

The department answered in the affirmative stating that the above interpretation would not be inconsistent with the language of the statute or the intent of the Legislature so long as the bank did not view the interpretation as sanctioning grace days on DOD/DOW accounts. The department observed that grace days are not permitted on DOD/DOW accounts, and cautioned the savings bank that if it chose to avail itself of the advantages of this new interpretation, it must be careful not to violate the grace day proscription.

DATED: September 20, 1968

3 CRR-NY Legal Interpret. LI 4.4 Procedure for converting a regular savings account to a date of deposit—date of withdrawal status {#sec-3-crr-ny-legal-interpret.-li-4.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.4}

The department received a number of inquiries regarding the proper procedure for savings banks and savings and loan associations to follow in transferring accounts from regular savings status to date of deposit—date of withdrawal (DOD/DOW) status. The department stated its position as follows:

The proper procedure and the procedure which the department recommends to all institutions requires the depositor to take some affirmative action to precipitate an account change. A bank may take the initiative by contacting its depositors either by means of a newspaper advertisement or by letter, and advising them that it is prepared to make the account transfer if it receives a written request to do so.

The department does not regard it as proper for a bank to make an account transfer without notifying the depositor or after notifying a depositor that the transfer will be made unless the bank is directed not to do so. This approach is regarded as unsound because of possible breach of the deposit contract and because of the risk of the bank finding itself with no regular savings accounts (which accounts it is required to maintain under section 245[3-b] if it is to have DOD/DOW accounts).

DATED: March 18, 1970

3 CRR-NY Legal Interpret. LI 4.5 Savings bank investments in bank holding companies {#sec-3-crr-ny-legal-interpret.-li-4.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.5}

The department was asked whether section 235(26)(c) of the Banking Law proscribed savings banks and savings and loan associations from investing in common stock of bank holding companies.

The department responded that the purpose of section 235(26)(c) is to prevent savings banks from investing in institutions with which they compete and that this legislative intent would be thwarted if savings institutions were allowed to invest in bank holding companies. Accordingly, the department expressed its view that such investments were improper.

DATED: March 12, 1969

3 CRR-NY Legal Interpret. LI 4.6 Investment by a mutual savings institution in a mutual fund listed on a national securities exchange {#sec-3-crr-ny-legal-interpret.-li-4.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.6}

The department was asked whether a mutual fund which is listed on a national securities exchange is an eligible investment for a mutual savings institution. The department answered the question in the negative for the following reason. There is a specific Banking Law provision dealing with investments in mutual funds, section 235(26)(e). Under it savings banks are authorized to invest in mutual funds only if such mutual funds are owned by savings banks or savings and loan associations and invest only in investments which are eligible for savings banks. This limitation was imposed because savings banks may only invest in certain types of common stock which meet certain quality standards, while mutual funds are not subject to such restrictions. To read section 235(26)(e) as anything other than exclusive would render that provision meaningless and authorize savings banks to do indirectly that which they can not do directly.

DATED: January 2, 1970

3 CRR-NY Legal Interpret. LI 4.7 Conflict of interest—mortgage loans by savings bank on real estate sold by trustee of the savings bank {#sec-3-crr-ny-legal-interpret.-li-4.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.7}

The department was presented with the following facts: A trustee of a savings bank is the owner of a real estate business (hereinafter the company). Since his election to the board of trustees over two years ago, one-third of all the mortgage loans made by the savings bank were made to purchasers of properties sold by the company. The purchasers made their mortgage applications to the savings bank at the suggestion of the trustee. Neither the trustee nor the company received any commission or fee for the placement of the mortgage.

On the above facts, it was asked whether a conflict of interest problem existed because of the trustee's interest in the realty firm. The department responded that for many years it had taken the position that activity of the sort described above would be inconsistent with section 247(2)(a) of the Banking Law and article 10, section 3 of the New York State Constitution. It stated that the essential rationale for its position was that the only practical way for the department to keep a savings bank trustee to the highest standard in this area is by assuring that he does not place himself in a position where he might have to explain away his acts. Continuing to believe that the above reasoning was sound, the department concluded that, on the facts presented, a conflict of interest existed.

DATED: August 1, 1969

3 CRR-NY Legal Interpret. LI 4.8 Contracts of employment for officers of savings banks—deferred compensation {#sec-3-crr-ny-legal-interpret.-li-4.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.8}

The department was presented with the following facts: A savings bank was contemplating an agreement with one of its officers to provide him with deferred compensation computed at a specified rate for a two year period. The amount attributable to the deferred compensation was to be invested in property or securities eligible for investment by savings banks. Any appreciation or depreciation was to be reflected in the amount ultimately payable to the officer and the deferred compensation was to be paid at a predetermined rate until paid in full.

Two questions were asked: (a) Would the deferred compensation constitute salary rather than retirement benefits? (b) Could the amount of the deferred compensation be considered in determining the amount of the retirement benefits to which the officer would be entitled?

The department stated its view that a contract of employment with an officer of a savings bank may include a provision for deferred compensation so long as the agreement was entered into with the approval of the board of trustees and the deferred payment represented compensation for services actually performed by the officer. Thus, the first question was answered in the affirmative. In response to the second question, the department stated that the salary on which the retirement benefits would be based could include the portion of the salary deferred pursuant to the agreement. The department noted, however, that a retirement plan may require contributions based upon salary and if such contributions do not take into consideration the amount of the deferred compensation, it is quite likely that the amount of deferred compensation could not be included in determining the retirement benefits under the formula set forth in section 250(3) of the Banking Law.

Finally, the department called attention to its policy that officer employment contracts either extend for no longer than one year or authorize termination at any time by the board of trustees. The reason for the policy was stated to be that the management of the business of the bank, including the right to hire and fire officers, must remain in the hands of the board. A contract of employment for more than one year which does not permit the board to terminate the contract at will would violate that policy. The department, therefore, recommended that the agreement be modified accordingly.

DATED: November 18, 1969

3 CRR-NY Legal Interpret. LI 4.9 Investments in mortgages on real property located in possessions of the United States {#sec-3-crr-ny-legal-interpret.-li-4.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.9}

The department was asked whether a mortgage on real property, otherwise qualifying as a permissible investment for savings banks and savings and loan associations under section 235(6) and 380(1)(b)(1) of the Banking Law, is rendered impermissible by the fact that such real property is located in the Virgin Islands.

The department replies that the investment is not permissible under the sections cited, which allow investments secured by mortgages on real property located in New York, adjoining States and, subject to regulation, “any other state of the United States, the District of Columbia or the Commonwealth of Puerto Rico __”. In reaching this conclusion the department duly noted section 47 of the General Construction Law, which provides as follows (emphasis supplied):

“The term State, when used generally to include every State of the United States, includes also every territory of the United States and the District of Columbia.”

However, because the Legislature in enacting the Banking Law provisions in question added to the word “state” specific references to the District of Columbia and to one United States territory (Puerto Rico) but no others, the department concluded that in this instance the term “state” was not “used generally” in the sense contemplated by the General Construction Law. That only Puerto Rico is a permissible territory for the purposes under review was found to be further supported by the legislative history contained in 1966 New York State Legislative Annual 64, 73, pertaining to L. 1966 ch. 324, which added the language in question to the Banking Law.

In this, as in other legal-investment opinions rendered by the department which do not specifically indicate the contrary, no question was asked nor answer given as to the legality of the investment under “leeway” provisions such as sections 235(29) and 379(7) of the Banking Law.

DATED: January 31, 1974

3 CRR-NY Legal Interpret. LI 4.10 Payment of dividends upon conversion from a regular to a day of deposit—day of withdrawal account {#sec-3-crr-ny-legal-interpret.-li-4.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.10}

The department's opinion was requested as to whether dividends could be paid by a savings bank from the beginning of the regular dividend period in the event a regular savings account is converted to a Day of Deposit-Day of Withdrawal account in mid-dividend period.

Section 245(3)(c) provides that a savings bank shall not

“Declare any dividend on any deposit for a longer period than the same has been on deposit or on any deposit withdrawn before the end of a dividend period, except as provided in subdivisions three-a and three-b of this section. . . ”

Also, section 245 (3-a) provides that if funds are withdrawn from a regular savings account before the end of a dividend period, dividends for the time during which the funds were on deposit may be paid in two circumstances:

(1) If the withdrawal is made during the “grace days” —the last three business days of any business period or the last four if one of the last three days is a Saturday.

(2) If the by-laws so provide, dividends may be paid at the rate of the last dividend to the first day of the month during which the withdrawal is made.

The preceding provisions indicate clearly that the only dividends which may be paid are those which are mandated or permitted by statute. No provision exists for the payment of dividends on a regular account between the quarterly dividend date and the date of withdrawal other than as provided in section 245 (3-a). Even though funds transferred from a regular to a DOD/DOW account remain in the bank at all times, in fact and according to law, two transactions occur: a withdrawal is made from the regular account and a deposit is then made into a DOD/DOW account.

Accordingly, the department concluded there is no provision of law to permit a bank to treat the withdrawal from the regular account any differently from any other withdrawal from a regular account which is not followed by a deposit into a DOD/DOW account. However, the department expressed the hope that savings banks would not encourage transfers which result in the loss of dividends to the depositor.

The department also expressed the opinion that under section 378 of the Banking Law as amended by chapter 704 of the Laws of 1974, a result opposite to the foregoing would be correct in the case of accounts with savings and loan associations.

DATED: June 1, 1974

3 CRR-NY Legal Interpret. LI 4.11 Lump-sum payments to retiring employees in lieu of pension {#sec-3-crr-ny-legal-interpret.-li-4.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.11}

The department was asked whether it would be permissible under sections 250 and 400 of the Banking Law for a retiring employee of a savings bank or savings and loan association which participates in a retirement plan to waive part or all of his annual pension and accept instead a lump sum equivalent to the amount actuarially necessary to fund the pension waived. The following example illustrates the question:

Assume Employee A is entitled under a plan to an annual pension of $9,000 at age 65, which amount is equal to 60 percent of average final three-year earnings preceding retirement of $15,000. Let us assume that the total reserve required at retirement to fund the pension is $100,000. Employee A would like to take $50,000 or half the reserves necessary to fund his benefit in a lump-sum payment at retirement, with the remaining $50,000 to be used to provide him with a life-time benefit of $4,500 per annum.

The department in response reiterated its long-standing view that such lump-sum payments are legally impermissible. For, one thing, pension plans create a trust in favor of the retired employee. As in any inter vivos trust the legal title is separated from the beneficial interest. Most plans specifically provide that a pensioner's right cannot be assigned. Furthermore, various provisions of the New York State law grant pension rights a more privileged status than is accorded to other forms of deferred compensation. In sum, therefore, it would appear likely that sections 250 and 400 were designed not only to prohibit misapplication of the depositor's funds, but also to protect the retired employee by providing for periodic payment of pension benefits. Were this not so, the statute might have provided for severance pay instead.

In addition, the department noted that permitting such payments could work financial harm on such plans, to the possible detriment of employees entitled to plan benefits after a given employee takes his lump sum. This would result if actuarial assumptions proved to be inaccurate over a period of time (for instance, if actual longevity of retirees were greater than expected), so that additional funding for the plan or system was needed to provide appropriate pensions.

Finally, the department gave weight to the related fact that the single amount actuarially calculated as necessary to fund a given pension assumes, for purposes of that particular pension, earnings over the projected period of retirement at a rate considerably lower (say four percent) than that which the monies actually earn, with the overage credited to the plan generally, creating a “cushion” designed at least in part to minimize the adverse impact of invalid actuarial assumptions. To deprive plans of this earnings margin could adversely impact upon benefits later payable to persons other than the one having elected and received the lump sum.

DATED: July 24, 1973

3 CRR-NY Legal Interpret. LI 4.12 Permissible solicitations with respect to savings bank life insurance {#sec-3-crr-ny-legal-interpret.-li-4.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.12}

The department received an inquiry as to the legal propriety of newspaper, broadcast and direct-mail advertisement of savings bank life insurance. Section 269 of the Banking Law provides that savings banks offering life insurance “shall not employ solicitors of insurance, and shall not employ persons to make house to house collections of premiums”.

The department responded that it saw no inherent illegality in the use of these techniques. It found that statutory and practical history supported a straightforward reading of the term “employ solicitors” as banning only the creation of an employer-employee relationship between the savings bank and one whose duties and basis of compensation are substantially those of an insurance salesman collecting commissions directly based on the number and amount of policies he sells. The statute does not ban the usage of all outside means of solicitation. The department would, of course, continue to monitor the nature, accuracy and cost of such outside means to assure that they remained consistent with the statutory purpose of affording quality protection at a cost kept low in large part by the ban discussed herein on commissions and excessive overhead.

DATED: May 15, 1973

3 CRR-NY Legal Interpret. LI 4.13 Years of service to mutual savings banks in computing allowable pensions {#sec-3-crr-ny-legal-interpret.-li-4.13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.13}

Maximum allowable pensions in retiring savings bank employees can under section 250 of the Banking Law be increased, up to a stated limit, “for each year of service” by such employee. The department was asked whether it would be permissible to include years spent by the employee in service to other institutions prior to his employment by the bank from which he is retiring.

The department responded that it would regard it as within the spirit as well as the letter of the law to permit inclusion of years of prior service to other New York savings banks, as well as to institutions owned in substantial entirety by one or more such banks during the entire period of the employee's prior service. The department was not asked to pass on, and reserved for future judgment on a case-by-case basis, the legal acceptability of including prior service to savings banks in other States, commercial banks, State or Federal savings and loan associations, entities not substantially wholly owned by New York savings banks, and entities presently so owned but served by the retiring employee before such ownership occurred.

DATED: October 25, 1973

3 CRR-NY Legal Interpret. LI 4.14 Legality of debentures of real estate investment trusts for investment by savings banks {#sec-3-crr-ny-legal-interpret.-li-4.14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.14}

The department was asked whether debentures of a real estate investment trust formed under Massachusetts law could be considered “corporate interest-bearing securities” eligible as savings banks investments under section 235(21)(a)(2) of the Banking Law.

The department reiterated its long-standing view that such debentures could not be considered “corporate” for purposes of the subdivision concerned. First of all, both the Legislature and the Congress, particularly in tax legislation but including, at the State level, such other examples as section 81 of the Insurance Law, have shown themselves quite cognizant of the existence of business entities similar but not identical in form to true corporations. Express references to business trusts in some instances, and allusions to “associations” as well as “corporations” in others, are entirely lacking in the pertinent Banking Law subdivision; this led the department to conclude that the Legislature intended “corporate” securities for these purposes to be precisely that. Legislative history, indicating the origins of this subdivision as a narrow and careful exception to the strict rules theretofore prevailing, supported this conclusion, as did the department's review of an explanation by Massachusetts counsel of some significant respects, albeit usually more important to holders of equity than debt, in which Massachusetts trust differ in legal attributes and consequences from corporations in that Commonwealth.

In sum, the department felt it would need a clear legislative mandate before it could allow REIT debentures to be considered “corporate” under the legal-investment statutes.

DATED: February 27, 1973

3 CRR-NY Legal Interpret. LI 4.15 Deposits in savings banks by cooperative corporations {#sec-3-crr-ny-legal-interpret.-li-4.15 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.15}

The department was asked whether a savings bank could accept the deposits of a cooperative corporation, organized under the Cooperative Corporations Law, in view of section 237.2 of the Banking Law, which provides that a savings bank may not accept deposits from any “partnership, corporation or other organization for profit”.

The department replied that section 237.2 has always been understood to prohibit only deposits of corporations “for profit”. General Construction Law, section 65(c) (3) provides that a cooperative corporation is a corporation “formed other than for profit”. Section 66.12 of the General Construction Law defines a cooperative corporation as a corporation “to which the cooperative corporations law is made applicable by a provision of such law”. Section 3(d) of the Cooperative Corporations Law provides as follows:

“A cooperative corporation shall be classed as a non-profit corporation, since its primary object is not to make profits for itself as such, or to pay dividends on invested capital, but to provide service and means whereby its members may have the economic advantage of cooperative action, including a reasonable and fair return for their product and service.”

In view of the foregoing statutory definitions, the department is of the opinion that a cooperative corporation is not a corporation “for profit” whose deposits would be excluded, and therefore a savings bank may accept the deposit of a cooperative corporation.

DATED: October 1975

3 CRR-NY Legal Interpret. LI 4.16 Pooling of Keogh retirement accounts into a general investment pool {#sec-3-crr-ny-legal-interpret.-li-4.16 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.16}

The Banking Department was asked whether § 237(7) of the Banking Law permits a savings bank to pool the Keogh retirement accounts for which it serves as trustee into a combined “Keogh Fund”. The assets of the Fund would consist of various passbook accounts and time deposits issued by the savings bank. The legislative history of § 237(7) indicates that the legislature did not intend to permit savings banks which accept Keogh deposits to exercise any investment discretion with respect thereto and that the duties of the savings bank were to be strictly ministerial. In 1965, the Governor vetoed a bill which would have permitted savings banks to act as trustees for Keogh Retirement Plans which lacked any limitation on the investment which could be made by the trustees of the Plans. Legislation empowering savings banks to act as trustees for these accounts was enacted in 1966. The departmental memorandum in support of the legislation indicated that the trustee's functions would consist merely of depositing the employer's annual contributions in a savings account and making such distributions from the account as were directed by the trust instrument.

Implementation of the savings bank's proposal would result in greater fiduciary responsibilities than contemplated by the Banking Law. The administrator of the Fund would determine the nature and maturities of the accounts in which the assets of the Fund were to be invested. In so doing, it would be exercising the very type of discretionary power that was denied to savings banks in 1965.

The 1966 legislation contemplated that a savings bank would be a trustee in name only. The limited fiduciary power granted thereby was intended to permit individuals eligible for a Keogh plan to place their pension contributions in thrift institutions. Although called a trustee, the savings bank was intended to serve solely as a custodian.

In light of the foregoing, the Department concluded that the savings bank did not have the statutory authority to pool the assets of the separate Keogh accounts into a combined fund for investment purposes.

DATED: August 31, 1976

3 CRR-NY Legal Interpret. LI 4.17 Supplemental pension benefits {#sec-3-crr-ny-legal-interpret.-li-4.17 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.17}

A savings bank inquired whether Section 250(5) of the Banking Law requires its trustees to determine whether a supplemental benefit should be paid for any given year in the year in question or whether the trustees may adopt an automatic plan for supplemental benefits, the amount of which would be determined on the basis of the applicable cost-of-living index as provided in subdivision 5, without the necessity of making a specific determination for each year for which benefits are to be supplemented.

The Department responded that the statute does not require a bank's trustees to make an annual decision as to whether the supplemental benefit should be paid for the year in question. The words “each calendar year” appearing in the first sentence of the subdivision are intended to describe the supplement as an annual payment, the maximum amount of which is to be determined on the basis of the cost-of-living index figure for the year in question. The words do not qualify the manner in which the trustees must act in order to authorize the supplement. The grammatical sense of the language is that (i) the trustees may, in their discretion, determine to supplement any retirement benefit payable by a savings bank and (ii) such supplement may be made “each calendar year”, measured on the basis of the cost-of-living index for each year. This interpretation is confirmed by the parallel language contained in subdivisions 1, 2 and 3 of Section 250, where reference to “each year of service” or similar language describes the benefits to be paid rather than the manner in which the trustees must act.

Any interpretation of the subdivision which conditioned the supplemental benefits upon an annual decision would make it impossible to fund the benefits. By its nature, a funded program requires a continuing plan whose future costs can be estimated and provided for on a current basis.

Requiring a new decision to be made each year and thereby precluding the use of a funded program would contravene the intent of subdivision 5, which was to permit pension benefits to be supplemented through funding. Subdivision 5 provides for a supplement to any retirement benefit payable “in accordance with the preceding subdivisions of this section”. Subdivision 3 expressly authorizes funded benefits, consequently, the supplements contemplated by subdivision 5 include those provided in connection with funded plans. An interpretation which made it difficult either as a matter of law or as a practical matter, to fund these benefits would contravene the intent of the Legislature.

DATED: October 20, 1976

3 CRR-NY Legal Interpret. LI 4.18 Checking accounts for the account of fiduciaries; checking accounts in the form of totten trusts {#sec-3-crr-ny-legal-interpret.-li-4.18 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.18}

The department was asked whether an individual serving as a fiduciary under a will or trust instrument may open a checking account at a State-chartered savings bank or savings and loan association. The department was also asked whether an individual may open a checking account in the form of a “totten trust”.

The department responded that an individual fiduciary for an individual beneficiary could maintain a demand deposit at a mutual institution, if such trust is not for a business purpose and subject to compliance with Banking Law Section 237.1. The department also replied that demand deposits could be maintained in the form of totten trusts.

Section 237.2 of the Banking Law, as recently amended, prohibits a savings bank from accepting “any deposit for credit to a municipal corporation or for credit to any partnership, corporation, association or other organization for profit, or any demand deposit for credit to any depositor except a natural person”. Section 380.13 of the Banking Law, as amended, imposes a similar restriction upon savings and loan associations.

The quoted language would cleraly prohibit a corporate fiduciary from opening a checking account at a mutual institution. It would also prohibit an individual who serves as trustee for a corporate account from opening a checking account, since the corporation would be the beneficial owner of the funds. The issue, therefore, is whether the language quoted would permit an individual serving as a fiduciary for another individual to open a checking account at a mutual institution. This, in turn, depends upon the Legislature's intent when it adopted Sections 237.2 and 380.13 of the Banking Law. Sections 237.2 and 380.13 were enacted by Chapter 225 of the Laws of 1976. The language of the two sections was derived, in large measure, from the language contained in A. 11147/S. 8626, which was a Banking Department bill which included checking as well as personal loan powers. During the Legislature's consideration of A. 11147 and of A. 12452-A, which was subsequently enacted as Chapter 225 of the Laws of 1976, the Banking Department repeatedly emphasized that the bills would not affect the commercial banks' monopoly on commercial checking accounts and that the bills were not intended to permit mutual institutions to offer checking accounts for business or commercial uses. The department also stated that checking account powers would further the restructuring of the thrift industry and would be the first of the steps necessary toward the transformation of thrift institutions into family banking centers.

An examination of relevant provisions of law suggests that certain trusts do not constitute business instruments and that the trustees of those trusts may open a checking account with a mutual institution without violating the purpose of Section 237.2, as understood by the Legislature. More specifically:

A checking account in the name of the trustee for a non-business trust is compatible with—and furthers—the concept of the mutual institution as a family banking center.
As indicated above, Section 237.2 of the Banking Law prohibits savings banks from accepting deposits from municipal corporations, partnerships, corporations and other organizations for profit and, in the case of demand deposits, from any person other than a natural person. The section does not include trusts or trustees within its language. Construing “natural person” in such a way as to include individuals who serve as fiduciaries for non-business trusts would be consistent with such other subdivisions of Section 237, as subdivision (1).

Former subdivision 1 of Section 237, repealed in 1971, set a ceiling on the amount of deposit which a savings bank could accept from “any person”. The statute excluded certain sums from such deposits, including

“(b) All amounts credited to him as trustee under a voluntary trust, unless the aggregate of all such amounts, exclusive of dividends or interest, is in excess of twenty-five thousand dollars in which event not more than twenty-five thousand dollars may be excluded.

(c) All amounts standing to his credit as executor, administrator, trustee, committee or guardian, named in a will or appointed by a court of competent jurisdiction.”

At the time former subdivision 1 was repealed, subdivision 2 of Section 237 was renumbered subdivision 1. The renumbered subdivision 1 specifically permits certain kinds of trustees to open an account in the name of the trustee. The subdivision reads as follows:

“No savings bank shall accept any deposit for credit to any executor, administrator, trustee, committee or guardian, named in a will or appointed by a court of competent jurisdiction, unless a certified copy of the will, order or decree of the court authorizing such deposits or appointing such executor, administrator, trustee, committee or guardian, or a certificate of such appointment is filed with the savings bank.”

Presumably, the current version of subdivision 1 of Section 237 was retained to insure that trust funds be counted separately, as provided in former subdivision 1 of Section 237.

Subdivision 4 of Section 237 permits a savings bank to accept deposits of moneys paid as security for the performance of a lease regardless of the fact that the person depositing such moneys may be deemed to be a trustee of trust funds. While one might argue, on the basis of the existence of subdivision 4, that acceptance of any deposit from a trustee requires specific authorization, a close reading of subdivision 4 indicates that it was added to the law in order to permit lessors to deposit the security deposits they received with a savings institution, regardless of whether the lessor or the lessee is a corporation, partnership, association or other organization for profit. Stated otherwise, Section 237.4 creates an exception to Section 237.2 and permits a mutual institution to accept a deposit from a corporate or other entity if the deposit is a security deposit.
As noted earlier, Section 237.1 requires any individual who serves as trustee and who wishes to deposit funds with a savings bank to file a certified copy of the instrument appointing the depositor as fiduciary. This requirement would have to be met by any fiduciary who seeks to open a checking account. An examination of the instrument filed may reveal the purpose of the trust. If not, the bank should require a sworn statement from the fiduciary to the effect that the trust was not established for a business purpose.
Section 27 of the General Construction Law defines “person” to include a corporation, a joint-stock association and, under certain circumstances, a state, government or country. The use of the term “natural person” in Section 237.2 makes it clear that the reference is to a human being rather than a legal entity. Although the definition of “person” does not refer to a fiduciary, this was not done to disqualify fiduciaries from the benefits otherwise available to “persons” under the law. Instead, the reference to trustees and other fiduciaries in Section 237 and the absence of other special mention of fiduciaries indicates that the Legislature contemplated that fiduciaries would be considered “persons” but would be subject to certain special requirements. In view of the foregoing, the department concluded that an individual serving as fiduciary for an individual beneficiary may open a demand deposit account at a mutual institution, subject, however, to compliance with Section 237.1 (made applicable to savings and loan associations by Section 380.18). The department further concluded that demand deposits could be opened and maintained in the form of totten trusts.

DATED: November 1976

3 CRR-NY Legal Interpret. LI 4.19 Direct deposits of payroll funds by a corporate employer into a checking account maintained at a savings bank by its employee {#sec-3-crr-ny-legal-interpret.-li-4.19 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.19}

The department has been asked for its opinion of the legality of an arrangement whereby, pursuant to an agreement among a savings bank, its depositors and the corporate employer of the depositors, some of the depositors have instructed the corporate employer to deposit all or part of their salaries into checking accounts which they maintain with the savings bank. The department has concluded that this arrangement is authorized by the Banking Law.

The authority for a savings bank to accept deposits of all or a part of a depositor's salary from his corporate employer into the depositor's checking account is found in section 234.1 of the Banking Law as supplemented by section 234.23. Subdivision one of section 234 authorizes savings banks “to receive and repay deposits, including demand deposits.” It also authorizes savings banks to “exercise all such incidental powers as shall be necessary to conduct the business of a savings bank.” Subdivision 23 of section 234 authorizes savings banks “to have and exercise all other powers necessary or appropriate in conducting the business of the savings bank.” While the incidental powers authorized by subdivision 23 relate to the general conduct of the business of a savings bank (including the receipt of demand deposits), the incidental powers authorized in subdivision one relate specifically to the receipt of deposits, including demand deposits. Thus, it is clear that the Banking Law now authorizes savings banks to perform those operations associated with the receipt of demand deposits including the making of an arrangement for the direct deposit of salaries into the checking accounts of their depositors.

The Banking Law does impose certain restrictions upon the acceptance of checking accounts by savings banks, including a prohibition of the imposition of charges for maintaining these accounts or for honoring checks drawn on them as well as prohibition of the maintenance of checking accounts for corporate depositors. Neither section 234.1 nor any other section of the Banking Law, however, appears to impose limitations on the method or the mechanics by which deposits are made into checking accounts which are otherwise lawfully maintained.

In connection with this issue, a question has been raised about the meaning of the language added to section 238.5 by chapter 225 of the Laws of 1976, the chapter which authorized savings banks to accept demand deposits. Section 238.5 provides, as follows:

“A savings bank may accept deposits, other than demand deposits and deposits held pursuant to subdivision one-a of section two hundred thirty-four of this chapter, from an employer or an employee group, to be credited to the individual accounts of the members of a group of employees having a common employer, without the issuance of a passbook in connection therewith, and may pay to any one of the members of such group, or to his authorized agent, in person, the whole or any part of such deposits credited to his account together with the dividends credited thereon, without requiring the production of a passbook.”

It is the department's opinion that the exclusion of demand deposits from the authority granted by section 238.5 was not intended to and in fact did not prohibit savings banks from accepting payroll funds from employers for deposit into the checking accounts maintained by their employees at a savings bank. Until 1947, all savings bank accounts required a passbook because section 238.3 required that all interest credited and withdrawals charged be entered in the passbook. In 1947, section 238.5 was added to create an exception from the strict passbook rule of section 238.3 by permitting savings banks to maintain no-passbook (savings) accounts for the purpose of receiving from employers of savings bank depositors direct deposits of all or a part of the depositors' wages. Only in 1965, with the addition of section 238.6 were savings banks granted general authority to accept no-passbook accounts. Even then, however, savings banks were still restricted to the acceptance of savings deposits.

Section 238.5 is but one of a series of restrictions which the Banking Law had imposed upon savings accounts. Each of these restrictions was amended by chapter 225 of the Laws of 1976 to make it clear that its limitation did not apply to demand accounts. For example, section 238.2—the requirement of 60 days' notice prior to withdrawal—and section 238.4—dividend crediting provisions—were amended to exclude demand accounts from their restraints. Section 238.5 was amended in the same fashion. The purpose of the amendment, then, was not to prohibit direct deposit of payroll funds by employers into their employees' checking accounts, but rather to make it clear that section 238.5 applies only to savings deposits.

3 CRR-NY Legal Interpret. LI 4.20 Interest rates on time deposits in savings banks and savings and loan associations {#sec-3-crr-ny-legal-interpret.-li-4.20 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 4.20}

The department was asked to review two situations wherein thrift institutions have been offering different interest rates on time deposit accounts of the same maturities. In the first situation, a thrift institution with its principal office in City A and a branch in City B is offering a higher rate at the branch in City B than at its office in City A. In the second situation, a thrift institution offers to renew maturing time deposits at a higher rate than it offers for new deposits of the same maturity.

Time deposits at thrifts are governed by contract between the banking organization and its customer, as authorized by Banking Law, sections 234.1-a and 378-a. So long as the interest offered is within the limits set by law, the rate of interest may be established by competitive market forces and by agreement between the parties. It is the Banking Department's opinion that there is no impediment in the Banking Law or in the department's regulations to the payment of interest as proposed above.

The department has been informed by the Federal Deposit Insurance Corporation that, in its opinion, interest rate differentials such as those described above are not prohibited by the Federal Deposit Insurance Act or by its implementing regulations.

LEGAL INTERPRETATIONS LI 5. CREDIT UNIONS LEGAL INTERPRETATIONS LI 5. CREDIT UNIONS

3 CRR-NY Legal Interpret. LI 5.1 Revolving credit loans under Banking Law, section 470 {#sec-3-crr-ny-legal-interpret.-li-5.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 5.1}

A credit union inquired whether it had the power to approve lines of credit for its members and whether it could, in effect, enter revolving credit agreements with such members.

Relying on section 470 of the Banking Law, which requires that each loan application to a credit union “must be made in writing and must state the purpose for which the loan is desired and the security offered,” the department concluded that a credit union is foreclosed from issuing a “line of credit” since the purpose of each advance will not be known to the credit union, nor will its credit committee have the opportunity to pass on the wisdom of granting each advance.

The department noted that the reason for the credit union's requesting this authorization might have been related to the inconvenience caused by the statutory requirement that the credit union's credit committee pass on every loan. Therefore, the department pointed out that, to a meaningful extent, this inconvenience has been eliminated by chapter 68 of the Laws of 1969 which authorized the credit committee of a credit union having shares in excess of $50,000 to appoint loan officers, which officers are authorized to make certain loans.

DATED: July 22, 1969

3 CRR-NY Legal Interpret. LI 5.2 Manner of holder bearer securities {#sec-3-crr-ny-legal-interpret.-li-5.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 5.2}

A credit union inquired whether securities in which it could legally invest but which were available only in bearer form could be held in an account with a broker who in turn would place them in the broker's own name in a custody account with a commercial bank in this State, but with a designation that they were the property of the credit union. Subdivision 14 of section 453 of the Banking Law, pertaining to securities in which a credit union may invest, provides with exceptions not here relevant that such securities if non-registrable “shall be placed in the custody of a bank or trust company or a national bank located in this State, in the name of the credit union__”

The department replied that the arrangement described would not be in compliance with law. As a technical matter the securities would be held by the bank in the name of the broker, not of the credit union as required by statute. As a matter of substance, the fact that there was some form of designation regarding the credit union's ownership would not give the credit union the same control over the securities as it would have if the account were in its own name. In addition, the placement of a broker in the chain of ownership, however nominal its interest may appear to be, adds a degree of risk to the liquidity of, and clarity of ultimate title to the investment securities concerned.

DATED: November 26, 1973

LEGAL INTERPRETATIONS LI 6. OTHER LICENSEES LEGAL INTERPRETATIONS LI 6. OTHER LICENSEES

3 CRR-NY Legal Interpret. LI 6.1 Insurance charges by licensed lenders {#sec-3-crr-ny-legal-interpret.-li-6.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 6.1}

(a) A company licensed to make small loans under article 9 of the Banking Law inquired whether, in connection with a single loan having more than one obligor, the lender could require several obligors to be insured and bear the cost of such insurance, so long as a single amount was charged for the joint or multiple risk rather than a charge which is the sum of the premiums for each individual risk.

(b) Section 357-a of the Banking Law states that when a licensed lender provides credit life or credit accident and health insurance, or both, with respect to one or more borrowers, the licensee may collect from the borrower otherwise legal premiums or charges, and further states that “(o)nly one such amount may be collected in connection with any loan contract irrespective of the number of obligors and only one obligor need be insured.”

(c) The department in response adhered to its long-standing interpretation of the statute as permitting the imposition of insurance charges only in the amount necessary to cover one obligor. The department recognized that several obligors can be insured more economically on a joint rather than a several basis. However, in the department's view it has not been demonstrated that insurance of more than one obligor is necessary to protect the licensee's investment or that it adds significantly to the protection afforded by insuring one obligor. Furthermore, there is nothing in the legislative history of section 357-a which would indicate legislative sanction for insurance of more than one obligor.

3 CRR-NY Legal Interpret. LI 6.2 Time of payment of service charge on premium advanced by insurance premium finance agency {#sec-3-crr-ny-legal-interpret.-li-6.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 6.2}

(a) The department was asked whether it was legally permissible for a premium finance agency to take the service charge authorized by section 568(4) of the Banking Law in one lump sum at the beginning of the related transaction or whether it must, on the contrary, pro-rate such charge over the life of the repayment contract and collect it periodically along with installments of principal.

(b) The department, after a careful review of the legislative history of article XII-B of the Banking Law and with particular emphasis on section 568(1), forbidding agencies from taking any greater charges than are permitted by that article, concluded that payment of the full service charge at the beginning of the contract rather than in installments over its term would constitute an expense to the borrower greater than that contemplated by the statute, since a “front end” payment of the service charge would immediately deprive the borrower of the use of the money concerned. Such an increase in the actual cost of the financing to the consumer was not, in the department's view intended by the Legislature and hence is legally impermissible.

3 CRR-NY Legal Interpret. LI 6.3 Preemption of part of Banking Law, § 352(b) by the Federal Equal Credit Opportunity Act {#sec-3-crr-ny-legal-interpret.-li-6.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 6.3}

Banking Law, § 352[b]

(a) Section 352(b) of the Banking Law provides that a licensed lender may not “induce or permit any person, nor any husband and wife jointly or severally, to become obligated, directly or contingently, or both, under more than one contract of loan at the same time, for the purpose or with the result of obtaining a higher rate of interest than would otherwise be permitted by this section”. This prohibits a licensed lender from inducing or permitting husband and wife to enter into multiple loan agreements if the purpose or result is to obtain a rate of interest higher than would be permissible if only one loan agreement were made. Since the interest rates which licensed lenders may charge decline as the amount of the loan increases, a licensee would earn greater interest from multiple loans than from a single loan and might attempt to structure a singe loan as a multiple loan in the absence of such a provision.

(b) The Federal Equal Credit Opportunity Act and Regulation B, which was promulgated pursuant thereto, expressly preempt “any provision of State law which prohibits the separate extension of consumer credit” to spouses if “each spouse voluntarily applies for separate credit from the same creditor”. Thus, Regulation B preempts so much of section 352(b) as prohibits a licensee from permitting a husband and wife to enter into separate loan agreements with the same licensee. By its terms, however, section 202.8(a) of Regulation B does not apply to a situation in which a licensee induces a husband and wife to enter into separate loan agreements.

(c) The result of the interplay of the two provisions is that the language of section 352(b) quoted above should be understood as follows:

(1) No licensee shall induce or permit any person to become obligated, directly or contingently, or both, under more than one contract of loan at the same time, for the purpose or with the result of obtaining a higher rate of interest than would otherwise be permitted by this section.

(2) No licensee shall induce any husband and wife jointly or severally to become obligated, directly or contingently, or both, under more than one contract of loan at the same time, for the purpose or with the result of obtaining a higher rate of interest than would otherwise be permitted by this section.

(3) If a husband or wife so requests, a licensee must permit any husband and wife jointly or severally to become obligated, directly or contingently, or both, under more than one contract of loan at the same time, but the licensee may not obtain a higher rate of interest on any loan than would otherwise be permitted if any loan or loans made to both spouses jointly and any loan or loans made to one spouse individually were considered a single loan; provided, however, that any loan or loans made to one spouse individually or jointly with a third party shall not be considered in determining the rate of interest applicable to any loan or loans made to the other spouse individually or jointly with a third party.

(4) The aggregate amount of loans outstanding by a licensee on which any person is obligated in any manner shall not exceed the amount authorized by section 352(a) of the Banking Law.

3 CRR-NY Legal Interpret. LI 6.4 Preemption of part of Banking Law § 352(e) by § 2125(c) of the Vehicle and Traffic Law {#sec-3-crr-ny-legal-interpret.-li-6.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 6.4}

(a) The Banking Department was asked whether section 2125(c) and section 2123 of the Vehicle and Traffic Law, which became effective on July 1, 1972, impliedly repealed section 352(e) of the Banking Law, which permits a licensed lender to charge a borrower the cost of filing fees for the perfection of a lien on an automobile or to include it in the lender's charge to the borrower.

(1) Section 2123 of the Vehicle and Traffic Law provides that the method provided in this article of perfecting and giving notice of security interests subject to this article is exclusive. Security interests subject to this article are hereby exempted from the provisions of law which otherwise relate to the perfection of security interests.

(2) On the subject of fees, section 2125(c) directs that the fee for filing a notice of security interest shall be paid by the party secured and such fee shall not be charged to the owner in any manner.

(b) The quoted provisions have not been the subject of judicial construction, but a literal reading of the statutory language indicates that the Legislature intended for them to be exclusive. The filing fee for perfection of a lien on a vehicle must be paid by the “party secured”, which, in this case, is the lender. An owner of the vehicle may not be charged for the cost of filing the notice of security. Section 2101(g) defines “owner” to mean “a person, other than a lienholder, having the property in or title to a vehicle”. Consequently, a lienholder cannot be the “owner” of a vehicle.

(c) If the borrower is the owner of the automobile which is the subject of the security notice, there will be a clear conflict between section 2125(c) of the Vehicle and Traffic Law and section 352(e) of the Banking Law.

(d) The laws enacting sections 2123 and 2125(c) of the Vehicle and Traffic Law contain no express repeal of section 352(e). Whether or not they impliedly repealed it depends on the legislative intent. It should be noted, in this connection, that an implied repeal of a special law, by a subsequent general statute, is not to be presumed, Where the two statutes are so completely inconsistent that they cannot operate together, however, an implied repeal will be deemed to occur.

(e) In this case the Legislature has clearly indicated its intent in the statute itself by providing in section 2123 of the Vehicle and Traffic Law that the procedure set forth therein shall be exclusive, reflecting an intent to render all prior inconsistent provisions inapplicable. Section 2125(c)'s directive that the filing fee shall be paid by the party secured and not charged to the owner is patently inconsistent with section 352(e). To the extent that section 352(e) of the Banking Law is not in accord with section 2125(c) of the Vehicle and Traffic Law, therefore, it has been abrogated.

(f) As a result, it is no longer permissible for a licensed lender to charge the costs of filing a notice of security interest on a post 1972 model automobile to the borrower/owner.*

LEGAL INTERPRETATIONS LI 7. MISCELLANEOUS—BANKING LAW LEGAL INTERPRETATIONS LI 7. MISCELLANEOUS—BANKING LAW

3 CRR-NY Legal Interpret. LI 7.1 Certain activities with respect to credit cards {#sec-3-crr-ny-legal-interpret.-li-7.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 7.1}

A company wished to engage in the business of gathering credit card purchase slips from a number of small merchants and presenting the same for payment to the bank having issued the cards. By such presentment in bulk the company obtained a more favorable purchase rate from the card issuer than would have been available to each merchant making smaller individual presentments. Part of the saving was to be retained by the company, and the rest to be passed on to the participating merchants. The department was asked whether this activity required licensing under the Banking Law.

In response the department indicated that article XI-B of the Banking Law would only require licensing of the activity described if the company was in the business of “purchasing or otherwise acquiring” the credit-card obligation involved. If title to the obligations at no time vested in the company and its activity was solely in the nature of providing bookkeeping and bailment services to the merchants as their agent, neither article XI-B nor any other Banking Law provision would require licensing. The department understood that payment arrangements between issuing banks and merchants were not such as to constitute the company as one which receives money for transmission or transmits the same, an activity which would require licensing under article XIII of the Banking Law.

DATED: June 1, 1974

LEGAL INTERPRETATIONS LI 8. MISCELLANEOUS—BANKING BOARD REGULATIONS, SUPERINTENDENT'S REGULATIONS, SUPERVISORY POLICIES AND PROCEDURES LEGAL INTERPRETATIONS LI 8. MISCELLANEOUS—BANKING BOARD REGULATIONS, SUPERINTENDENT'S REGULATIONS, SUPERVISORY POLICIES AND PROCEDURES

3 CRR-NY Legal Interpret. LI 8.1 Interest payments by a person other than the borrower {#sec-3-crr-ny-legal-interpret.-li-8.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 8.1}

A borrower asked whether there would be a violation of the usury laws if a lender, upon the security of a single family residence, required the seller or broker (not the borrower) to pay a certain amount, as discount or points, in addition to charging the borrower interest at a rate slightly below the maximum rate permitted by law.

The borrower's attention was called to the language of section 4.2 of Part 4 of the general regulations of the Banking Board which defines interest to include “all other amounts paid or payable, directly or indirectly, by any person, to or for the account of the lender in consideration for making the loan or forbearance.” (Emphasis added) The borrower was advised that amounts paid in consideration for the making of the loan or forbearance would, thus, be included as interest regardless of whether they were paid by the borrower or by someone else. If the amount so paid brought the interest rate over the maximum rate permitted by law, then the loan would be usurious.

DATED: July 23, 1969

3 CRR-NY Legal Interpret. LI 8.2 Propriety of “transfer” charge by mortgagee upon change of mortgagor {#sec-3-crr-ny-legal-interpret.-li-8.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 8.2}

The department was informed that a mortgage investing institution had granted a conventional home mortgage loan in 1969 which by its terms did not allow the mortgagee to accelerate the mortgage indebtedness or declare it in default upon sale or transfer of the residence mortgaged. The mortgage debt bore the maximum rate permitted by law when made. A sale did occur, and the mortgagee attempted to impose a “transfer fee” on the assuming mortgagor. The department was asked whether in its opinion the charge was proper under Part 4 of the general regulations of the Banking Board, which was applicable because the loan postdated June 30, 1968.

The department responded that on the facts presented it did not see a legal justification for the charge. Since the loan already bore the maximum legal rate in effect at the time it was made, imposing the additional charge would be a usurious practice unless the charge fell within one of the categories set forth in section 4.3 of Part 4. Since the purchaser of the home assumed the existing mortgage, the department recognized that certain of these categories might be operative, such as legal services and disbursements (section 4.3[b][5]), and possible fees and taxes for filing or recording whatever transfer, satisfaction or other documents might be necessary (section 4.3[c] and [e]). However, the mortgagee should be prepared to itemize and justify these expenses and may not charge an undifferentiated aggregate “transfer fee”. The department was of the view that the foregoing principles would be equally applicable if the purchaser had taken the property subject to the mortgage instead of assuming it. It was felt likely, however, that even fewer of the categories in section 4.3 would be operative in a “subject to” situation.

DATED: May 1, 1973

LEGAL INTERPRETATIONS LI 9. MISCELLANEOUS—OTHER LEGAL INTERPRETATIONS LI 9. MISCELLANEOUS—OTHER

3 CRR-NY Legal Interpret. LI 9.1 Back office operations {#sec-3-crr-ny-legal-interpret.-li-9.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 9.1}

A foreign banking corporation licensed to do business in New York asked whether it could conduct a municipal bond operation at a so-called “back-office location” without special branch authorization. The operation would have involved underwriting and trading municipal securities as a dealer with other dealers, and purchasing and selling municipal securities, as an agent.

The Department responded that the construction given to Sections 200 and 396 of the Banking Law which govern the licensing of offices for the transaction of business by foreign banking corporations and savings and loan associations is similar to the construction given Sections 105 and 240(2) of the Banking Law which prohibit banking organizations from transacting all or any part of the “usual business of banking” from any place other than a principal office or duly authorized branch. In construing these sections, the Department has historically distinguished the activities which may be conducted solely from a duly authorized office or branch from the so-called “back office”, loan production office and representative office operations for which no special approval is required.

The “back office” exception would not apply unless the activities and functions of the back office were carefully circumscribed. The bank's services could not be marketed from such office, and any contact with the members of the public to whom or for whom such services are normally directed or performed would have to take place at either the authorized office or branch or, to the limited extent permitted by Supervisory Policy CB 121, a loan production office or representative office, and not at the “back office”.

The loan production office and representative office exceptions would not apply unless the activities and functions conducted thereat were carefully circumscribed and the bank had submitted the information required by CB 121. To qualify as a loan production office, the activities would have to be limited to the solicitation of loans on behalf of the bank, the solicitation of investors to purchase loans from the bank, and the search for servicers of the bank's loans. Although limited contact with members of the public could occur in connection with such solicitations, the activities of the loan production office could not be so broad as to constitute the business of banking within the meaning of the New York State Banking Law. See Section 121.2(a) of Supervisory Policy CB 121.

Likewise, to qualify as a representative office, the activities of the office would have to be limited to the solicitation of new business, to research, to the servicing of home office needs, and to the acting as a liaison between the home office and its customers in New York State. See Section 121.b(2) of the Supervisory Policy CB 121.

The information provided to the department indicated that the activities of the so-called “back office” would entail substantially more than the mere solicitation of business for the Municipal Bond Department. Through its proposed underwriting activities, dealer activities and agency activities in municipal securities, the bank would have been unequivocally engaged in the business of banking. In this connection, the department referred to a ruling of the New York Attorney General, 1914 Op. Atty. Gen. 147, in which the Attorney General held that the purchase, sale, and delivery of investment securities by a trust company constituted the transaction of the business of the company and that such activity could be conducted solely at an authorized location.

In light of the foregoing, the department concluded that the proposed Municipal Bond Department operations would not fall within the “back office,” loan production office or representative office exceptions, and that such operations could be conducted solely at a duly authorized branch.

DATED: July 1, 1976

3 CRR-NY Legal Interpret. LI 9.2 Sale of certificates of deposit in New York by out-of-State savings and loan association {#sec-3-crr-ny-legal-interpret.-li-9.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 9.2}

[Statutory authority: Banking Law, §§ 131, 670] A savings and loan association organized under the laws of the State of California (the “S&L”) asked whether it would be permissible for the S&L to issue certificates of deposit in denominations of $100,000 to individuals and investment houses within the State of New York under the circumstances described in its letter. The S&L would deliver the certificates to the New York commercial bank (the “Bank”) with which it currently maintains a commercial account and would issue a power of attorney to the Bank, authorizing it, upon receipt of specific instructions, to countersign one or more of the certificates of the S&L and to deliver the certificates, as so countersigned, to the purchaser or purchasers thereof against payment therefor. The funds received as payment for the certificates would be deposited in the Bank to the credit of the S&L. The sale of the certificates would be governed, in each case, by the terms of the purchase orders which would be accepted in California. By executing the purchase orders, the purchasers of the certificates would acknowledge that the Bank's actions—i.e., the completion of delivery in New York on behalf of the S&L—would not give rise to any rights against the Bank. The S&L would permit the certificates to be paid, at maturity, from its commercial account with the Bank unless it exercised its right, prior to maturity, to insist upon presentment and payment at its offices in California.

Subdivision 1 of section 131 of the Banking Law provides, in relevant part, as follows:

“No corporation, domestic or foreign, other than a national bank or a federal reserve bank, unless expressly authorized by the laws of this state, shall employ any part of its property, or be in any way interested in any fund which shall be employed for the purpose of receiving deposits, making discounts, receiving for transmission or transmitting money in any manner whatsoever. . . ”

Section 670 of the Banking Law reads as follows:

“Any person or corporation, who acts as agent or representative of any mortgage, loan or investment corporation or building and mutual loan corporation or association or co-operative savings and loan association organized outside of this state, while such mortgage, loan or investment corporation or building and mutual loan corporation or association or co-operative savings and loan association shall not be authorized under a license of the superintendent of banks to do business in this state, is guilty of a misdemeanor.”

The fact that the Bank would be authorized to countersign and deliver the certificates in the name of the S&L, that it would be authorized to accept payment therefor on behalf of the S&L, that the payment would be retained in the S&L's account in New York and that the Bank would not incur any liability to the purchasers of the certificates in its own name indicate that the Bank would be acting solely as “agent” for the S&L. As such, it would be accepting and delivering certificates in New York on behalf of, or as the representative of, a foreign corporation. The foreign corporation would thereby have an interest in a fund employed in the receipt of deposits within the meaning of, and would otherwise be engaged, through its agent, in the activities proscribed by, Section 131(1) of the Banking Law. Finally, the Bank itself, as representative of the foreign S&L, would be violating Section 670 of the Banking Law.

It was suggested, on behalf of the S&L, that Sections 131 and 670 were inapplicable and that the legality of the proposed transaction should be determined solely by reference to Article 10 of the Banking Law (and Section 408(1) thereof in particular). The language of the statutory provisions cited, however, prohibits any such construction of the statute. Section 131(1), for example, specifically states that it applies to any “corporation, domestic or foreign __ other than a national bank or a federal reserve bank” and Section 670 specifically prohibits “any person or corporation” from acting “as agent or representative of any __ loan or investment corporation or building and mutual loan corporation or association or co-operative savings and loan association organized outside of this state, while such [entity] __ shall not be authorized under a license of the superintendent of banks to do business in this state__”

It was the Department's view that the proposed transaction would require substantial restructuring if it were to comply with the Banking Law. More precisely, all activities related to the certificates of deposit, including receipt of payment for the certificates and signature of the certificates, should be transacted outside of New York.

DATED: March 5, 1976

3 CRR-NY Legal Interpret. LI 9.3 Transfer agents {#sec-3-crr-ny-legal-interpret.-li-9.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Legal Interpret. LI 9.3}

It is the opinion of the department that a corporation organized under the Business Corporation Law may not act as transfer agent in this State.

DATED: November 6, 1976

SUPERVISORY POLICIES AND PROCEDURES SUPERVISORY POLICIES AND PROCEDURES

G. GENERAL G. GENERAL

1. SCHEDULE OF ADDRESSES AND FEES. 1. SCHEDULE OF ADDRESSES AND FEES.

3 CRR-NY Sup. Pol. G 1.1 Contacting the New York State Department of Financial Services; other agencies; availability of documents {#sec-3-crr-ny-sup.-pol.-g-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 1.1}

(a) The main office of the New York State Department of Financial Services is the New York City office. Any person having business with the Department of Financial Services may contact the New York City office by accessing the department's web page, calling the toll-free consumer telephone number or the other telephone number listed for the New York City office, or writing the Department of Financial Services at the address listed for the New York City office, as set forth in subdivision (b) of this section. All application forms may be obtained by contacting the New York City office of the Department of Financial Services or accessing the Department of Financial Services web page. Any communications by persons to the superintendent or any other division or office of the Department of Financial Services, including any applications or any documents related thereto, shall be submitted to the New York City office, unless specifically instructed otherwise pursuant to such applications or other communications by the Department of Financial Services. Inquiries or complaints regarding persons or entities regulated by the Department of Financial Services may be submitted in writing, by accessing the web page, or by calling the toll-free consumer or New York City office telephone numbers. Persons interested in inspecting or copying public documents available through the department may contact or visit the New York City office as noted herein; however, copying of documents is subject to a fee as set forth in section 1.2 of this Part.

(b) The web page for the Department of Financial Services is:

www.dfs.ny.gov

The toll-free consumer telephone number for the Department of Financial Services is:

1-800-342-3736.

The offices of the Department of Financial Services are located at:

New York State Department of Financial Services One State Street New York, NY 10004-1417 (212) 709-3500

New York State Department of Financial Services One Commerce Plaza Albany, NY 12257 (518) 474-6600

New York State Department of Financial Services 333 East Washington Street Syracuse, NY 13202 (315) 428-4049

(c) The United States Code is published by the Office of the Law Revision Counsel of the United States House of Representative. The Code of Federal Regulations is published by the Office of the Federal Register, National Archives and Records Administration. Both documents are available for public inspection and copying at the New York City office of the Department of Financial Services (see contact information, as noted above). The Federal Register also is published by the Office of the Federal Register, National Archives and Records Administration. All the referenced Federal publications can be obtained from the U.S. Government Printing Office (GPO). The GPO is located at:

U.S. Government Printing Office 732 North Capitol Station NW Washington, DC 20401 (202) 512-0000

The publications also may be accessed and copied through the GPO web page at:

(www.gpoaccess.gov/index.html)

The GPO web page also provides the locations of Federal Depository Libraries throughout New York State at which copies of the United States Code, the Code of Federal Regulations and the Federal Register may be viewed.

3 CRR-NY Sup. Pol. G 1.2 Schedule of fees; payment {#sec-3-crr-ny-sup.-pol.-g-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 1.2}

(a) Any fee or fees prescribed by this section may be paid by a check payable to the order of "New York State Department of Financial Services."

(b) Fees charged for a copy of copies of documents on file with the department and/or for the certification thereof shall be: 25 cents per page for a copy not exceeding 9 x 14 inches in size, and the actual cost of the reproduction if larger or in any other form or for the certification thereof; except that in the case of requests pursuant to the Freedom of Information Law, the first 10 pages of copies, not exceeding 9 x 14 inches made for a requester in any calendar year, shall be free. The Department of Financial Services reserves the right to charge the same fee per page for those records requiring redaction even is no copies are required.

(c) Fees charged for the processing of any application for which a fee may be charged pursuant to the Banking Law, or the regulations thereunder, shall be as set forth in the following schedule:

Schedule of Application Fees

| | | Section 18-a | | --- | --- | --- | | | Banking Law | Authorized | | Institution | Authorizations | Amount | | Depository Institutions | | | | Banks & Trust Companies (including Limited Purpose Trust Companies) | | | | Charter Application | § 23 | $12,500 | | Branch or Public Accommodation Office (see Note 1) | § 29/§ 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 113 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Change of Control | § 143-b.2 | $12,500 | | Acquisition of Banking Institution (no change of control) | § 143-a | $12,500 | | Conversion (From National to State) | § 136.5 | $12,500 | | Merger (National to State) | § 136.5 | $12,500 | | Purchase of Assets (by State from Federal) | § 136-a | $12,500 | | Merger | § 601.1 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Out-of-State, State-Chartered Banking Institutions | | | | Additional NY Branch (after initial entry) (see Note 2) | § 224 | $ 750 | | Savings Banks - Mutual | | | | Charter Application | § 23 | $12,500 | | Branch or Public Accommodation Office (see Note 1) | § 29/§ 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 241.1 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Conversion (From Federal to State) | § 412 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Conversion (From Mutual to Stock Form) | § 14-e.2 | $12,500 | | Savings Banks - Stock Form | | | | Charter Application | § 23/§ 14-e.2 | $12,500 | | Branch or Public Accommodation Office (see Note 1) | § 29/§ 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 241.1 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Change of Control | § 143-b.2 | $12,500 | | Conversion (From Federal to State) | § 412 | $12,500 | | Merger (Federal to State) | § 600/§ 14-e.2 | $12,500 | | Purchase of Assets (By State from Federal) | § 601-a/§ 14-e.2 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Acquisition of Banking Institution (no change of control) | § 143-a | $12,500 | | Savings & Loans - Mutual | | | | Charter Application | § 23 | $12,500 | | Branch or Public Accommodation Office (see Note 1) | § 29/§ 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 396 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Conversion (From Federal to State) | § 410/§ 412 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Conversion (from Mutual to Stock Form) | § 14-e.2 | $12,500 | | Conversion (to Savings Bank) | § 23/§ 411 | $12,500 | | Savings & Loans - Stock Form | | | | Charter Application | § 23/§ 14-e.2 | $12,500 | | Branch or Public Accommodation Office (see Note 1) | § 29/§ 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 396 | $ 750 | | Change of Control | § 143-b.2 | $12,500 | | Conversion (From Federal to State) | § 410 | $12,500 | | Merger (Federal to State) | § 600/§ 14-e.2 | $12,500 | | Purchase of Assets (By State from Federal) | § 601-a/§ 14-e.2 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Acquisition of Banking Institution (no change of control) | § 143-a | $12,500 | | Conversion (to Savings Bank) | § 23/§ 411 | $12,500 | | Credit Unions | | | | Charter Application | § 23 | $12,500 | | New Station (see Note 3) | § 461 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 461 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Conversion (From Federal to State) | § 486 | $12,500 | | Conversion (to Mutual Savings Bank) | § 487-a | $12,500 | | Merger | § 601.1 | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Conversion (from Mutual to Stock Form) | 14-e.2 | $12,500 | | Conversion (to Savings Bank) | § 23/§ 411 | $12,500 | | Foreign Banks - Branches & Agencies | | | | License Application | § 201.4 | $ 7,500 | | Public Accommodation Office | § 191 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 203.1 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Foreign Banks - Representative Offices | | | | License Application | § 26 | $ 7,500 | | Change of Location (Temporary) (see Note 4) | § 28-a | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Private Bankers | | | | Initial Verified Application | § 23 | $12,500 | | Verified Certificate (Continuation of Business) | 24 | $ 750 | | Branch | § 29 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 164 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Investment Companies | | | | Charter Application | § 23 | $12,500 | | Branch (unless exempt under § 508.4) | § 29/§ 508.4 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 511 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Change of Control | § 519 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Safe Deposit Companies | | | | Charter Application | § 23 | $12,500 | | Branch) | § 29 | $ 750 | | Change of Location (Temporary and Permanent) | § 28-a/§ 321 | $ 750 | | Change of Location (Temporary due to emergency) | § 28-a | $ 0 | | Change of Control | § 324 | $12,500 | | Merger | § 601 | $12,500 | | Purchase of Assets | § 601-a | $12,500 | | Sale or Conveyance of More Than 50% of Assets | § 605.8 | $12,500 | | Holding Companies | | | | Initial or Expansion Application | § 142 | $12,500 | | Acquisition of Banking Institution (no change of control) | § 143-a | $12,500 | | Mutual Holding Companies | | | | Conversion (from Mutual to Stock Form) | § 294/§ 14-e.2 | $12,500 | | Sale of up to 49% of Subsidiary Bank Stock | § 290.1/§ 14-e.2 | $12,500 | | Non-Depository Institutions | | | | Mortgage Bankers | | | | Original License | § 591.2 | $ 3,000 | | Branch License | § 591.3 | $ 500 | | Change of Control | § 594-b.1 | $ 3,000 | | Mortgage Brokers | | | | Original Registration | § 591-a | $ 1,500 | | Branch | § 591-a.2 | $ 500 | | Change of Control | § 594-b | $ 1,500 | | Check Cashers | | | | Original License | § 367.3 | $ 3,000 | | Additional Regular Location | § 367.3 | $ 2,000 | | Mobile Location | § 367.3 | $ 2,000 | | Limited Station | § 370.2 | $ 500 | | Change of Location (Regular) | § 367.3 | $ 2,000 | | Change of Location (Mobile) | § 367.3 | $ 500 | | Change of Location (Limited) | § 367.3 | $ 0 | | Change of Control | § 370-a.1 | $ 3,000 | | Money Transmitters | | | | Original License | § 641.3 | $ 3,000 | | Change of Control | § 652-a.1 | $ 3,000 | | Licensed Lenders | | | | Master License | § 341.2 | $ 3,000 | | Additional Location (Temporary and Permanent) | § 341.6 | $ 500 | | Change of Location | § 343.3a | $ 500 | | Change of Control | § 345-1 | $ 3,000 | | Acquisition, Merger, Consolidation, Purchase of Assets | § 344.1 | $ 3,000 | | Sales Finance Companies | | | | Original License (1 location/3 or more initial locations) | § 492.4.b & .c | $ 3,000/4,000 | | Additional Place of Business | § 492.4.c | $ 500 | | Change of Control | § 492-a.1 | $ 3,000 | | Premium Finance Companies | | | | Original License (1 location/3 or more initial locations) | § 555.4 | $ 3,000/4,000 | | Additional Office | § 555.3 | $ 500 | | Change of Control | § 555-a.1 | $ 3,000 | | Budget Planners | | | | Original License | § 580.3 | $ 3,000 | | Change of Control | § 583-a.1 | $ 3,000 |

Note 1: No fee charged when branch is part of the approval of a Banking Development District (see § 96-d, Banking Law). Note 2: No fee charged if home state does not charge fee for entry or additional branches of a NY banking institution. Note 3: The designation of a student branch is not subject to the provisions applicable to stations, pursuant to § 450-b, Banking Law. Note 4: No fee charged for a permanent change of location.

2. ADVERTISEMENT OF INTEREST RATES ON SAVINGS AND TIME ACCOUNTS 2. ADVERTISEMENT OF INTEREST RATES ON SAVINGS AND TIME ACCOUNTS

3 CRR-NY Sup. Pol. G 2.1 Advertisement of interest rate achieved through compounding {#sec-3-crr-ny-sup.-pol.-g-2.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 2.1}

Advertisements may refer to an effective annual yield on any savings account, time deposit, certificate of deposit, or other time balance, which is achieved by compounding interest during one year together with a reference to the basis of compounding, but the annual rate of simple interest on such time balance which does not include the effect of compounding shall also be stated with at least equal prominence.

3 CRR-NY Sup. Pol. G 2.2 Advertisement of compounding method {#sec-3-crr-ny-sup.-pol.-g-2.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 2.2}

While it is the policy of the superintendent to encourage the payment of the maximum permitted interest rates on savings and time accounts, provided sufficient earnings are available to make such payments, it is the superintendent's belief that advertisements which give prominence to statements such as interest is “compounded continuously” , “compounded every minute of the day”, “compounded every second” or “compounded even while you sleep” may be confusing. Accordingly, the following guidelines are established for advertisements which refer to compounding interest for periods of less than one day:

(a) the reference to the basis of compounding shall be limited to the word “compounded” and the actual time period or interval used; further, such reference shall not be emphasized or otherwise given prominence within the advertisement and, in the case of a printed advertisement, shall not appear in a type size which is larger than that of the text of such advertisement;

(b) the advertisement shall state prominently the effective annual yield achieved by compounding on the basis used as well as the simple annual interest rate in accordance with subsection 2.1 hereof;

(c) the advertisement shall state the monetary difference in the amount earned annually, on the sum of $1,000, between the method of compounding used and compounding on a daily basis; and

(d) no further statement regarding the basis of compounding, which is not specifically permitted by this subsection 2.2, shall be included in such advertisement.

Irrespective of the description of the method of compounding used, the maximum interest rate permitted by the appropriate regulatory authority may be paid.

3. NOTICE OF MINIMUM BALANCE REQUIREMENTS ON DAY-OF-DEPOSIT TO DAY-OF-WITHDRAWAL SAVINGS ACCOUNTS 3. NOTICE OF MINIMUM BALANCE REQUIREMENTS ON DAY-OF-DEPOSIT TO DAY-OF-WITHDRAWAL SAVINGS ACCOUNTS

3 CRR-NY Sup. Pol. G 3.1 Notice of minimum balance requirements to be given depositors {#sec-3-crr-ny-sup.-pol.-g-3.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 3.1}

The superintendent has adopted section 67.2, Part 67, general regulations of the superintendent to insure that every depositor having a day-of-deposit to day-of-withdrawal account with a minimum balance requirement be given due notice of such requirement.

3 CRR-NY Sup. Pol. G 3.2 Sample notice {#sec-3-crr-ny-sup.-pol.-g-3.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 3.2}

Compliance would be effected if the following appears in each passbook, or other evidence of deposit, in clear and prominent type of stamping, printing or otherwise:

“A minimum balance of $ must be maintained in this account until the end of each interest/dividend period in which a withdrawal is made. Failure to maintain such minimum balance will result in foreiture or interest/dividends on withdrawals up to the date that the balance falls below the minimum balance.”

3 CRR-NY Sup. Pol. G 3.3 Application to passbooks already issued {#sec-3-crr-ny-sup.-pol.-g-3.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 3.3}

Passbooks already issued as of the effective date of the amendment may be brought into compliance by inserting or affixing the appropriate notice whenever such passbooks are presented at any office of the issuing institution.

4. PUBLIC ACCOMMODATION OFFICES, ADJOINING FACILITIES, AND ADJACENT FACILITIES 4. PUBLIC ACCOMMODATION OFFICES, ADJOINING FACILITIES, AND ADJACENT FACILITIES

3 CRR-NY Sup. Pol. G 4.1 General statement {#sec-3-crr-ny-sup.-pol.-g-4.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 4.1}

The Superintendent of Financial Services is prepared to authorize public accommodation offices for commercial banks, savings banks and savings and loan associations, subject to the requirements of article IV- A of the Banking Law and provided that, unsound or destructive competition would not result, and there is a reasonable likelihood of success for the proposed office.

3 CRR-NY Sup. Pol. G 4.2 Adjoining or adjacent facilities {#sec-3-crr-ny-sup.-pol.-g-4.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 4.2}

The establishment of the following does not require authorization by the superintendent:

(a) Any facility which adjoins the wall of an existing office of an institution.

(b) Any facility which is within 150 feet of the nearest wall of an institution's principal office or branch provided that such facility is located on the same property or property contiguous with the principal office or branch and there is no intervening space occupied or which may be occupied by anyone else (except for purposes of parking by bank customers and employees), and no public street or thoroughfare, between the facility and the institution's principal office or branch. However, the superintendent must be notified of an institution's intention to open such facility at least 30 days in advance of such opening and such institution must provide proof satisfactory to the superintendent that the facility meets the above criteria.

3 CRR-NY Sup. Pol. G 4.3 Existence of public accommodation office not considered in evaluating application for full-service branch {#sec-3-crr-ny-sup.-pol.-g-4.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 4.3}

The existence of a public accommodation office shall not be considered as a factor in the evaluation of an application for a full-service branch.

6. BRANCHING POLICY FOR BANKING ORGANIZATIONS 6. BRANCHING POLICY FOR BANKING ORGANIZATIONS

3 CRR-NY Sup. Pol. G 6.1 General statement {#sec-3-crr-ny-sup.-pol.-g-6.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 6.1}

The Superintendent of Financial Services is prepared to authorize branches of State-chartered banking organizations, provided that approval of the proposed branch will not result in unsound and destructive competition, the performance of the institution pursuant to the standards set forth in Part 76 of this Title is satisfactory to the department, and the policies, condition and operation of the institution do not afford a basis for supervisory objection. The words banking organization as used in this supervisory policy shall include all banking organizations (as defined in section 2[11] of the Banking Law) which are authorized by the Banking Law to open branch offices, subject to the provisions of section 29 of the Banking Law. The words branch, branches, office and offices as used in this Supervisory Policy shall not include limited branches, public accommodation offices, satellite offices, automated teller machines, point-of-sale terminals or similar facilities.

3 CRR-NY Sup. Pol. G 6.2 Competing applications {#sec-3-crr-ny-sup.-pol.-g-6.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 6.2}

(a) If applications are filed by two or more institutions for new branches in the same area and, in the judgment of the superintendent, approval of only one branch is warranted, particular consideration will be given to the following factors:

(1) which of the institutions is best able, in terms of capital and management strength, to support an additional office;

(2) the effects of approval on competition and public choice among banking institutions in the area;

(3) the effects of approval on the competitive banking structure on a citywide or countywide basis;

(4) the performance of the institution pursuant to the standards set forth in General Regulation Part 76; and

(5) any other factors which may be of particular relevance in a given situation.

(b) In no event will the date of filing of the application be the sole factor in deciding which of the competing branch applications is approved.

3 CRR-NY Sup. Pol. G 6.3 Competitive effects on other institutions {#sec-3-crr-ny-sup.-pol.-g-6.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 6.3}

In determining whether approval of a branch application by an institution will result in unsound and destructive competition, consideration will be given to all banking organizations as well as to all national banks, out-of-state state banks, Federal savings banks and Federal savings and loan associations, in substantial competition with the proposed branch.

7. LEGALIZATION OF FOREIGN DOCUMENTS 7. LEGALIZATION OF FOREIGN DOCUMENTS

3 CRR-NY Sup. Pol. G 7.1 General statement {#sec-3-crr-ny-sup.-pol.-g-7.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 7.1}

From time to time, documents executed in foreign countries must be submitted to the department. Such documents include applications by a foreign banking corporation for a license to open a branch or agency in New York, appointment of New York branch manager as well as certifications as to paid-in-capital stock, surplus fund and undivided profit. Such requirements are found, for example, in article V of the New York State Banking Law and Supervisory Procedure CB 104.

On October 15, 1981, the United States became a party to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents. The convention simplified the procedure for having a foreign document legalized. Each country which is a party to the convention designates the authority or authorities who may certify public documents. A certification, also known as an apostille, is affixed to the document by the competent local authority of the foreign country where the document originated. The form of the apostille is set forth in section 7.2 of this supervisory policy in the same form as set forth in the convention. Further legalization of documents will not be required for submission to the New York State Department of Financial Services in the case of documents originating in countires which are parties to the convention.

3 CRR-NY Sup. Pol. G 7.2 Model form of apostille {#sec-3-crr-ny-sup.-pol.-g-7.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 7.2}

APOSTILLE

Country
This public document

has been signed by

Acting in the capacity of
bears the seal/stamp of
certified at _ 6. the _
by
No.
Seal/stamp Signature 10.

3 CRR-NY Sup. Pol. G 7.3 Limitations {#sec-3-crr-ny-sup.-pol.-g-7.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 7.3}

This supervisory policy applies only to documents originating in countries which are party to the convention. The department will rely on opinions of counsel or other appropriate evidence from parties seeking to use this supervisory policy that the country in which the documents originate is a party to the convention.

8. REGISTRATION OF DOMESTIC REPRESENTATIVE OFFICES 8. REGISTRATION OF DOMESTIC REPRESENTATIVE OFFICES

3 CRR-NY Sup. Pol. G 8.1 General {#sec-3-crr-ny-sup.-pol.-g-8.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 8.1}

Any banking institution seeking to establish or maintain a representative office shall submit the information called for by section 8.3 of this Supervisory Policy to the superintendent, at the New York City Office of the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1.

3 CRR-NY Sup. Pol. G 8.2 Definitions {#sec-3-crr-ny-sup.-pol.-g-8.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 8.2}

For purposes of this Supervisory Policy:

(a) Banking institution means any bank, trust company, savings bank, and savings and loan association chartered under the laws of New York State, Puerto Rico or any other state or territory of the United States.

(b) Representative office means any office located in this State of a banking institution that engages in representational functions (including but not limited to soliciting business, marketing services or acting as liaison with customers) on behalf of the banking institution, but shall not include a branch office of a banking institution or any office that engages solely in administrative or supervisory functions. A representative office shall also include an office of a New York chartered institution located outside this State that engages in representational functions.

3 CRR-NY Sup. Pol. G 8.3 Information required {#sec-3-crr-ny-sup.-pol.-g-8.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 8.3}

(a) The information to be supplied to the superintendent pursuant to section 8.1 of this Supervisory Policy shall be in letter form, shall be submitted prior to the establishment of the office, and shall include:

(1) address of the representative office;

(2) for institutions headquartered outside this State, address of the head office of the banking institution;

(3) complete description of the activities of the representative office;

(4) for institutions headquartered outside this State, opinion of counsel that:

(i) the activities of the representative office are permissible under section 8.4 of this Supervisory Policy; and

(ii) the banking institution has obtained all regulatory approvals required to establish and maintain such representative office.

(b) Any material changes in the above shall be promptly reported to the superintendent.

3 CRR-NY Sup. Pol. G 8.4 Permissible activities {#sec-3-crr-ny-sup.-pol.-g-8.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 8.4}

(a) The activities that may be conducted by a representative office of a banking institution in this State on behalf of such banking institution shall be limited to the following:

(1) approval of loans;

(2) execution of loan documents;

(3) solicitation of loans and, in connection therewith, assembly of credit information, making of property inspections and appraisals, securing of title information, preparation of applications for loans (including making recommendations with respect to action thereon);

(4) solicitation of purchasers of loans from the banking institution;

(5) solicitation of parties to contract with the banking institution for the servicing of its loans;

(6) solicitation of other banking business on behalf of the banking institution;

(7) conduct of research;

(8) acting as liaison with customers of the banking institution; and

(9) other similar activities.

(b) A representative office of a banking institution may not disburse funds, transmit funds, accept loan repayments, or accept or contract for deposits or deposit-type liabilities on behalf of the banking institution.

3 CRR-NY Sup. Pol. G 8.5 Designation as representative office {#sec-3-crr-ny-sup.-pol.-g-8.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. G 8.5}

Any representative office subject to registration pursuant to this Supervisory Policy shall designate itself as a representative office on any office sign at its office location, telephone listing, print advertisement and on its stationery. It shall also prominently display a notice at its office location that it is not a branch office of a bank and does not engage in general banking transactions at such office.

100. ADDRESSING OF REQUESTS FOR OFFICIAL ACTION 100. ADDRESSING OF REQUESTS FOR OFFICIAL ACTION

3 CRR-NY Sup. Proc. G 100.1 General rule {#sec-3-crr-ny-sup.-proc.-g-100.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 100.1}

To insure the orderly processing of Department of Financial Services (“department”) mail, supervised institutions and licensees should, unless otherwise specified in a particular Procedure, address all initial requests for official action and all initial requests for an opinion of department counsel to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

Copies of such initial correspondence may be sent to named individuals or divisions within the department.

3 CRR-NY Sup. Proc. G 100.2 Subsequent correspondence {#sec-3-crr-ny-sup.-proc.-g-100.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 100.2}

Such initial requests will be routed to specific individuals or divisions within the department, from whom the applicant may receive further correspondence, including requests for additional information. Subsequent correspondence from the applicant concerning the same request should be addressed specifically to such individual or to the deputy superintendent in charge of the division to whom the initial request has been referred.

101. NOTICE OF AUTOMATED DATA PROCESSING SYSTEMS: SUPERINTENDENT'S RIGHT TO EXAMINE INDEPENDENT SERVICES 101. NOTICE OF AUTOMATED DATA PROCESSING SYSTEMS: SUPERINTENDENT'S RIGHT TO EXAMINE INDEPENDENT SERVICES

3 CRR-NY Sup. Proc. G 101.1 Notice {#sec-3-crr-ny-sup.-proc.-g-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 101.1}

All banking organizations, registered bank holding companies, and other entities supervised by the Department of Financial Services should notify the Department of Financial Services, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, of a decision to contract to receive automated data processing services from an independent firm or banking organization.

Such notice should list the name of the firm or banking organization which is to furnish such services and the date for conversion of records to outside-serviced automated data processing equipment, and should identify the application to be initially converted, the applications scheduled for subsequent conversion and the anticipated conversion dates; and should be accompanied by a copy of the proposed contract to receive automated data processing services.

3 CRR-NY Sup. Proc. G 101.2 Superintendent's right of examination {#sec-3-crr-ny-sup.-proc.-g-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 101.2}

Such contract for independently furnished automated data processing services shall state that the superintendent or his authorized representative has the right to examine all records and material, use the equipment and interview employees of the firm or banking organization furnishing the services to the extent he deems necessary to protect the interests of depositors, creditors or stockholders of the banking organization or licensee receiving such services.

104. APPLICATION FOR A PUBLIC ACCOMMODATION OFFICE 104. APPLICATION FOR A PUBLIC ACCOMMODATION OFFICE

3 CRR-NY Sup. Proc. G 104.1 General information {#sec-3-crr-ny-sup.-proc.-g-104.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 104.1}

A bank or trust company, savings bank or savings and loan association which seeks approval of a public accommodation office pursuant to Banking Law, section 191 should submit an application for such approval to the superintendent, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. G 104.2 Contents of application {#sec-3-crr-ny-sup.-proc.-g-104.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 104.2}

Application requirements are set forth by the superintendent. Forms may be obtained directly from the department, and are available on the department's website (www.dfs.ny.gov). Additional information may be required on a case-by-case basis.

105. APPLICATION FOR A CHANGE OF LOCATION OR A CHANGE OF DESIGNATION OF PRINCIPAL OFFICE 105. APPLICATION FOR A CHANGE OF LOCATION OR A CHANGE OF DESIGNATION OF PRINCIPAL OFFICE

3 CRR-NY Sup. Proc. G 105.1 General information {#sec-3-crr-ny-sup.-proc.-g-105.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 105.1}

Requests for approval to change the location of a place of business or to change the designation of a principal office should be submitted by letter application to the superintendent, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Banking organizations subject to article III, VI, X or XI of the Banking Law which seek to change the location of a place of business may utilize an application form in lieu of a letter application. Forms may be obtained directly from the department, and are available on the Department of Financial Services' web page, in each case as set forth in section 1.1 of Supervisory Policy G 1 of this Title. Banking organizations subject to other articles of the Banking Law which seek to change the location of a place of business should submit a letter application setting forth the information required in sections 105.2 and 105.3 of this Procedure.

3 CRR-NY Sup. Proc. G 105.2 Application {#sec-3-crr-ny-sup.-proc.-g-105.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 105.2}

The application submitted to the New York City of the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, should state the reason for any proposed change, should include addresses of the offices affected by any such proposed change, and should be accompanied by a copy of the resolution of the board of directors/trustees authorizing such application. (Banking organizations subject to article III, VI or X of the Banking Law eligible for the expedited branch application process may submit a statement that a resolution has been passed in lieu of submitting a copy.)

3 CRR-NY Sup. Proc. G 105.3 Additional information {#sec-3-crr-ny-sup.-proc.-g-105.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 105.3}

If the application is for a change of location, the applicant should submit the following:

(a) a statement giving the proposed date for commencement of operations at the new location and:

(1) stating that no lease for the proposed premises will contain a clause prohibiting the landlord from renting space to another banking institution under State or Federal supervision;

(2) stating whether any director, trustee, officer or employee of the applicant has any interest, direct or indirect, in the proposed premises, or in the construction thereof;

(3) estimating the cost of establishing an office at the new location;

(4) confirming that the proposed site has been appropriately zoned to permit the operation of a banking office;

(5) stating whether or not the contemplated expenditures for acquisition of land and buildings, or leasehold improvements, may be incurred within the relevant statutory limits;

(6) indicating the proposed disposition of the present location, if owned, or if leased, the arrangements made to terminate the lease or to sublet the premises;

(7) confirming that the establishment of the office at the proposed location does not conflict with any of the existing provisions of the New York State Historic Preservation Act;

(8) stating that the applicant is aware of and has given due consideration to adopting appropriate security measures in accordance with industry standards; and

(9) confirming that the level of service at the new location will be substantially the same as, or greater than, the level of service presently being offered. (If this is not the case, an explanation should be provided.);

(b) any additional items which the department may require on a case-by-case basis.

3 CRR-NY Sup. Proc. G 105.4 Confidential information {#sec-3-crr-ny-sup.-proc.-g-105.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 105.4}

(e) In accordance with Supervisory Procedure G 106 (Public Access to Department of Financial Services Records), the entire application and all supporting material are available for public inspection except for confidential material. If the applicant believes that the public availability or disclosure of certain of the information provided would be clearly harmful, such information should be segregated from the public portion and labeled "confidential." The applicant should also state the reasons for any request for confidentiality.

3 CRR-NY Sup. Proc. G 105.5 Information required for certain relocations {#sec-3-crr-ny-sup.-proc.-g-105.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 105.5}

The following applies to banking organizations subject to article III, VI or X of the Banking Law: For a planned change of location in which the proposed site is outside the immediate neighborhood of the present office, or the nature of the business of the office or the customers served by the office would be substantially affected, the customers of the office must be given prior notice of the relocation of at least 90 days, in the manner set forth in section 112.3 of Supervisory Procedure G 112 (Report of Planned Branch Closing) of this Title.

108. EVIDENCE OF COMPLIANCE WITH EXECUTIVE LAW, SECTION 296-A 108. EVIDENCE OF COMPLIANCE WITH EXECUTIVE LAW, SECTION 296-A

3 CRR-NY Sup. Proc. G 108.1 Application of procedure {#sec-3-crr-ny-sup.-proc.-g-108.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 108.1}

The procedure outlined in this section applies to every creditor, as defined in section 292 of the Executive Law, who applies to the Superintendent of Financial Institutions (“superintendent”) for any approval or other action requiring consideration of the public interest and the needs and convenience thereof, or requiring a finding that the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant is a co-partnership or association, and of the officers and directors thereof if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently. The procedure also applies to all persons, corporations, partnerships or other entities who apply to the superintendent for the approval of the certificate of organization of a proposed banking organization, as defined in section 2 of the Banking Law, or for the issuance of a license pursuant to the Banking Law. Such applications include, but are not limited to, the following:

(a) application for approval of the organization certificate of a proposed banking organization or private banker's certificate;

(b) application by a foreign corporation for leave to do business in New York as a branch or agency or for renewal of a license therefor;

(d) application for approval of the purchase of the assets of a national banking association by a bank or trust company;

(e) application for approval of the acquisition and/or exercise of control of a banking organization;

(f) application for a licensed lender license;

(g) application for a sales finance company license;

(h) application for a premium finance agency license;

(i) application for the approval of a merger of two or more banking organizations;

(j) application for a transmitter of money license; and

(k) application for approval to be a bank holding company pursuant to section 141.

3 CRR-NY Sup. Proc. G 108.2 Certification {#sec-3-crr-ny-sup.-proc.-g-108.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 108.2}

(a) Any person filing an application of the type described in section 108.1 of this Supervisory Procedure shall certify as follows:

(1) In the case of a creditor, that it is in compliance with and will continue to comply with section 296-a of the Executive Law.

(2) In the case of persons applying for the approval of an organization certificate or a private banker's certificate or for the issuance of a license, that the proposed banking organization or licensee will comply with section 296-a of the Executive Law.

(b) Forms for certification may be obtained from the New York City Office of the Department of Financial Services at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. G 108.3 Supporting documents {#sec-3-crr-ny-sup.-proc.-g-108.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 108.3}

(a) Except as otherwise provided in subdivisions (b) and (c) of this section every certificate submitted by a creditor pursuant to section 108.2(a) of this Supervisory Procedure shall be accompanied by the affidavit of an officer or, in the case of a non-corporate creditor, of a principal or duly authorized representative, which shall state the action taken by such creditor to insure that it is in compliance with section 296-a of the Executive Law. Such statement should include, but need not be limited to, a description of training programs for personnel, materials circulated, statements of policy and names of officials charged with overseeing compliance with section 296-a of the Executive Law, as well as any other evidence which demonstrates such compliance.

(b) If a creditor has filed an affidavit with the Department of Financial Services pursuant to subdivision (a) of this section within the 12 months immediately preceding the date on which it files an application for which a certificate is required by section 108.2(a) of this Supervisory Procedure and there has been no change in the facts and circumstances stated in such affidavit, the creditor may so state and may file such statement in lieu of the affidavit required by subdivision (a) of this section.

(c) A creditor may elect to file an affidavit containing the information described in subdivision (a) of this section with the Department of Financial Services at any time. A creditor who has filed such an affidavit within the 12 months immediately preceding the filing of an application for which a certification is required by section 108.2(a) of this Supervisory Procedure may, in connection with such certification and in lieu of filing the affidavit required by subdivision (a) of this section, refer to the affidavit filed pursuant to this subdivision and state that there has been no change in the facts and circumstances stated therein.

3 CRR-NY Sup. Proc. G 109.0 Applicability {#sec-3-crr-ny-sup.-proc.-g-109.0 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 109.0}

The procedure and criteria outlined in this Procedure apply to applications for exemption from the requirements of section 32 of the Banking Law or to applications for extensions of time for compliance with the requirements of section 32 of the Banking Law.

3 CRR-NY Sup. Proc. G 109.1 Definitions {#sec-3-crr-ny-sup.-proc.-g-109.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 109.1}

For the purposes of this Procedure, the term banking organization means a State-chartered bank, trust company, savings bank, savings and loan association or credit union as these terms are defined by section 2 of the Banking Law.

3 CRR-NY Sup. Proc. G 109.2 Form of application {#sec-3-crr-ny-sup.-proc.-g-109.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 109.2}

Two copies of a letter application for exemption or extension, signed by a duly authorized officer of the applicant, shall be submitted to the Superintendent of Financial Services (“superintendent”) at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The application must be accompanied by a certified copy of the resolution of the applicant's board of directors or trustees authorizing such application and shall contain the information set forth below. The superintendent reserves the right to require additional information in connection with the application. The applicant may, of course, submit any information in addition to that required which is deemed pertinent to the application.

(a) Application for exemption.

Such an application must set forth the basis of the applicant's claim that it does not receive deposits or share accounts from the general public and documentary or statistical information in support of the claim. Exemptions will not be granted to any banking organization which receives deposits or share accounts from the general public.

(b) Application for extension.

Such an application must contain:

(1) A statement of the reasons for the application and any documentary or statistical information available to support them.

(2) A statement as to whether the banking organization has complied with all reserve transfer requirements within the provisions of applicable laws and regulations for the three calendar years immediately preceding the date of the application.

(3) Projected balance sheets and earnings statements covering the period of time for which the extension is requested.

3 CRR-NY Sup. Proc. G 109.3 Criteria {#sec-3-crr-ny-sup.-proc.-g-109.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 109.3}

In determining whether or not to approve an application, the superintendent shall consider, but not be limited to, the following:

(a) The financial condition of the applicant including asset quality, earnings capacity and surplus or net worth position.

(b) The applicant's management.

(d) Availability of insurance.

(e) Whether an insurance application has been filed and is now pending with an insurer as specified in section 32.1 of the Banking Law.

(f) The interests of the public, in general, and the interests of the depositors or shareholders, in particular, and whether approval of the application would serve such interests.

110. REQUESTS FOR DECLARATORY RULINGS 110. REQUESTS FOR DECLARATORY RULINGS

3 CRR-NY Sup. Proc. G 110.1 Declaratory rulings {#sec-3-crr-ny-sup.-proc.-g-110.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 110.1}

Any person may, in writing submitted in duplicate, request of the Superintendent of Financial Services (“superintendent”) a declaratory ruling with respect to:

(a) the application of any regulation or statute enforceable by the superintendent to any person, property or statement of facts; or

(b) whether any action by the superintendent should be taken pursuant to a regulation or rule.

3 CRR-NY Sup. Proc. G 110.2 Petition {#sec-3-crr-ny-sup.-proc.-g-110.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 110.2}

(a) Petitions for declaratory rulings shall contain at least the following information:

(1) name and address of petitioner;

(2) a prominently placed caption or notice contained therein that petition is for a declaratory ruling;

(3) a complete and detailed statement of all relevant facts pertaining to the ruling requested by petitioner;

(4) a clear and concise statement of the issue sought to be determined by the ruling requested by petitioner;

(5) precise reference to all statutes, regulations and rules, if known, pertaining to the ruling requested by petitioner; and

(6) citations to all judicial decisions, if known, either in support of or otherwise, pertaining to the ruling requested by petitioner.

(b) Petitions submitted pursuant to this Procedure shall be sent to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The superintendent reserves the right to request such additional information as he or she shall deem relevant to the issue sought to be determined.

3 CRR-NY Sup. Proc. G 110.3 Disposition of petition {#sec-3-crr-ny-sup.-proc.-g-110.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 110.3}

A petitioner who, after the lapse of 30 days from the date of filing of such petition, shall not have received a declaratory ruling described in section 110.1(a) of this Part may avail himself or herself of the provisions of section 205 of the State Administrative Procedure Act.

3 CRR-NY Sup. Proc. G 110.4 Rulings to be made available to the public {#sec-3-crr-ny-sup.-proc.-g-110.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 110.4}

Petitions, and declaratory rulings responding thereto, shall be made available to the public. Written requests for copies of petitions or rulings should be sent to the address listed in section 110.2(b) of this Procedure.

112. REPORT OF PLANNED BRANCH CLOSINGS 112. REPORT OF PLANNED BRANCH CLOSINGS

3 CRR-NY Sup. Proc. G 112.1 General statement {#sec-3-crr-ny-sup.-proc.-g-112.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 112.1}

This Supervisory Procedure is designed to provide the Superintendent of Financial Services (superintendent) with detailed information concerning the planned closings of branch offices by State-chartered banking organizations, the availability of alternative financial services within the general area served by such branches, and the economic impact upon the community resulting from such closings, and to provide the superintendent with authority to conduct meetings with banking organizations and community groups in areas where a branch closing is planned. A sale or other transfer of a branch office which does not result in any material reduction in the financial services offered at such location shall not be deemed to be a closing of such branch, notwithstanding the fact that the ownership of such branch has been transferred from a banking organization to another banking institution. Provided that the report and notice are given as required in sections 112.2 and 112.3 of this Procedure, nothing contained in this Procedure shall prevent a banking organization from closing a branch.

3 CRR-NY Sup. Proc. G 112.2 Report to the superintendent {#sec-3-crr-ny-sup.-proc.-g-112.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 112.2}

(a) Every banking organization shall submit to the superintendent a report of its planned closing of a branch office not less than 90 days nor more than 180 days prior to the planned closing. Such report shall be in writing and shall contain:

(1) a statement of the reasons leading to the decision to close the branch;

(2) any statistical or other information in support thereof;

(3) a past (at least three years), present and projected financial analysis of deposits at such branch (giving number of accounts and dollar amount, profits and losses);

(4) a past (at least three years), present and projected financial analysis of profits and losses relating to the loan activity at such branch;

(5) a detailed map of the general area served by such branch, showing the distance and direction of all remaining State- or federally chartered banking institutions within such area and any licensee of the Banking Division of the Department of Financial Services which provides financial services of any kind (e.g.,licensed lenders, check cashers); and

(6) a description of any planned limited or full service banking facility to be opened within such area by either the reporting banking organization or, if known to the reporting banking organization, by any other banking institution.

(b) Reports submitted pursuant to this section shall be treated as confidential, pursuant to section 106.6 of these Supervisory Procedures.

3 CRR-NY Sup. Proc. G 112.3 Notice to customers {#sec-3-crr-ny-sup.-proc.-g-112.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 112.3}

Every banking organization shall give notice to its customers of the planned closing of a branch not less than 90 nor more than 180 days prior to the planned date of closing. Such notice shall be accomplished by:

(a) the posting of a notice in a conspicuous place in the branch which is planned to be closed, and leaving such notice in such branch for at least 90 days; and

(b) the inserting of a single notice in the periodic account statement ordinarily mailed to each person who maintains a banking relationship with such banking organization at the branch which is planned to be closed.

3 CRR-NY Sup. Proc. G 112.4 Findings of superintendent; consultations by superintendent {#sec-3-crr-ny-sup.-proc.-g-112.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 112.4}

The superintendent shall make a finding as to whether or not the proposed branch closing will result in a significant reduction of financial services in the community to be affected. Such findings shall be made public. If the superintendent finds that the availability of financial services in the community will be significantly reduced by the closing of the branch office, he shall be authorized to conduct such meetings with banking organizations and community leaders as are necessary, in his judgment, to explore the feasibility of replacing such branch with other adequate banking facilities.

3 CRR-NY Sup. Proc. G 112.5 Definitions {#sec-3-crr-ny-sup.-proc.-g-112.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 112.5}

As used in this Procedure:

(a) the words banking organization shall mean and include each bank, trust company, savings bank, and savings and loan association, as those terms are defined in section 2 of the Banking Law;

(b) the words branch office, branch or office shall include principal offices, branch offices, and public accommodation offices, but shall not include convenience centers, mobile teller units, automatic teller machines, point-of-sale terminals or similar facilities;

(c) the words financial services shall mean and include demand and time deposit accounts, check cashing services, deposit and withdrawal transactions, sale of bank or travelers checks and money orders, processing loan applications, acceptance of loan repayments, and any related services; and

(d) the words facility and facilities shall mean and include any building, structure, vehicle, unit, machine or device, permanent or temporary, mobile or stationary, at which financial services of any kind or description are provided or dispensed.

114. ACCESS TO PERSONAL INFORMATION 114. ACCESS TO PERSONAL INFORMATION

3 CRR-NY Sup. Proc. G 114.1 Purpose and scope {#sec-3-crr-ny-sup.-proc.-g-114.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.1}

(a) It is the purpose of this Supervisory Procedure to set forth the procedures and limitations relative to the maintenance and disclosure of personal information under the provisions of article 6-A of the Public Officers Law, the Personal Privacy Protection Law. Unless the context requires otherwise, the terms used herein shall have the same meanings ascribed to them in said article 6-A.

(b) The Department of Financial Services (department) shall maintain in its records only such personal information as is relevant and necessary to accomplish a purpose of the agency required to be accomplished by statute or executive order, or to implement a program specifically authorized by law.

(c) Personal information will be collected, whenever practicable, directly from the person to whom the information pertains.

(d) The department seeks to ensure that all records pertaining to or used with respect to individuals are accurate, relevant, timely and complete.

3 CRR-NY Sup. Proc. G 114.2 Designation of privacy compliance officer {#sec-3-crr-ny-sup.-proc.-g-114.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.2}

(a) The Privacy Compliance Officer for the department shall be designated by the general counsel from among the attorneys in the office of the general counsel and is responsible for ensuring that the department complies with the provisions of the Personal Privacy Protection Law and this Supervisory Procedure and for coordinating the department's response to requests for records or amendment of records.

(b) The address and telephone number of the privacy compliance officer is the New York City office of the department, at the address and telephone number set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. G 114.3 Proof of identity {#sec-3-crr-ny-sup.-proc.-g-114.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.3}

(a) When a request is made in person, or when records are made available in person following a request made by mail, the department may require appropriate identification, such as a driver's license, an identifier assigned to the data subject by the department, a photograph or similar information that confirms that the record sought pertains to the data subject.

(b) When a request is made by mail, the department may require verification of a signature or inclusion of an identifier generally known only by a data subject, or similar appropriate identification.

(c) Proof of identity shall not be required regarding a request for a record accessible to the public pursuant to article 6 of the Public Officers Law, the Freedom of Information Law.

3 CRR-NY Sup. Proc. G 114.4 Location {#sec-3-crr-ny-sup.-proc.-g-114.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.4}

(a) Records shall be made available at the main office of the department, which is located at the address set forth in section 1.1 of Supervisory Policy G 1.

(b) Whenever practicable, records shall be made available at a regional office most convenient to a data subject. Regional offices are located at One Commerce Plaza, Albany, NY 12257 and 333 East Washington Street, Syracuse, NY 13202.

3 CRR-NY Sup. Proc. G 114.5 Hours for public inspection and copying {#sec-3-crr-ny-sup.-proc.-g-114.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.5}

The department shall accept requests for records and produce records from 9 a.m. to 4 p.m. Monday through Friday.

3 CRR-NY Sup. Proc. G 114.6 Requests for records {#sec-3-crr-ny-sup.-proc.-g-114.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.6}

(a) All requests shall be made in writing.

(b) A request shall reasonably describe the record sought. Whenever possible, the data subject should supply identifying information that assists the department in locating the record sought.

(1) provide access to the record;

(2) deny access in writing, explaining the reasons therefor; or

(3) acknowledge the receipt of the request in writing, stating the approximate date when the request will be granted or denied, which date shall not exceed 30 days from the date of the acknowledgment.

3 CRR-NY Sup. Proc. G 114.7 Amendment of records {#sec-3-crr-ny-sup.-proc.-g-114.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.7}

Within 30 business days of a request from a data subject for correction or amendment of a record or personal information that is reasonably described and that pertains to the data subject, the department shall either:

(a) make the amendment or correction in whole or in part and inform the data subject that, on request, such correction or amendment will be provided to any person or governmental unit to which the record or personal information has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law; or

(b) inform the data subject in writing of its refusal to correct or amend the record, including the reasons therefor.

3 CRR-NY Sup. Proc. G 114.8 Denial of request for a record or amendment or correction of a record or personal information {#sec-3-crr-ny-sup.-proc.-g-114.8 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.8}

(a) Denial of a request for records or amendment or correction of a record or personal information:

(1) shall be in writing, explaining the reasons therefor; and

(2) identifying the person to whom an appeal may be directed.

(b) A failure to grant or deny access to records within five business days of the receipt of a request or within 30 days of an acknowledgment of the receipt of a request, or a failure to respond to a request for amendment or correction of a record within 30 business days of receipt of such a request, shall be construed as a denial that may be appealed.

3 CRR-NY Sup. Proc. G 114.9 Appeal {#sec-3-crr-ny-sup.-proc.-g-114.9 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.9}

(a) Any person denied access to a record or denied a request to amend or correct a record or personal information pursuant to section 114.8 of this Supervisory Procedure may, within 30 days of such denial, appeal to the Executive Deputy Superintendent of the Department of Financial Services.

(b) The time for deciding an appeal shall commence upon receipt of an appeal that identifies:

(1) the date and location of a request for a record or amendment or correction of a record or personal information;

(2) the record that is the subject of the appeal; and

(3) the name and return address of the appellant.

(c) Within seven business days of an appeal of a denial of access, or within 30 days of an appeal concerning a denial of a request for correction or amendment, the Executive Deputy Superintendent of the Department of Financial Services shall:

(1) provide access to or correct or amend the record or personal information; or

(2) fully explain in writing the factual and statutory reasons for further denial and inform the data subject of the right to seek judicial review of such determination pursuant to article 78 of the Civil Practice Law and Rules.

(d) If, on appeal, a record or personal information is corrected or amended, the data subject shall be informed that, on request, the correction or amendment will be provided to any person or governmental unit to which the record or personal information has been or is disclosed pursuant to paragraph (c) of subdivision 3 of section 94 of the Public Officers Law.

(e) The department shall immediately forward to the Committee on Open Government a copy of any appeal made pursuant to this section, the determination thereof and the reasons therefor.

3 CRR-NY Sup. Proc. G 114.10 Statement of disagreement by data subject {#sec-3-crr-ny-sup.-proc.-g-114.10 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.10}

(a) If correction or amendment of a record or personal information is denied in whole or in part upon appeal, the department shall inform the data subject of the right to:

(1) file with the department a statement of reasonable length setting forth the data subject's reasons for disagreement with the determination; and

(2) request that such a statement of disagreement be provided to any person or governmental unit to which the record has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law.

(b) Upon receipt of a statement of disagreement by a data subject, the department shall:

(1) clearly note any portions of the record that are disputed; and

(2) attach the data subject's statement as part of the record.

(c) When providing a data subject's statement of disagreement to a person or governmental unit in conjunction with a disclosure made pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law, the department may also include a concise statement of its reasons for not making the requested amendment or correction.

3 CRR-NY Sup. Proc. G 114.11 Fees {#sec-3-crr-ny-sup.-proc.-g-114.11 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.11}

(a) Unless otherwise prescribed by statute, copies of records shall be provided for the fee per page specified in section 1.2 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. G 114.12 Severability {#sec-3-crr-ny-sup.-proc.-g-114.12 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. G 114.12}

If any provision of this Supervisory Procedure or the application thereof to any person or circumstance is adjudged invalid by a court of competent jurisdiction, such judgment shall not affect or impair the validity of the other provisions of this Supervisory Procedure or the application thereof to other persons and circumstances.

CB. COMMERCIAL BANKS CB. COMMERCIAL BANKS

1. CHARTERING POLICY FOR BANKS AND TRUST COMPANIES 1. CHARTERING POLICY FOR BANKS AND TRUST COMPANIES

3 CRR-NY Sup. Pol. CB 1.1 General statement {#sec-3-crr-ny-sup.-pol.-cb-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. CB 1.1}

The superintendent is prepared to charter State banks with or without fiduciary powers, provided:

(a) the proposed bank or trust company will promote in a demonstrable and significant way the convenience and advantage of the public; and

(b) the proposed management commands confidence and warrants the belief that the business of the bank or trust company will be honestly and efficiently conducted in accordance with the intent and purpose of the New York Banking Law.

3 CRR-NY Sup. Pol. CB 1.2 Requirements {#sec-3-crr-ny-sup.-pol.-cb-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. CB 1.2}

To enhance the likelihood of success of a proposed new bank or trust company, the superintendent requires:

(a) the employment of top management personnel having substantial and satisfactory experience in general commercial bank operations, if the proposed institution will offer significant banking services;

(b) if a trust company is to be chartered, the employment of top management personnel having substantial and satisfactory experience in fiduciary operations;

(d) capital funds of not less than $1.2 million.

3 CRR-NY Sup. Pol. CB 1.3 Limited purpose organizations {#sec-3-crr-ny-sup.-pol.-cb-1.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. CB 1.3}

The superintendent is receptive to chartering proposals for either a bank or a trust company under which significant commercial bank services may or may not be offered to the public. In the case of a trust company which would not offer significant commercial bank services, proponents must demonstrate to the satisfaction of the superintendent that public convenience and advantage would be promoted by the proposed new facility. Any approval of such charter will be conditioned upon such restrictions on doing business that the superintendent shall deem necessary and proper to achieve the purposes set forth.

101. CONVERSION OF NATIONAL BANKING ASSOCIATION TO STATE CHARTER 101. CONVERSION OF NATIONAL BANKING ASSOCIATION TO STATE CHARTER

3 CRR-NY Sup. Proc. CB 101.1 General information {#sec-3-crr-ny-sup.-proc.-cb-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 101.1}

(a) A national banking association which seeks to convert itself into a State-chartered bank or trust company (hereinafter referred to as “the State bank”) pursuant to Banking Law, section 136, should, after complying with section 101.2 of this Procedure, submit to the superintendent a letter application which meets the requirements of section 101.3 of this Supervisory Procedure.

(b) Following submission of the application, the superintendent may require an examination of the national banking association by State bank examiners before he acts on the application.

(c) Approval of the conversion will be conditioned upon either the continuance by the Federal Deposit Insurance Corporation of insurance of the applicant's deposit accounts to the extent permitted by Federal law or, in the case of a national banking association that does not accept deposits from the general public, the grant by the superintendent, pursuant to Banking Law, section 32, of a waiver of the deposit insurance requirement.

3 CRR-NY Sup. Proc. CB 101.2 Meeting of stockholders; clearance of name {#sec-3-crr-ny-sup.-proc.-cb-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 101.2}

Before an application for conversion is submitted:

(a) the plan of conversion should be approved by the vote, in person or by proxy, of the holders of at least 662/3 percent of each class of capital stock of the national banking association at a meeting held in accordance with the requirements of Federal law;* and

(b) the name proposed for the State bank should be submitted to the superintendent for his prior approval.

3 CRR-NY Sup. Proc. CB 101.3 Application {#sec-3-crr-ny-sup.-proc.-cb-101.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 101.3}

(a) Six copies of the letter of application, together with the number of copies specified in section 101.4 of this Procedure for the documents therein described, should be submitted to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The letter of application should include:

(1) the name and address of the officer to whom all communications from the Department of Financial Services should be addressed;

(2) the dates or proposed dates of filing such documents as may be required with the Comptroller of the Currency, the Board of Governors of the Federal Reserve System or the Federal Deposit Insurance Corporation; and

(3) a request for permission to retain a larger number of directors than the number authorized for State-chartered banks and trust companies pursuant to Banking Law, section 7002, if the number of directors of the national banking association exceeds such number and the applicant seeks to retain one or more directors in excess of the number so authorized.

(b) The superintendent reserves the right to require additional information in connection with the application. The applicant may, of course, submit any information in addition to that required by this Procedure which it deems pertinent to the application.

3 CRR-NY Sup. Proc. CB 101.4 Documents required {#sec-3-crr-ny-sup.-proc.-cb-101.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 101.4}

The following documents should be submitted as part of the application:

(a) Five executed copies of the plan of conversion, signed in accordance with section 1003(4) of the Banking Law, setting forth the terms and conditions of the conversion, the mode of carrying it into effect and the names of the persons proposed as the principal officers of the State bank. (Pursuant to Banking Law, section 105[5][a], such plan should stipulate which offices of the converted institution will be continued by it and show the officially designated address of each such office.)

(b) Five executed copies of the organization certificate in the form required by Banking Law, section 4001.

(c) Minutes of the meeting of stockholders of the national banking association authorizing the conversion, including the notice of meeting and proxy material submitted to stockholders, certified by the presiding officer and the secretary of the meeting and otherwise in accordance with the requirements of Federal law.*

(d) Five executed copies of a certification by the president, secretary or cashier of the national banking association that all steps have been taken which are necessary under Federal law to consummate the conversion.

3 CRR-NY Sup. Proc. CB 101.5 Additional documents {#sec-3-crr-ny-sup.-proc.-cb-101.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 101.5}

The following additional documents should be submitted to the superintendent as they become available:

(a) Copies of all approvals and notices required by Federal law and regulations in connection with the conversion.

(b) Opinions of counsel for the applicant as to compliance with all requirements of Federal and State law in connection with the conversion.

102. AMENDMENTS TO ORGANIZATION CERTIFICATE 102. AMENDMENTS TO ORGANIZATION CERTIFICATE

3 CRR-NY Sup. Proc. CB 102.1 General information {#sec-3-crr-ny-sup.-proc.-cb-102.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 102.1}

A bank, trust company, safe deposit company,* investment company* or mutual trust investment company* proposing to amend its organization certificate pursuant to Banking Law, Article XV, should submit a letter application to the superintendent and stating the reasons therefor.

3 CRR-NY Sup. Proc. CB 102.2 Initial submission {#sec-3-crr-ny-sup.-proc.-cb-102.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 102.2}

(a) The letter application should be accompanied by a certified copy of a resolution of the applicant's board of directors authorizing the proposed amendment, subject to stockholder approval, and designating the officer or officers to sign all documents and take all necessary action to accomplish the proposed amendment.

(b) As soon as practicable after submission of the letter application, two copies of each of the following documents should also be forwarded to the superintendent:

(1) draft-notice of meeting, proxy and any other material to be mailed to stockholders;

(2) letter, signed by a duly authorized officer, as to compliance with Banking Law, section 6009(9) (relating to persons disqualified to act as proxies);

(3) draft-resolutions to be presented to the stockholders at the meeting† authorizing the proposed amendment and the execution and delivery to the superintendent of the certificate of amendment and any other necessary documents; and

(4) draft-certificate of amendment in form prescribed by Banking Law, section 8005(1).

3 CRR-NY Sup. Proc. CB 102.3 Approval; delivery of executed documents {#sec-3-crr-ny-sup.-proc.-cb-102.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 102.3}

Upon receipt of notice from the department that the superintendent has approved the application in principle, the applicant should proceed to obtain the approval of its stockholders. After such approval, the following documents should be submitted to the superintendent:

(a) two copies of the notice of meeting, proxy and other material mailed to the applicant's stockholders, certified by its secretary as being in the form mailed to the stockholders;

(b) two copies of the resolutions of the applicant's stockholders, certified by its secretary as being in the form adopted by the stockholders; and

(c) five copies of the certificate of amendment, in the form approved by the stockholders, executed and verified as prescribed by Banking Law, section 1003(4).

3 CRR-NY Sup. Proc. CB 102.4 Effective date of amendment {#sec-3-crr-ny-sup.-proc.-cb-102.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 102.4}

The amendment to the organization certificate becomes effective after the applicant's stockholders and directors have duly approved the certificate of amendment and upon the approval and filing thereof by the superintendent pursuant to Banking Law, section 1003. For the filing of statements of condition and reports in connection with subsequent sales or distributions of capital stock, see Supervisory Procedure CB 107.

103. APPLICATION FOR COMMERCIAL BANK BRANCH OFFICES 103. APPLICATION FOR COMMERCIAL BANK BRANCH OFFICES

3 CRR-NY Sup. Proc. CB 103.1 General information {#sec-3-crr-ny-sup.-proc.-cb-103.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 103.1}

(a) A bank, trust company, or safe deposit company that seeks permission to open a branch office should file an application therefor with the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, which meets the requirements of this supervisory procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The words “branch,” “office,” and “offices” as used in this supervisory procedure shall include limited purpose branches, but shall not include automated teller machines, point-of-sale terminals or similar facilities.

(b) In accordance with Supervisory Procedure G 106 (Public Access to Department of Financial Services Records) of this Title, the entire application and all supporting material are available for public inspection except for confidential material. If the applicant believes that the public availability or disclosure of certain of the information provided would be clearly harmful, such information should be segregated from the public portion and labeled "confidential." The applicant must also state the reasons under section 87(2) of the Freedom of Information Law for any request for confidentiality.

(c) The Department of Financial Services processes branch applications using either an expedited application process or a standard application process. An institution is eligible for the expedited process if it satisfies all of the following criteria:

(1) has a composite CAMELS rating of "1" or "2";

(2) has at least a satisfactory ("2") rating for management;

(3) is well capitalize in accordance with applicable Federal standards;

(4) has a CRA rating of "satisfactory" or better; and

(5) has no major unresolved supervisory issues outstanding (as determined by the Department of Financial Services in its discretion).

Application requirements are set forth by the Superintendent of Banks. Forms and instructions may be obtained directly from the department, and are available on the department's website (www.banking.state.ny.us).

(d) An application should be filed concurrently with the appropriate Federal supervisory authority if Federal approval is also required. An applicant may submit information to the Department of Financial Services by submitting a copy of the appropriate Federal or uniform State application and providing cross-references to the information contained therein. Such Federal or uniform State applications shall be supplemented where necessary to comply with the Department of Financial Services’ specific application requirements.

3 CRR-NY Sup. Proc. CB 103.2 Application for community afforded home office protection {#sec-3-crr-ny-sup.-proc.-cb-103.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 103.2}

The Department of Financial Services will not accept applications for branch offices in communities from which the applicant would be barred, at the time of filing, under the home office protection provisions of the New York Banking Law; provided, however, such a branch application may be accepted for filing if there exists on such date any application with the appropriate regulatory authorities which would, if approved, eliminate the protection provisions of section 105 of the New York Banking Law. No final action will be taken on such branch application until home office protection will have ceased under New York Banking Law.

105. APPLICATION FOR APPROVAL OF THE FORMATION OF A BANK HOLDING COMPANY; THE EXPANSION OF AN EXISTING BANK HOLDING COMPANY; THE VOTING BY A BANK HOLDING COMPANY OF THE STOCK OF A BANKING SUBSIDIARY; A MERGER; A CONSOLIDATION; OR A PURCHASE OF ASSETS 105. APPLICATION FOR APPROVAL OF THE FORMATION OF A BANK HOLDING COMPANY; THE EXPANSION OF AN EXISTING BANK HOLDING COMPANY; THE VOTING BY A BANK HOLDING COMPANY OF THE STOCK OF A BANKING SUBSIDIARY; A MERGER; A CONSOLIDATION; OR A PURCHASE OF ASSETS

3 CRR-NY Sup. Proc. CB 105.1 General information {#sec-3-crr-ny-sup.-proc.-cb-105.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 105.1}

(a) A separate application shall be submitted with respect to each action or transaction for which approval is sought and six copies thereof together with all exhibits shall be submitted to the superintendent at the address set forth in section 1.1 of Supervisoy Policy G 1 of this Title (Attention: Applications Unit). Each application shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title if filed pursuant to Banking Law, sections 136, 136-a, 142, 143-a, 601 or 601-a. Inquiries concerning the preparation of an application should be addressed to the Applications Unit of the Banking Department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

(b) The statutory period for approval or disapproval of an application submitted pursuant to this Procedure shall commence on the date that the Banking Department shall acknowledge to the applicant that the contents of the application and the required documents and exhibits are acceptable in the form submitted.

(c) The corporate approvals required by the Banking Law and by applicable Federal law with respect to each action or transaction shall be obtained before the application for approval by the superintendent is submitted, except that an application by a bank holding company to vote the stock of a banking subsidiary in connection with a merger or an acquisition of assets must receive approval by the superintendent prior to submission of the merger or acquisition of assets proposal to stockholders.

(d) The superintendent reserves the right to require additional information in connection with the application. The applicants may, of course, submit any information in addition to that required which they deem pertinent to the application.

(e) Unless otherwise indicated, all statistical data required to be submitted in the application (e.g., as to deposits and loans) shall be furnished as of December 31st preceding the date of submission.

(f) The application may be filed in the form that such application is filed with the appropriate Federal supervisory authority, provided permission to so file has been requested in writing from the Commercial Banks Division and such permission has been granted; and provided further that any information, documents or exhibits not required by the Federal form but required by this Procedure are included in the application or in a supplement or supplements to the application.

3 CRR-NY Sup. Proc. CB 105.2 Information required in the application.* {#sec-3-crr-ny-sup.-proc.-cb-105.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 105.2}

(a) General information.

Set forth the name and address of the applicants; the name and address of the officer to whom all communications from the Banking Department should be addressed; the date or proposed date of submission of any required applications or other documents to the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation or the Comptroller of the Currency; and include a conformed copy of the plan of merger or acquisition of assets or acquisition of capital stock.

(b) Banking offices.

List the name and address of the principal office of each party to the proposed merger or acquisition and of the surviving bank; the branch office locations of each party; the road distance between the nearest offices of each party and the offices, if any, which will be closed if the application is approved.

(1) Number and volume.

List in tabular form the number of accounts and dollar amount of deposits of each party to the transaction, by type of account, as of December 31st for each of the preceding three years.

(2) Primary and secondary service areas.

Indicate the deposits, by number of accounts and dollar amount, which originate in the primary service area and the secondary service area, respectively, of each party. This computation should also be made for any office if the service area thereof is reasonably close to or overlaps any service area of the other party or any of its offices. The term primary service area means the area from which is derived approximately 75 percent of the dollar amount of deposits based on the record addresses of the depositors thereof.** The term secondary service area means the area contiguous to but outside of the primary service area from which is derived approximately an additional 15 percent of the dollar amount of the deposits based on the record address of the depositors thereof.**

(3) Overlap.

Indicate the deposits, by number of accounts and dollar amount, that each party to the transaction draws from the primary and secondary service areas of the other, separately itemized for demand deposits, for savings and other time deposits, and for total deposits.

(4) Rates.

For each party, describe the rates paid on savings and other time deposits and methods of computation. If any of the rates or the methods of computation differ between the parties, include a statement specifically indicating how the differences will be resolved if the application is approved.

(5) Service charges.

For each party, provide a complete schedule of service charges on special checking accounts and on regular checking accounts for individuals and business firms. If any of these charges differ between the parties, include a statement specifically indicating how the differences will be resolved if the application is approved.

(d) Loans.

(1) Breakdown of loans.

For each party, list in tabular form for each of the preceding three calendar years the breakdown of all major types of loans outstanding on each December 31st. The breakdown should be by number and dollar amount of loans based on call report classifications (commercial and industrial; real estate; loans to farmers; installment loans to individuals for household, family and other personal expenditures; single payment loans to individuals for household, family and other personal expenditures; etc.).

(2) Overlap.

Indicate the outstanding loans, by number and dollar amount, of each party to borrowers located in the primary and secondary service areas of the other party, separately itemized for each major type of loan.*

(3) Rates.

For each party, list the typical loan rates charged for comparable types of loans (for example, unsecured small business loans, other types of business loans, direct automobile instalment loans, one- and two-family conventional mortgage loans, etc.). The rates should be those at which the preponderance of loans of these types are currently being made by the parties. If these rates differ between the parties, include a statement specifically indicating how the differences will be resolved if the application is approved.

(4) Loan policies.

For each party, indicate the policies with respect to the maximum maturities and maximum loan-value ratios granted to an “average credit risk” for such types of loans as on new and used cars, mortgage loans on one- and two-family new houses, etc. If any of the policies differ between the parties, include a statement specifically indicating how the differences will be resolved if the application is approved.

(5) Participations.

List the loan participations, by number and dollar amount, which each party has originated or participated in during the three preceding calendar years, and the amount of each party's participation. List the participants in each such case.

(6) Loan limits.

For each party, indicate the maximum legal loan limits for secured and for unsecured loans. Indicate the volume of loans (by number and dollar amount) which are currently 75 percent or more of each party's loan limit, as well as any unused credit lines exceeding 75 percent of those loan limits.

(e) Trust services.

(1) Breakdown.

For each party, indicate the volume of business (measured by number of accounts and, wherever possible, dollar volume on a comparable basis) for each of the personal and corporate trust services provided, including voluntary and court trusts, agency and custody accounts, pension and welfare plans, corporate trusteeships, stock transfer agencies, bond and coupon paying agencies, dividend disbursing agencies, etc.

(2) Overlap.

Indicate the number and dollar volume of trust business, subdivided by major type, obtained from the primary and secondary service areas of the other party.

(3) Fees.

For each party, provide a schedule of fees or charges for trust services. If these differ between the parties, include a statement specifically indicating how the differences will be resolved if the application is approved.

(f) Service areas-economic characteristics.

Describe the economic characteristics of each party's primary and secondary service areas and the population and average income, growth trend during the preceding 10-year period, and current economic outlook thereof.

(g) Management.

List the names, addresses and titles of the principal officers of each party, including the composition of the board of trustees or board of directors and any advisory or similar committee, indicating the number of each class of shares of each party owned of record, segregated as to individual ownership and joint ownership with others. Provide similar information with respect to the proposed management of the surviving bank.

(h) Management succession problems.

If management succession is a problem for any party, indicate specifically what attempts have been made in recent years to recruit management personnel, state how the merger or acquisition is expected to solve the management succession problem, and list the names, ages and salaries of the principal officers of the bank(s) for which management succession is indicated as a problem, together with a brief summary of the educational background and banking experience of each such officer.

(i) Inducements.

State whether any consideration, monetary or otherwise, has been paid, given or offered to any shareholder, director, trustee or officer of any party, or to any other person, as compensation or inducement for assistance in consummating the proposed merger or acquisition, and the details thereof and reasons therefor.

(j) Reasons for approval.

Include a separate statement setting forth in detail the reasons why the applicants believe the application should be approved, including a discussion as to (1) whether the proposed merger or acquisition will meet specific needs for banking services in the designated service areas which are not now being met, (2) the competitive consequences of the proposed merger or acquisition within the designated service areas, and (3) the manner in which the proposed merger or acquisition will otherwise serve the public interest.

3 CRR-NY Sup. Proc. CB 105.3 Exhibits and documents required {#sec-3-crr-ny-sup.-proc.-cb-105.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 105.3}

(a) Application for merger or acquisition of assets.

(1) Draft copies of each of the following documents should be submitted to the Commercial Banks Division as soon as practicable after the parties to the proposed merger or acquisition of assets have reached agreement in principle to the proposal:

(i) the plan of merger or acquisition of assets, together with resolutions of the board of directors of each party to the plan approving its terms and conditions. (Pursuant to Banking Law § 105-6, such plan should stipulate which offices of each merged or selling institution will be continued by the receiving or acquiring bank and should show the officially designated address of each such office.);

(ii) notice of stockholders' meetings, form of proxy, and letter as to compliance with Banking Law § 6009(9) (relating to persons disqualified to act as proxies);

(iii) letter to stockholders describing the proposal, or a proxy statement as may be required by Federal regulation;

(iv) proposed stockholders' resolutions;

(v) oath of inspectors of stockholders' meetings;

(vi) reports of inspectors of stockholders' meetings;

(vii) certificate of compliance of each party to the plan, as shall be required by Banking Law §§ 136, 136-a, 601, or 601-a;

(viii) Certificate of Amendment of Organization Certificate, if an amendment to the receiving or acquiring bank's charter is to be made.

(2) After the stockholders of the parties to the plan have acted, the following documents are to be submitted to the Superintendent, together with the application:

(i) five executed copies of the plan of merger or acquisition, together with one certified copy of the resolution of the board of directors of each party to the plan approving its terms and conditions;

(ii) final copies of: notice of stockholders' meetings; form of proxy; and letter to stockholders or proxy statement;

(iii) letter, signed by a duly authorized officer of each party to the plan, as to compliance with Banking Law § 6009(9) (relating to persons disqualified to act as proxies);

(iv) letter stating that the appropriate Federal supervisory authority has approved the proxy statement if a proxy statement is required;

(v) affidavit of each party to the plan that the required notice of stockholders' meeting, form of proxy, and letter to stockholders, or proxy statement, have been duly mailed to each stockholder; the affidavit should state the date or dates of mailing and that the notice, form of proxy, and letter or proxy statement were mailed to each stockholder at his address as it appears on the record of stockholders, or, if he shall have filed with the secretary of the corporation a written request that notices to him be mailed to some other address, then directed to him at such other address;

(vi) affidavit of publication of notice of stockholders' meetings;

(vii) certified copy of the resolution adopted by the stockholders of each party to the plan;

(viii) copy of oath of inspectors of stockholders' meeting from each party to the plan;

(ix) copy of report of inspectors of stockholders' meeting from each party to the plan;

(x) five executed copies of the certificate of compliance of each party to the plan, as shall be required by Banking Law §§ 136, 136-a, 601 or 601-a;

(xi) five executed copies of the Certificate of Amendment of Organization Certificate of the receiving or acquiring bank, effected in accordance with Supervisory Procedure CB 102.

(b) Application by bank holding companies for approval to vote the stock of a bank subsidiary (voting permit application):

(1) each copy of a voting permit application submitted to the superintendent should be accompanied by a copy of the related proposed plan of merger or acquisition of assets;

(2) if the voting permit application involves a merger of a national banking association or a State-chartered bank into a State-chartered bank subsidiary, the procedures described in section 105(3)(a) of this Part “Application for merger or acquisition of assets” should be followed after the superintendent has approved the voting permit application.

(3) if the voting permit application involves the merger of a national banking association or a State-chartered bank into a national banking association subsidiary, no documents relative to the merger application are required inasmuch as such application will be submitted to the Comptroller of the currency for approval after the superintendent has approved the voting permit application.

(1) the documents required are the same as described in section 105(3) of this Part “Application for merger or acquisition of assets” except that: the plan referred to shall be a plan of acquisition of capital stock; and the certificates of compliance, as required, shall be executed pursuant to Banking Law § 143-a;

(2) in the event one or more of the banks whose capital stock is to be acquired is a national banking association which will be converted to a State-chartered bank, Supervisory Procedure CB 101 should first be followed;

(3) pursuant to Banking Law § 144 and Supervisory Procedure CB 118, a newly formed bank holding company shall register as a bank holding company within 180 days after consummation of the acquisition of subsidiary banks.

(d) Application for the expansion of an existing bank holding company:

(1) In the event the bank holding company proposes to acquire a State-chartered bank, the requirements for presentation of documents are the same as described in section 105(3)(c) of this Part “Application for approval of the formation of a bank holding company.”

(2) In the event the bank holding company proposes to acquire a national banking association which will be converted to a State-chartered bank, Supervisory Procedure CB 101 should first be followed.

(3) In the event the bank holding company proposes to acquire the stock of a newly-chartered national banking association (so-called “Phantom bank”) for the purpose of merging into it an existing national banking association, a copy of the proposed plan of merger submitted to the Comptroller of the currency should accompany each copy of the voting permit application of the bank holding company to vote the stock of the “phantom bank” in favor of the merger.

(e) Other exhibits and documents:

(1)*The latest statements available as of mid-year and December 31st of the assets and liabilities of each party to the plan of merger or acquisition, as reported to the supervisory authorities. (Call Reports)

(2) *Copies of the income and expense reports of each party (as reported to the supervisory authorities) for each of the three preceding calendar years.

(3) A list of all stockholders who own more than 5% of the stock of each party.

(4) Maps showing the primary and secondary service areas of each party; the location of the respective offices of each of the parties; and the location, except in the case of a service area wholly within New York City, of every commercial bank, savings bank and savings and loan association office located in or near such primary and secondary service areas. A key to office numbers, scale of miles and compass points should be provided.

(5) For bank holding companies only, a copy of the company's balance sheet and profit and loss statement certified by independent public accountants for the past three years, together with a balance sheet and profit and loss statement certified by the chief financial officer of the applicant as of the close of the calendar or fiscal quarter immediately preceding date of application.

(6) Copies of any agreements, in addition to the plan of merger, relating to the merger or acquisition.

(7) Copies of all approvals related to this application obtained pursuant to Federal law and regulations.

(8) Opinions of counsel for each party to the merger or acquisition as to compliance of that party with all requirements of Federal and State law in connection with the merger or acquisition as they become available.

3 CRR-NY Sup. Proc. CB 105.4 Confidential information {#sec-3-crr-ny-sup.-proc.-cb-105.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 105.4}

Information as to the following items should be furnished on separate pages which can be detach from the rest of the application.

(a) any computation of the deposits by number of accounts and dollar amount, according to primary and secondary service areas, for any office of each party to the merger, submitted under section 105.2(c)(2);

(b) the typical compensating balance (as a percentage of the amount of the loan) expected to be maintained, the extent to which such maintenance is a requirement of the bank, and the statement specifically indicating how any policy differences between the parties on this subject will be received, submitted under section 105.2(d)(6);

(d) any information regarding management succession problems, submitted under section 105.2(h);

(e) estimate of major categories of assets, deposits and capital accounts and of gross income and expenses, and net earnings or loss for each of the first three years of operation of a proposed new bank, submitted under section 105.3(e);

(f) the names of individual depositors, borrowers, and beneficiaries of trusts wherever listed;

(g) names of banks maintaining balances at a subsidiary bank (due to) wherever listed;

(h) any remarks of a derogatory nature or that might otherwise cause harm to a bank or an individual;

(i) should the applicant desire to submit any additional information it deems to be of a confidential nature, such information should be properly identified, separately bound, and labeled “Confidential.” The superintendent will determine whether information submitted as confidential will be so regarded, and will advise the applicant of any decision to make public information furnished on a confidential basis. However, it shall be understood that, without prior notice to applicant, the superintendent may disclose or comment on any of the contents of the application in his opinion issued in connection with his decision on the application.

107. STATEMENTS OF CONDITION RELATING TO SALES AND DISTRIBUTION OF CAPITAL STOCK 107. STATEMENTS OF CONDITION RELATING TO SALES AND DISTRIBUTION OF CAPITAL STOCK

3 CRR-NY Sup. Proc. CB 107.1 General reporting requirement {#sec-3-crr-ny-sup.-proc.-cb-107.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 107.1}

Within 10 days after the completion of a sale or distribution by a bank, trust company, safe deposit company, investment company or mutual trust investment company of its capital stock, the issuer should send to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, two condensed statements of condition, acknowledged by its chief executive or financial officer:

(a) one, as of the close of business on the day prior to such sale or distribution; and

(b) the other, as of the close of business on the day thereof.

Each statement should also indicate the number of shares then issued and outstanding.*

109. PERMISSION TO MAKE EXCESS DEPOSITS 109. PERMISSION TO MAKE EXCESS DEPOSITS

3 CRR-NY Sup. Proc. CB 109.1 General information {#sec-3-crr-ny-sup.-proc.-cb-109.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 109.1}

A bank or trust company that proposes to deposit an amount in excess of 100% of its capital stock, surplus fund and undivided profits with another banking corporation or a private banker should request the superintendent's permission to make such deposit, in accordance with Banking Law § 106, by submitting a letter application for such permission to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, specifying the name of the proposed depositary and the reasons why the applicant wishes to make such deposit.

3 CRR-NY Sup. Proc. CB 109.2 Application {#sec-3-crr-ny-sup.-proc.-cb-109.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 109.2}

The letter application should be accompanied by a certified copy of the resolution of the applicant's board of directors authorizing such application and naming the proposed depositary. The certification should state that a majority of the applicant's board of directors, exclusive of any director who is an officer, director, trustee or partner of the proposed depositary, was present and voted for the resolution at the meeting at which it was adopted.

111. APPROVAL OF CAPITAL NOTES AND DEBENTURES 111. APPROVAL OF CAPITAL NOTES AND DEBENTURES

3 CRR-NY Sup. Proc. CB 111.1 General information {#sec-3-crr-ny-sup.-proc.-cb-111.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 111.1}

A bank or trust company that seeks authorization from the superintendent to issue capital notes or debentures in accordance with Banking Law, section 96(4) should submit a letter application to the superintendent at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title (Attention: Applications Unit), requesting the superintendent's approval, in principle, of the proposed issue of capital notes or debentures.

3 CRR-NY Sup. Proc. CB 111.2 Application {#sec-3-crr-ny-sup.-proc.-cb-111.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 111.2}

The letter application should:

(a) be accompanied by the form of capital note or debenture, the agreement or indenture pursuant to which such notes or debentures are to be issued, and a certified copy of the resolution of the applicant's board of directors approving such issue, the form of note or debenture and the form of agreement or indenture, and designating an officer to submit the application and to take other necessary actions in connection therewith, and

(b) include the following information (a cross-reference to the appropriate section of the agreement or indenture may be substituted):

(1) aggregate dollar amount of the proposed issue;

(2) interest rate or rates to be paid on the proposed issue (if such rate or rates are not known at the time of application, a maximum rate should be estimated);

(3) maturity date of the proposed issue or if maturing in series, a schedule of amounts and maturity dates;

(4) call or prepayment provisions, if any, including the call periods, amounts which may be called therein and call prices. No optional prepayment in whole or in part of the unpaid principal of the notes or debentures may be made without the prior specific approval, in writing, of the superintendent;

(5) text of any subordination provision of the proposed issue, which should include the following or similar language:

Such obligation shall be junior and subordinate to the obligations of the bank to depositors and other creditors—except any such obligations expressly subordinated or made equal to the notes (debentures)—in that, in case of any receivership, conservatorship, liquidation, dissolution or winding up of the bank (or trust company), whether voluntary or involuntary, all obligations to depositors or creditors—except any expressly subordinated or made equal to the notes (debentures)—shall be paid in full before any payment shall be made on account of the principal or interest on the notes (debentures);

(6) if the proposed notes or debentures are to be convertible into capital stock, the applicant should include a detailed description of the conversion privilege including antidilution provisions, if any;*

(7) if payment for any part of the proposed issue is to be other than in cash, a complete description of the property proposed to constitute such payment and the value accorded to it by the applicant's board of directors; and

(8) the intended use of the proceeds.

The superintendent reserves the right to require additional information in connection with a particular application.

3 CRR-NY Sup. Proc. CB 111.3 Approval {#sec-3-crr-ny-sup.-proc.-cb-111.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 111.3}

The applicant may proceed with the proposed issue and sale of the capital notes or debentures upon receipt of a certificate of approval from the superintendent.

3 CRR-NY Sup. Proc. CB 111.4 Subsequent reports {#sec-3-crr-ny-sup.-proc.-cb-111.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 111.4}

The applicant should advise the superintendent by letter of the consummation of the sale, including therewith two condensed statements of condition acknowledged by its chief executive or financial officer—one as of the close of business on the day immediately preceding the sale and the other as of the close of business on the day on which the sale was consummated. Conversions of capital notes or debentures into shares of capital stock should be reported to the superintendent in accordance with the requirements of Banking Law, section 5016(6).

113. AUTHORIZATION TO INVEST IN SUBSIDIARY CORPORATIONS 113. AUTHORIZATION TO INVEST IN SUBSIDIARY CORPORATIONS

3 CRR-NY Sup. Proc. CB 113.1 General information {#sec-3-crr-ny-sup.-proc.-cb-113.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 113.1}

A savings bank or savings and loan association that seeks authorization, pursuant to Banking Law section 235-d, to invest in the stock of a corporation to be operated as a service corporation should submit a letter application to the Applications Unit of the Department of Financial Services, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. CB 113.2 Application {#sec-3-crr-ny-sup.-proc.-cb-113.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 113.2}

The letter application should

(a) be accompanied by a conformed copy of any stock purchase agreement, the financial statements referred to in section 113.3 of this Supervisory Procedure, and a certified copy of the resolution of applicant's board of directors approving the investment and specifying the number of shares to be purchased and their purchase price, and

(b) contain the following information (a cross-reference to the applicable section of a stock purchase agreement may be substituted):

(1) name of the proposed service corporation;

(2) a detailed description of its present business, any proposed change in its business, or, if a company is to be formed, a brief description of the business which the proposed service corporation will engage in;

(3) the location of each of its offices;

(4) the proposed location of its records;

(5) brief descriptions of the experience and qualifications of the senior officers of the proposed service corporation and of the officers of the applicant who are to supervise its affairs;

(6) the purchase price of the stock to be purchased and the manner in which the purchase price is to be paid;

(7) the number and percentage of the outstanding shares of each class of stock to be purchased;

(8) the total number of shares, if any, of the proposed service corporation to be purchased, directly or indirectly, by the applicant from officers or directors thereof and the name of and amount to be purchased from each such officer and director;

(9) the names of any persons other than the applicant who will be major stockholders of the proposed service corporation following the proposed investment, the number of shares to be owned by each such stockholder and his relationship, if any, to the applicant or to any of its officers or directors;

(10) the amount of any finder's fees, broker's fees or commissions to be paid in connection with the proposed investment, the name of the person or persons to whom payment is to be made and their relationship, if any, to the applicant or to any of its officers or directors;

(11) a statement as to whether the applicant plans to make loans to the proposed service corporation, or guarantee any of its obligations and, if so, the details of any such arrangements;

(12) a statement of the benefits to be realized by applicant as a result of the proposed investment; and

(13) a statement outlining the reasons for this investment which should include objectives, business factors and market information.

3 CRR-NY Sup. Proc. CB 113.3 Financial statements {#sec-3-crr-ny-sup.-proc.-cb-113.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 113.3}

If the proposed service corporation is already in existence, the application should be accompanied by balance sheets and income statements of the proposed service corporation for each of the three fiscal years preceding the date of the application or, if the proposed service corporation has been in business for less than three years, then for each fiscal year and portion of a fiscal year it has been in business. If the proposed service corporation has subsidiaries or affiliated companies, the application should also be accompanied by (a) consolidated balance sheets and income statements for all such entities and (b) individual balance sheets and income statements for each such subsidiary and affiliated company, in all cases for the same period or periods as those covered by the unconsolidated financial statements of the proposed service corporation.

3 CRR-NY Sup. Proc. CB 113.4 Contributions to capital surplus {#sec-3-crr-ny-sup.-proc.-cb-113.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 113.4}

For the purpose of complying with the requirements of section 235-d of the Banking Law and Part 85 of this Title, an investment by a savings bank or savings and loan association in the capital surplus of a corporation operated as a service corporation shall be deemed to be an investment in the capital stock of such service corporation.

3 CRR-NY Sup. Proc. CB 116.1 General information {#sec-3-crr-ny-sup.-proc.-cb-116.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 116.1}

A bank or trust company that seeks the superintendent's consent to leave one or more vacancies on its board of directors unfilled pursuant to Banking Law § 7005(1)(b) should submit a letter application at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title (Attention: Applications Unit).

3 CRR-NY Sup. Proc. CB 116.2 Application {#sec-3-crr-ny-sup.-proc.-cb-116.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 116.2}

Each letter application should include a statement of the reasons for such application and should be accompanied by a certified copy of the resolution of the applicant's board of directors authorizing such application.

117. APPLICATION FOR COMPANIES SEEKING TO ACQUIRE OR EXERCISE CONTROL OF A BANKING INSTITUTION UNDER BANKING LAW, SECTION 143-B 117. APPLICATION FOR COMPANIES SEEKING TO ACQUIRE OR EXERCISE CONTROL OF A BANKING INSTITUTION UNDER BANKING LAW, SECTION 143-B

3 CRR-NY Sup. Proc. CB 117.1 General requirements {#sec-3-crr-ny-sup.-proc.-cb-117.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 117.1}

(a) Applicability.

The instructions set forth in this Supervisory Procedure shall apply:

(1) to the exercise of voting control of any banking institution pursuant to section 143-b of the Banking Law, as such section existed prior to June 30, 1980 if the purchase or other acquisition of such control was consummated prior to June 30, 1980 and was not previously approved by the superintendent; and

(2) to the direct or indirect acquisition of control of any banking institution made on or after June 30, 1980 pursuant to section 143-b of the Banking Law, as such section existed on and after June 30, 1980.

(b) Form of application.

Six copies of a letter application containing the information, and accompanied by all of the documents, required by this Supervisory Procedure and payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title shall be submitted to the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

All of the information and documents required to be submitted by an applicant pursuant to this Supervisory Procedure shall be supplied to the superintendent, or waivers shall have been granted in accordance with the following procedure, before an application shall be considered complete and shall be accepted by the superintendent. Requests for waivers of provisions of this Supervisory Procedure shall be in writing, shall be addressed to the superintendent and shall state, in reasonable detail, the basis of the request for the waiver. No provision of this Supervisory Procedure shall be deemed waived unless written notice of waiver from the superintendent shall have been issued.

The statutory period for approval or disapproval set forth in section 143-b(1) of the Banking Law, shall commence on the date that the Department of Financial Services has received both the applicable filing fee and an application determined by the Department of Financial Services to be complete and prepared in accordance with this Supervisory Procedure.

(d) Item numbers and captions.

The information required by this Supervisory Procedure shall be set forth in the order and under item numbers and captions which correspond to the order, item numbers and captions used in the applicable sections of this Supervisory Procedure. If the information requested in any item is inapplicable, a statement to that effect shall be made.

(e) Incorporation of previously filed reports.

If the information required by any item has been given in a sworn application or report filed with the Department of Financial Services pursuant to any law or regulation of the department and no additional information is needed to make the information previously filed accurate, complete and up-to-date, the required information may be incorporated by a specific reference to the date and page or pages of the previous filing which contains such information.

(f) Translation of foreign material.

All parts of the application, including documents submitted with the application, must be in the English language or complete and accurate translations must be provided.

(g) Conversion of foreign currency.

Financial statements of foreign applicants must be presented both in the applicable foreign currency and in United States dollars, and the date and basis of conversion must be stated.

(h) Federal filings.

All applicants must submit with their application six copies of any related filings made with any Federal regulatory agency and must continue to supply to the department six copies of each further submission to any of such agencies. Where appropriate, applicants may respond to any item of this Supervisory Procedure by making a reference to any of such filings, provided that a cross-reference sheet is supplied.

(i) Content of application.

Except as otherwise provided in a specific written waiver issued by the superintendent:

(1) an application submitted by an individual shall include the information required by sections 117.3 and 117.5 of this Supervisory Procedure;

(2) an application submitted by a one-bank holding company, as defined in section 117.2, shall include only the information required by section 117.3 of this Supervisory Procedure; and

(3) an application submitted by any other person shall include the information required by sections 117.3 and 117.4 of this Supervisory Procedure. All items of an application submitted by a corporation, partnership or other entity must be answered as to both the applicant and any person which controls the applicant. If such control person is an individual, such individual shall include the information required by sections 117.3 and 117.5 of this Supervisory Procedure.

(j) Execution.

Each copy of the application shall be signed by the applicant. If the applicant is a partnership, corporation or other entity, the application shall be signed by a partner or duly authorized executive officer thereof. Each person signing the application shall:

(1) state whether control has been acquired by or tendered to the applicant as of the time of the application is formally submitted for filing;

(2) certify that he will promptly advise the superintendent of any changes which may occur in the information furnished in the application subsequent to the date upon which the information was furnished; and

(3) subscribe the application and affirm, under penalties of perjury, that he has reviewed the application and that the application does not make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

(k) Additional information and in-person conferences.

The superintendent reserves the right to require additional information in connection with the application. The superintendent may also require that the applicant and any officers, directors and/or representatives of the applicant appear at the Department of Financial Services for in-person conferences. The applicant may submit any additional information it deems pertinent to the application.

3 CRR-NY Sup. Proc. CB 117.2 Definitions {#sec-3-crr-ny-sup.-proc.-cb-117.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 117.2}

For purposes of this Supervisory Procedure:

(a) Affiliate means any person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the person specified.

(b) One-bank holding company means a company:

(1) formed by only those persons who control a banking institution for the purpose of holding the stock of such banking institution, which shall be the only banking subsidiary of such company;

(2) which owns, controls or holds with power to vote all of the voting securities, except directors' qualifying shares of such banking institution;

(3) which is required to file an application with the Board of Governors of the Federal Reserve System under the Federal Bank Holding Company Act of 1956, as amended; and

(4) which is required to file an application under Banking Law, section 143-b.

(d) Banking organization means a State-chartered, Federally-chartered or foreign bank, trust company, private bank, investment company, banking association or bank holding company.

(e) Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a banking institution or other company, whether through the ownership of voting stock of such banking institution or other company, the ownership of voting stock of any company which possesses such power, by contract or otherwise. Control shall be presumed to exist if any person directly or indirectly, owns, controls or holds with the power to vote 10 percent or more of the voting stock of any banking institution or other company or of any company which owns, controls or holds with power to vote 10 percent or more of the voting stock of such banking institution or other company, but no person shall be deemed to control a banking institution or other company solely by reason of his being an officer or director of such banking institution or company.

(f) Person means a corporation, partnership, association or other business entity or a trust or an individual.

(g) Subsidiary means any company, a majority of whose voting stock is directly or indirectly owned, controlled or held with power to vote, by an applicant or by any company owned or controlled by an applicant.

3 CRR-NY Sup. Proc. CB 117.3 Information relating to the banking institution {#sec-3-crr-ny-sup.-proc.-cb-117.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 117.3}

Information relating to the banking institution control of which is sought to be acquired or exercised by the applicant and on the terms of the proposed transaction.

(a) Names and addresses.

Set forth the name and address of the banking institution control of which is sought to be acquired.

(b) Bank securities owned by applicant.

(1) State the total number of outstanding shares of such banking institution and the percentage of such shares, owned, beneficially and/or of record, by:

(i) the applicant; and

(ii) each affiliate of the applicant.

(2) State the aggregate unpaid principal amount of any other securities or indebtedness of such banking institution owned, beneficially and/or of record, by:

(i) the applicant; and

(ii) each affiliate of the applicant, and set forth a brief description thereof, including any conversion rights attached thereto.

With respect to the shares of such banking institution which were or are proposed to be acquired, state:

(1) the date or dates on which such shares were or are to be acquired;

(2) the name(s) and address(es) of the person(s) which have acquired or will be acquiring such shares, if an affiliate or affiliates of the applicant have acquired or are to acquire such shares;

(3) the name or names of the parties from who such shares were, or are to be, acquired;

(4) a description of the transaction or transactions in which such shares were or are to be acquired;

(5) the number of shares of stock of each class of stock of the banking institution which were or are to be acquired and the rights inherent in each such class; and

(6) the aggregate purchase price for the shares of stock which were or are to be acquired, stated by class.

(d) Source and amount of funds or other consideration.

(1) State the source and amount of funds or other consideration used or to be used in:

(i) acquiring the shares listed in section 117.3(c)(5) of this Supervisory Procedure; and

(ii) paying any finders' fees, legal fees or other expenses borne or to be borne by the applicant or its affiliates in connection with the acquisition of such shares.

(2) State whether any other consideration, monetary or otherwise, has been paid, given or offered to any shareholder or any other party as inducement for assistance in consummating the transaction in which control was or will be acquired and the details thereof.

(3) If any part of the purchase price for the shares acquired or to be acquired, or any part of the expenses of acquisition were represented or are to be represented by funds or other consideration directly or indirectly borrowed, describe the transaction(s) pursuant to which they were or are to be so borrowed and name the parties to the transaction.

(4) Provide copies of any contracts or other documents memorializing any of the arrangements described in section 117.3(d) of this Supervisory Procedure.

(e) Contracts, arrangements or understandings with respect to securities of the banking institution.

Describe any contracts, arrangements or understandings between applicant or any affiliate of applicant and any person with respect to any securities of the banking institution, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, guarantees of loans, guarantees against loss or of profits, division of loss or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements or understandings have been entered into and giving the details thereof, and supply copies of all such contracts or documents memorializing such arrangements or understandings.

(f) The banking institution.

(1) State whether, to the best of your knowledge, any other person controls the banking institution.

(2) Describe the purpose or purposes of the acquisition or proposed acquisition of control and the changes, if any, which applicant intends to make in the management and policies of the banking institution. If any management changes are anticipated, provide the same information required by section 117.4(c) of this Supervisory Procedure on any proposed new directors, trustees, partners and principal executive officers.

(3) Describe the extent to which applicant or any affiliate of applicant directs, or intends to direct, the policies of the banking institution relating to investments, loans, bank premises, operations, insurance, personnel, pension and profit sharing plans and dividends.

(4) State the extent to which applicant or any affiliate of applicant supervises or intends to supervise the auditing procedures of the banking institution.

(5) State whether applicant or any affiliate of applicant intends to charge any fees for management services and, if so, the amount thereof and any formula used to arrive at such amount.

(6) State whether applicant or any affiliate of applicant has or has had, or intends to have, a banking or contractual relationship with the banking institution, describe the terms and nature of such relationship(s), and provide copies of any contracts or agreements memorializing any such relationship(s).

(7) Provide copies of all contracts between applicant or any affiliate of applicant and the banking institution or any shareholder or officer thereof not provided in response to any other item of this Supervisory Procedure, including all employment, stock, debenture, note or bond purchase agreements.

(g) Future financing for the banking institution.

Describe all sources of financing which would be available to the applicant for future use in connection with the banking institution and the manner and terms on which it would be available to the applicant.

3 CRR-NY Sup. Proc. CB 117.4 Information required in applications filed by corporate or other entities {#sec-3-crr-ny-sup.-proc.-cb-117.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 117.4}

(a) Name and address of applicant.

Set forth the name and address of the applicant and the name and address of the officer or partner to whom all communications from the Department of Financial Services should be addressed.

(b) Applicant's business.

Describe fully the business of the applicant, each affiliate of the applicant referred to in section 117.3(c)(2) of this Supervisory Procedure, and each other significant subsidiary or affiliate of the applicant, including the name, state or country of incorporation, percentage ownership and business of each such subsidiary and affiliate. The description of business should include, but not be limited to, the following:

(1) a discussion of the general development of the business over the past two years;

(2) a description of the principal services or products and any significant change therein during the past two years;

(3) a list of each customer or group of related customers, which accounts, either singly or in the aggregate, for 10 percent or more of the gross revenues of the business. Indicate whether such customers are directly related to or affiliated with the applicant or its affiliates and if so, how;

(4) a list of the major suppliers of the business. Indicate whether such suppliers are directly or indirectly related to or affiliated with the applicant or its affiliates, and if so, how;

(5) a description of the source and availability of financing, if any, for the business. If any part consists of debt financing, provide the name and address of the lender(s) and describe the maturities and other terms of such financing; and

(6) a breakdown of the gross revenues of the business for the past two years, showing the approximate amount of revenues, before income taxes and extraordinary items, attributable to each line of business which accounted for 10 percent or more of the revenues and/or losses of the business in either of the years covered.

(1) List the name, title, citizenship, home address and number and percentage of applicant's shares owned, beneficially and/or of record, by each of applicant's directors and principal executive officer, or, in the case of a partnership, the name, home address and percentage interest therein of each of the partners. If applicant is a corporation, list all other persons owning, beneficially and/or of record, one percent or more of the shares of the applicant.

(2) List, for each director and principal executive officer of the applicant, or if applicant is a partnership, for each of the partners and for each individual controlling any partner, all material occupations, positions, offices or employment during the last 10 years, providing the starting and ending dates of each and the name and address and principal activities of any business, corporation or other entity in which each occupation, position, office or employment was carried on.

(3) State whether or not any of the directors or principal executive officers of the applicant, or if applicant is a partnership, if any of the partners or persons controlling such partners, has been convicted in a criminal proceeding or proceedings (excluding traffic violations) or has been the subject of a bankruptcy proceeding or proceedings, and if so, provide dates, nature of the proceeding(s) or conviction(s), name(s) and location of court(s) and disposition of the matters.

(4) State whether or not any of the directors or principal executive officers of the applicant, or if applicant is a partnership, whether or not any of the partners or persons controlling such partners:

(i) directly or indirectly owns, either beneficially or of record, five percent or more of the equity interests of any banking organization; or

(ii) directly or indirectly controls five percent or more of the equity interests of any banking organization.

If the answer to (i) or (ii) is “yes”, identify the director, officer or other person, the banking organization(s) involved, the nature and extent of such ownership and/or control, and the jurisdictions in which the organization(s) are chartered.

(d) Claims.

Summarize all:

(1) investigations, and civil and criminal proceedings by any Federal, State, local or foreign governmental agency; and

(2) claims which involve the applicant, each affiliate referred to in section 117.3(c)(2) of this Supervisory Procedure, or any other significant subsidiary or affiliate of the applicant which are currently pending or threatened, and which are either:

(i) material; or

(ii) related to the character of the applicant.

The summary must include the names of the parties, the agencies, courts or other tribunals before which the investigations, proceedings or claims are pending, if any, the status thereof, and the amount (or a reasonable estimate thereof) involved.

(e) Corporate or partnership documents.

With respect to the applicant, each affiliate referred to in section 117.3(c)(2) of this Supervisory Procedure, and any other significant subsidiary or affiliate of the applicant, provide copies of:

(1) In the case of a partnership, the partnership certificate and all amendments thereto duly certified by an appropriate official of the jurisdiction of organization, and the partnership agreement, with all amendments thereto duly certified by a general partner;

(2) In the case of a corporation or other entity:

(i) the certificate of incorporation, charter or other organizational certificate and all amendments thereto, duly certified by the Secretary of State (or other appropriate official of the jurisdiction of organization); and

(ii) a copy of the bylaws, as amended to date, duly certified by an appropriate officer.

(f) Ownership or control of banking organizations.

State whether or not the applicant or any affiliate of the applicant:

(1) directly or indirectly owns, either beneficially or of record, five percent or more the equity interest in any banking organization; or

(2) directly or indirectly controls five percent or more of the equity interest in any banking organization.

If the answer to (1) or (2) is “yes”, identify the banking organization(s) involved, the nature and extent of such ownership and/or control, and the jurisdiction(s) in which the organization(s) are chartered.

(g) Financial statements.

Provide the following financial statements:

(1) Consolidated and consolidating statements of condition as of the last day of each of the three fiscal years immediately preceding the date of the application and consolidated and consolidating statements of income, changes in financial position and changes in shareholders' equity for such three fiscal years for:

(i) the applicant and its subsidiaries; and

(ii) each unconsolidated affiliate of the applicant and its subsidiaries, each accompanied by a report thereon by an independent certified public accountant, stating that such financial statements present the information purported to be shown therein fairly and in conformity with generally accepted accounting principles consistently applied, and stating in the report any exceptions thereto.

(2) A consolidated and consolidating statement of condition as of the last day of the calendar quarter immediately preceding the date of the application and consolidated and consolidating statements of income, changes in financial position and changes in shareholders' equity for the period beginning on the first day of the fiscal year then in progress and ending on such last day, for:

(i) the applicant and its subsidiaries; and

(ii) each unconsolidated affiliate of the applicant and its subsidiaries, accompanied by a report of an independent certified public accountant stating that:

(a) he has reviewed such interim financial statements (indicating the scope of his review); and

(b) on the basis of such review and consultation with the officers of the applicant or the affiliate responsible for financial and accounting matters and such other inquiries as he deems necessary, nothing has come to his attention which, in his judgment, would indicate that:

(1) such interim financial statements were not prepared in accordance with generally accepted accounting principles consistent with those followed in the preparation of the certified financial statements referred to in section 117.4(g)(1) of this Supervisory Procedure or do not present fairly the information purported to be shown; or

(2) during the period covered by the interim financial statements, there has been any material change in the capital stock or funded debt of the applicant or the affiliate, as the case may be, or of any of their respective subsidiaries.

(3) A copy of the annual reports for each of the two fiscal years ended immediately prior to the date of the application sent to or prepared for the shareholders of:

(i) the applicant;

(ii) each affiliate of the applicant referred to in section 117.3(c)(2) of this Supervisory Procedure; and

(iii) each other significant subsidiary or affiliate of applicant.

(h) Prospecti.

Copies of the most recent prospectus filed with the Securities and Exchange Commission by:

(1) the applicant;

(2) each affiliate of the applicant referred to in section 117.3(c)(2) of this Supervisory Procedure; and

(3) any other significant subsidiary or affiliate of the applicant.

(i) Banking and securities brokerage firm relationships.

(1) Provide a list of all banking organizations and securities brokerage firms with which:

(i) the applicant;

(ii) each affiliate of the applicant referred to in section 117.3(c)(2) of this Supervisory Procedure; and

(iii) each other significant subsidiary or affiliate of the applicant has or within the past five years has had a banking or customer relationship.

The list should summarize the name of each such relationship and indicate the principal office of the banking organization or securities brokerage firm at which the relationship is or was maintained.

(2) Provide a letter addressed to each of the banks or brokerage firms referred to in section 117.3(i)(1) of this Supervisory Procedure authorizing the addressee to provide the superintendent and his representatives with such financial or other information concerning the applicant and its affiliates as the superintendent or his representatives may request.

(j) Affiliations chart.

Provide a chart clearly presenting the identities of an interrelationships among, the applicant and all affiliates of the applicant. The chart should indicate:

(1) the percentage of voting securities of each person who controls, is controlled by, or is under common control with, the applicant;

(2) if control of any such person is maintained other than by the ownership or control of voting securities, the basis of such control; and

(3) the names of any other persons owning shares of any affiliates of the applicant.

The chart should also indicate, for each person specified in the chart, the type of organization (e.g., corporation, trust, partnership) involved and the state or other jurisdiction of domicile.

3 CRR-NY Sup. Proc. CB 117.5 Information required in applications filed by individuals {#sec-3-crr-ny-sup.-proc.-cb-117.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 117.5}

(a) Name, address and relatives of applicant.

(1) Set forth the name, citizenship and business and residential addresses of the applicant, indicating the address to which communications from the Department of Financial Services should be sent.

(2) Set forth any other names by which the applicant has been known, and the circumstances thereof.

(3) Provide the name of applicant's spouse and all relatives of applicant, by blood or marriage, who, to applicant's knowledge, own or have agreed to acquire stock of the banking institution subject of the application.

(b) Birth date and place.

Provide the date and place of birth of the applicant.

Provide the addresses of all former residences of the applicant during the last 10 years and the starting and ending dates of such residences.

(d) Education.

Provide the names and addresses of all high schools, colleges, universities, graduate programs, technical institutions and professional institutions attended by the applicant, the dates of attendance, any degrees received and the dates of such receipt.

(e) Professional licenses.

List all professional licenses or certificates held by applicant, stating the type of license or certificate, the date of issue, the issuing authority and the extent of applicant's activity thereunder.

(f) Employment.

(1) State the present principal occupation or employment of the applicant and the name, address and principal business of any enterprise, corporation or other entity in which such employment was carried on.

(2) List all occupations, positions, offices or employment of the applicant during the 10 years preceding the date of the application, giving the starting and ending dates of each and the name, address and principal business of any enterprise, corporation or other entity in which such employment was carried on.

(g) Other activities.

Provide the names of any civil, professional or fraternal associations of which applicant is or has been a member at any time during the five years preceding the date of the application, the dates of membership and a description of the activities carried on by such associations.

(h) Applicant's business.

Describe fully the applicant's business, including the name, jurisdiction of incorporation, percentage of ownership and lines of business of each corporate or other entity which:

(1) is owned or controlled by the applicant; or

(2) has accounted for 10 percent or more of the gross income of the applicant in either of the last two calendar or fiscal years of the applicant. The description of the business should include, but not be limited to, the following:

(i) a discussion of the general development of the business over the past two years;

(ii) a description of the principal services or products and any significant change therein during the past two years;

(iii) a list of each customer, or group of related customers, which accounts, either singly or in the aggregate, for 10 percent or more of the gross revenues of the business. Indicate whether such customers are directly or indirectly related to or affiliated with the applicant or its affiliates, and if so, how;

(iv) a list of the major suppliers of the business. Indicate whether such suppliers are directly or indirectly related to or affiliated with the applicant or its affiliates, and if so, how;

(v) a description of the source of availability of financing, if any, for the business. If any part consists of debt financing, provide the name and address of the lender(s) and describe the maturities and other terms of financing; and

(vi) a breakdown of the business' gross revenues for the past two years, showing the approximate amount of revenues, before income taxes and extraordinary items, attributable to each line of business which accounted for 10 percent or more of the revenues and/or losses of the business in either of the years covered.

(i) Convictions, bankruptcies, claims and proceedings.

(1) State whether or not the applicant has been convicted in any criminal proceeding (excluding traffic violations) or has been the subject of any bankruptcy or similar proceeding, and if so, provide the dates and description of any such conviction or proceeding, the court or tribunal in which the matter was heard and the ultimate disposition thereof.

(2) State whether or not any business with which the applicant has been associated as an officer, director, partner or 10 percent or more shareholder has been:

(i) the subject of any criminal indictment;

(ii) convicted in any criminal proceeding; or

(iii) the subject of any bankruptcy or similar proceeding, and if so, provide the date and description of any such proceeding, the court or tribunal in which the matter was heard and the ultimate disposition thereof.

(3) State whether or not the applicant or any business with which the applicant has been associated as an officer, director, partner or 10 percent or more shareholder is the subject of any:

(i) pending or threatened investigation, civil or criminal proceeding by any Federal, State, local or foreign governmental agency; or

(ii) pending or threatened claim.

Provide a description of the matters disclosed, the names of the agencies or parties involved, the courts or tribunals in which any such matters are pending, the status of the matters and the amounts (or reasonable estimates thereof) involved.

(j) Ownership or control of banking organizations.

State whether or not the applicant:

(1) directly or indirectly owns, either beneficially or of record, five percent or more of the equity interests in any banking organization; or

(2) directly or indirectly controls five percent or more of the equity interests in any banking organization.

(k) Financial statements of applicant.

Provide the following financial statements:

(1) Detailed statements of assets and liabilities of the applicant as of the last day of each of the three calendar or fiscal years of the applicant immediately preceding the date of the application, together with statements of income and changes in financial condition for such three calendar or fiscal years, prepared by an independent certified public accountant in accordance with the Statement on Standards for Accounting and Review Services, No. 1, Compilation and Review of Financial Statements, issued by the American Institute of Certified Public Accountants, as amended, or any statement issued in substitution therefor, and accompanied by review reports on such financial statements prepared by such accountant, stating that based on his review, he is not aware of any material modifications that should be made to such statements in order for them to be in conformity with generally accepted accounting principles, and stating in the report any exceptions thereto.

(2) A detailed statement of assets and liabilities of the applicant as of the last day of the calendar or fiscal quarter of the applicant immediately preceding the date of the application, together with statements of income and changes in financial condition for the period beginning on the first day of the calendar or fiscal year of the applicant then in progress and ending on such last day, prepared by an independent certified public accountant, and accompanied by a review report on such financial statements prepared by such accountant, stating that based on his review:

(i) nothing has come to his attention which would indicate that such statements were not prepared in accordance with accounting principles consistent with those principles applied in preparation of the annual financial statements provided pursuant to paragraph (1) of this subdivision; and

(ii) he is not aware of any material modifications that should be made to such statements in order for them to be in conformity with generally accepted accounting principles, and stating in the report any exceptions thereto.

(3) Detailed statements of assets and liabilities of the applicant as of:

(i) the last day of the calendar or fiscal year of the applicant immediately preceding the date of the application.

(ii) as of the last day of the calendar or fiscal quarter immediately preceding the date of the application, showing current estimated values, both reviewed by an independent certified public accountant and both accompanied by letters from such accountant stating the scope of his review.

(l) Financial statements of affiliates.

For all affiliates of the applicant referred to in section 117.3(c)(2) of this Supervisory Procedure and all other significant affiliates of the applicant, provide the annual and interim financial statements referred to in sections 117.4(g)(1) and (2) of this Supervisory Procedure and the annual reports referred to in section 117.4(g)(3) of this Supervisory Procedure.

(m) Banking and securities brokerage relationships.

(1) Provide a list of all banking organizations and securities brokerage firms with which:

(i) the applicant;

(ii) any affiliate of the applicant referred to in section 117.3(c)(2); and

(iii) any other significant affiliate of the applicant has or within the past five years has had a banking or customer relationship.

The list should summarize the nature of each such relationship and indicate the principal office of the banking organization or brokerage firm at which the relationship is or was maintained.

(2) Provide a letter addressed to each of the banking organizations or brokerage firms referred to in section 117.4(m)(1) of this Supervisory Procedure authorizing the addressee to provide the superintendent or his representatives with such financial or other information concerning the applicant and his affiliates as the superintendent or his representatives may request.

(n) Affiliations chart.

Provide a chart clearly presenting the identities of, and the interrelationships among, the applicant and all affiliates of the applicant. The chart should indicate:

(1) the percentage of voting securities of each person who controls, is controlled by, or is under common control with applicant;

(2) if control of any such person is maintained other than by the ownership or control of voting securities, the basis of such control; and

(3) the names of any other persons owning shares of any affiliates of the applicant.

The chart should also indicate, for each person specified in the chart, the type of organization (e.g., corporation, trust, partnership) involved and the state or other jurisdiction of domicile.

(o) References.

Provide the names and addresses of at least three personal references.

118. REGISTRATION STATEMENT FOR MULTI-BANK HOLDING COMPANIES 118. REGISTRATION STATEMENT FOR MULTI-BANK HOLDING COMPANIES

3 CRR-NY Sup. Proc. CB 118.1 General information {#sec-3-crr-ny-sup.-proc.-cb-118.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 118.1}

(a) Within 180 days after becoming a bank holding company, as defined in Banking Law, section 141(3), such company shall file a registration statement with the superintendent, providing the following information:

(1) mailing address of the bank holding company to be used in the future (if different from that provided in the application);

(2) date of fiscal year-end of the bank holding company;

(3) parent-only balance sheet of the bank holding company as of the close of business on the date of consummation (balance sheet should be prepared in accordance with generally accepted accounting principles);

(4) number and percent of each class of voting shares of the banks and nonbank subsidiaries owned by the bank holding company at the time of registration;

(5) list of changes, if any, in directors and principal officers and shareholders of the bank holding company since the bank holding company application was filed;

(6) a copy of organization documents of the bank holding company (charters, by-laws, articles of incorporation, trust agreements, etc.), certified by its secretary or other authorized officer, and notarized; and

(7) an organization chart, showing the relationships among the banks, the nonbank subsidiaries, and the parent.

(b) All bank holding companies planning to submit a registration statement are requested to communicate with the New York State Department of Financial Services, Domestic Commercial Banks Division, Foreign Commercial Banks Division or Thrift Institutions Division, as the case may be, in advance of filing of such registration statements, to ascertain if any special registration requirements are necessary.

3 CRR-NY Sup. Proc. CB 118.2 Filing {#sec-3-crr-ny-sup.-proc.-cb-118.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 118.2}

The registration statement shall be submitted in duplicate, one of which statements has been certified by the president, a vice-president or secretary of the bank holding company.

3 CRR-NY Sup. Proc. CB 118.3 Annual reports {#sec-3-crr-ny-sup.-proc.-cb-118.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 118.3}

In addition to the requirements of section 118.1 of this Procedure, each bank holding company shall furnish to the department two copies of the report of the company's operations for the fiscal year in which it becomes a bank holding company, and for each year thereafter. The form of such annual report shall be the current form required to be filed under the regulations of the Board of Governors of the Federal Reserve System. The annual report shall be submitted to the department within three months after the end of such company's fiscal year.

120. UNDIVIDED PROFITS—DEFINED 120. UNDIVIDED PROFITS—DEFINED

3 CRR-NY Sup. Proc. CB 120.1 Undivided profits defined {#sec-3-crr-ny-sup.-proc.-cb-120.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. CB 120.1}

For purposes of Article III of the Banking Law, the term undivided profits includes paid-in or earned profits (unearned income must be deducted); reserves for loan losses or bad debts; valuation reserves for securities; and reserves for contingencies. It does not include reserves for dividends declared or reserves for taxes, interest and expenses.

SB. SAVINGS BANKS SB. SAVINGS BANKS

1. AUTHORIZATION OF TRUST POWERS FOR SAVINGS BANKS 1. AUTHORIZATION OF TRUST POWERS FOR SAVINGS BANKS

3 CRR-NY Sup. Pol. SB 1.1 General statement {#sec-3-crr-ny-sup.-pol.-sb-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SB 1.1}

Pursuant to the provisions of section 234-b of the Banking Law, the Superintendent of Financial Services (the “superintendent”) is prepared to authorize a State-chartered savings bank to exercise, through a trust department, any or all of the powers specified in sections 100, 100-a, 100-b and 100-c of the Banking Law, in accordance with applicable law, provided that:

(a) the granting of such powers to the institution will promote the convenience and advantage of the public; and

(b) the proposed management of the trust department commands confidence and warrants the belief that the business of such department will be honestly and efficiently conducted in accordance with the intent and purpose of applicable law.

3 CRR-NY Sup. Pol. SB 1.2 General criteria {#sec-3-crr-ny-sup.-pol.-sb-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SB 1.2}

In passing upon an application pursuant to section 234-b, the superintendent will consider, in addition to any other facts or circumstances deemed proper, the following:

(a) the financial condition of the applicant;

(b) the qualifications and experience of the proposed officer or officers of the trust department and the nature of the supervision to be exercised over the fiduciary activities;

(d) the plan of operations of the applicant's trust department, including information as to the manner in which legal, accounting, investment and recordkeeping functions of such department are to be performed and information as to any plans to obtain related services from outside sources.

3 CRR-NY Sup. Pol. SB 1.3 Specific requirements {#sec-3-crr-ny-sup.-pol.-sb-1.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SB 1.3}

An application for authority to exercise any fiduciary power shall consist of:

(a) a certified copy of a resolution of the applicant's board of trustees, authorizing the applicant to file the application and to undertake the fiduciary activities specified in the application; and

(b) a written statement covering the matters specified in section 1.2(b)-(d) of this Part and such other matters as the Department of Financial Services shall request after consultation with the applicant.

3 CRR-NY Sup. Pol. SB 1.4 Application of other laws and regulations {#sec-3-crr-ny-sup.-pol.-sb-1.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SB 1.4}

The provisions of Supervisory Procedure CB 119 shall apply to any savings bank which proposes to establish a common trust fund, and the provisions of Part 22 of this Title shall apply to any savings bank maintaining such a fund. The terms trust company and board of directors, as used in CB 119 and Part 22, shall be deemed to mean the trust department of a savings bank and board of trustees of a savings bank, respectively.

101. APPLICATION FOR SAVINGS BANK BRANCH OFFICES 101. APPLICATION FOR SAVINGS BANK BRANCH OFFICES

3 CRR-NY Sup. Proc. SB 101.1 General information {#sec-3-crr-ny-sup.-proc.-sb-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 101.1}

(a) A savings bank that seeks permission to open a branch office should file an application therefor with the Superintendent of Financial Services (the “superintendent”), at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, which meets the requirements of this supervisory procedure, accompanied by payment of the fee specified by section 1.2 of Supervisory Policy G 1 of this Title. The words “branch,” “office” and “offices” as used in this Supervisory Procedure shall include limited purpose branches, but shall not include automated teller machines, point-of-sale terminals or similar facilities.

(c) The Department of Financial Services (the “department”) processes branch applications using either an expedited application process or a standard application process. An institution is eligible for the expedited process if it satisfies all of the following criteria:

(1) has a composite CAMELS rating of "1" or "2";

(2) has at least a satisfactory ("2") rating for management;

(3) is well capitalized in accordance with applicable Federal standards;

(4) has a CRA rating of "satisfactory" or better; and

(5) has no major unresolved supervisory issues outstanding (as determined by the department in its discretion).

Application requirements are set forth by the superintendent. Forms and instructions may be obtained directly from the department, and are available on the department's website (www.dfs.ny.gov).

(d) An application should be filed concurrently with the appropriate Federal supervisory authority if Federal approval is also required. An applicant may submit information to the department by submitting a copy of the appropriate Federal or uniform State application and providing cross-references to the information contained therein. Such Federal or uniform State applications shall be supplemented where necessary to comply with the department's specific application requirements.

3 CRR-NY Sup. Proc. SB 101.2 Application for community afforded home office protection {#sec-3-crr-ny-sup.-proc.-sb-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 101.2}

The department will not accept applications for branch offices in communities from which the applicant would be barred, at the time of filing, under the home office protection provisions of the New York Banking Law; provided, however, such a branch application may be accepted for filing if there exists on such date any application with the appropriate regulatory authorities which would, if approved, eliminate the protection provisions of section 240 of the New York Banking Law. No final action will be taken on such branch application until home office protection will have ceased under New York Banking Law.

110. MERGER OF SAVINGS AND LOAN ASSOCIATION OR SAVINGS BANK INTO SAVINGS BANK 110. MERGER OF SAVINGS AND LOAN ASSOCIATION OR SAVINGS BANK INTO SAVINGS BANK

3 CRR-NY Sup. Proc. SB 110.1 General information {#sec-3-crr-ny-sup.-proc.-sb-110.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 110.1}

(a) The instructions set forth in this Procedure shall apply to a merger proposed pursuant to Banking Law, section 600(2) and (4), where the surviving institution is a savings bank.

(b) A separate application shall be filed with respect to each merger for which the approval of the Superintendent of Financial Services (the “superintendent”) is sought and eight copies thereof, together with all exhibits thereto, including two executed copies of the exhibits referred to in section 110.3(a)-(c) of this Procedure, shall be filed with the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The application shall contain the information specified in sections 110.2 and 110.3 of this Procedure and shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Inquiries concerning the preparation of the application should be addressed to the superintendent.

(c) The approvals required by this subdivision shall be obtained before the application for the superintendent's approval is submitted:

(1) The plan of merger shall be approved, in the manner prescribed by Banking Law, section 601(3), by the board of trustees of each savings bank and the board of directors of each association which is a party to the merger.

(2) If any party to be merged is an association, the plan of merger shall be approved at a meeting held upon not less than 30 days' written notice to each shareholder by the vote, in person or by proxy, of at least 662/3 percent of all the votes cast at the meeting (the voting rights of shareholders to be determined as prescribed in the bylaws of the association). Notice of the shareholders' meeting, together with any proxy material, shall be served personally upon or mailed to each shareholder of the association at his last known address and shall contain a statement of the time and place of the meeting, a full and clear statement of the purpose of the meeting and the effect of the proposed merger, if consummated, upon the shareholders' right to vote on matters affecting the management of the surviving institution.

(d) Approval by the superintendent will be conditioned in all cases upon the insurance by the Federal Deposit Insurance Corporation of deposit accounts acquired as a result of the merger to the extent permitted by Federal law.

(e) If the surviving savings bank plans to maintain as a branch one or more offices or maintain as its principal office the principal office of any bank or association being merged, the plan of merger must specifically provide therefor as required by Banking Law, section 240(2)(d).

(f) After the merger, the powers of the surviving savings bank, including its powers to receive new deposits, make new loans and undertake new borrowings, will be subject to the laws governing savings banks, except to the extent it has, as a result of the merger, succeeded to certain deposits, loans and borrowings which are legal for an association but not legal for a savings bank. While the surviving bank will ordinarily be required to dispose of such deposits, loans and borrowings within two years after the date of the merger, it may discharge any legal obligations previously undertaken by the association in connection with such nonconforming deposits, loans and borrowings. The plan of merger must specifically describe, by type and amount, such nonconforming deposits, loans and borrowings, and indicate the manner in which they are to be disposed of by the surviving savings bank.

(g) The superintendent reserves the right to require additional information in connection with the application. The applicants may, of course, submit any information in addition to that required by this Procedure which they deem pertinent to the application.

(h) Unless otherwise indicated, all statistical data required to be submitted in the application (e.g., as to deposits and loans) shall be furnished as of the December 31st preceding the date of submission.

3 CRR-NY Sup. Proc. SB 110.2 Information required in the application {#sec-3-crr-ny-sup.-proc.-sb-110.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 110.2}

(a) General information.

Set forth the name and address of the applicants; the name and address of the officer to whom all communications from the Department of Financial Services should be addressed; and the date or proposed date of filing of any required applications or other documents with the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation.

(b) Banking offices.

List the name and address of the principal office of each party to the proposed merger and of the surviving bank; the branch office locations of each party; the road distance between the nearest offices of each party and the offices, if any, which will be closed if the application is approved.

(1) Number and volume.

List in tabular form the number of accounts and dollar amount of deposits of each party to the merger, by type of account and type of depositor, as of December 31st for each of the preceding three years.

(2) Primary and secondary service areas.

Indicate the deposits, by number of accounts and dollar amount, which originate in the primary service area and the secondary service area, respectively, of each party to the merger. This computation should also be made for any office if the service area thereof is reasonably close to or overlaps any service area of the other party or any of its offices. The term primary service area, of a bank, association or any office thereof, means the area from which is derived approximately 75 percent of the dollar amount of deposits based on the record addresses of the depositors thereof.* The term secondary service area, of a bank, association or any office thereof, means the area contiguous to but outside of the primary service area from which is derived approximately an additional 15 percent of the dollar amount of deposits based on the record addresses of the depositors thereof.*

(3) Overlap. Indicate the deposits, by number of accounts and dollar amount, that each party to the merger draws from the primary and secondary service areas of the other, separately itemized for savings and other time deposits.

(4) Rates.

For each party, describe the rates paid on savings and other time deposits and the methods of computation. If any of the rates or the methods of computation differ between the parties to the merger, include a statement specifically indicating how the differences will be resolved if the application is approved.

(d) Loans.

(1) Breakdown of loans.

For each party, list in tabular form for each of the preceding three calendar years the breakdown of all major types of loans outstanding on each December 31st. The breakdown should be by number and dollar amount of loans on properties located (a) without New York State; (b) within New York State; and (c) within such party's primary and secondary service areas. Major types of loans should include at least the following categories: (i) FHA and VA loans on one- and two-family residences; (ii) conventional loans on one-and two-family residences; (iii) FHA and VA loans on other residential properties; (iv) conventional loans on other residential properties; and (v) nonresidential mortgage loans.

(2) Overlap.

Indicate the outstanding mortgage loans, by number and dollar amount, of each party to the merger on properties located in the primary and secondary service areas of the other party, separately itemized for each major type of loan.

(3) Loan policies.

Describe the policies of each party with respect to the rates charged and the maximum maturities and maximum loan-value ratios on the major types of loans offered by such party. If any of the policies differ between the parties to the merger, include a statement specifically indicating how the differences will be resolved if the application is approved.

(4) Participations.

List the loan participations, by number and dollar amount, which each party to the merger has originated or participated in during the three preceding calendar years and the amount of such party's participation. List the participants in each such case.

(e) Other information.

(1) Economic characteristics.

(2) Management.

List the names, ages and salaries of the senior executive and administrative officers of each party to the merger, including the composition of the board of trustees or board of directors and any advisory or similar committee, together with a brief summary of the educational background, banking experience and other qualifications of each such officer. Provide similar information with respect to the proposed management of the surviving savings bank. If management succession is a problem for any party to the merger, indicate specifically what attempts have been made in recent years to recruit management personnel and state how the merger is expected to solve the management succession problem.

(3) Inducements.

(f) Reasons for approval.

Include a separate statement setting forth in detail the reasons why the applicants believe the application should be approved, including a discussion as to: (1) whether the proposed merger will meet specific needs for banking services in the designated service areas which are not now being met; (2) the competitive consequences of the proposed merger within the designated service areas; and (3) the manner in which the proposed merger will otherwise serve the public interest.

3 CRR-NY Sup. Proc. SB 110.3 Exhibits {#sec-3-crr-ny-sup.-proc.-sb-110.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 110.3}

The following exhibits shall be filed as part of the application:

(a) Plan of merger, setting forth the terms and conditions of the merger, executed by each party to the merger and otherwise complying with the requirements of Banking Law, section 601.

(b) Copies of resolutions adopted by the board of directors of each association to be merged and by the trustees of each savings bank which is a party to the merger, certified in each case, by the president or secretary of the association or bank, that the meeting was held and the plan of merger adopted in compliance with the requirements of Banking Law, section 601(3).

(c) If any party to the merger is an association, a copy of the minutes of a meeting of the shareholders thereof at which the plan of merger was approved, including attached copies of the notice to shareholders, proxy material and plan of merger in the form submitted to the shareholders. The president or secretary of the association shall certify that (i) the notice to shareholders and proxy material were served personally or mailed to each shareholder at his last known address at least 30 days prior to the shareholders' meeting, and (ii) the plan of merger in the form attached was the plan submitted to the shareholders at such meeting, and was approved at the meeting by the vote, in person or by proxy, of at least 662/3 percent of all the votes cast at the meeting. Such certificate shall also indicate the actual vote of the shareholders for and against the plan of merger.

(d) A statement as of the preceding December 31st of the assets and liabilities of each party to the merger and, on a pro forma basis, of the surviving savings bank.

(e) Copies of the income and expense reports of each party to the merger (as reported to the supervisory authorities) for each of the three preceding calendar years and, on a pro forma basis, of the surviving savings bank for the preceding calendar year.

(f) A statement showing a 12-months' projection for the surviving savings bank of (1) the asset structure, (2) the indicated yield for each asset category and for total assets, (3) earnings, (4) book net worth, (5) ratio of book net worth to total assets, and (6) liquidity. Describe any anticipated material changes in the business of the surviving savings bank which will affect projected net worth.

(g) Maps, indicating (1) the primary and secondary service areas of each party to the merger, (2) the location of the respective offices of each of the parties and (3) the location, except in the case of a service area wholly within New York City, of every commercial bank, savings bank and savings and loan association office located in or near such primary and secondary service areas. A key to office numbers, scale of miles and compass points should be provided.

(h) Copy of the proposed by-laws for the surviving bank.

(i) Copies of any agreements, in addition to the plan of merger, relating to the merger.

3 CRR-NY Sup. Proc. SB 110.4 Additional documents {#sec-3-crr-ny-sup.-proc.-sb-110.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 110.4}

The following additional documents shall be submitted to the Superintendent as they become available to the parties:

(a) Copies of all approvals obtained pursuant to Federal law and regulations.

(b) Opinion of counsel for each party to the merger as to compliance of that party with all requirements of Federal and State law in connection with the merger.

3 CRR-NY Sup. Proc. SB 110.5 Confidential information {#sec-3-crr-ny-sup.-proc.-sb-110.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SB 110.5}

The following information is considered confidential and should be furnished on separate pages which can be detached from the rest of the application:

(a) that portion of the plan of merger which specifically describes nonconforming deposits, loans and borrowings (see section 110.1[f]), as required;

(b) the computation of deposits for any office of each party to the merger required by section 110.2(c)(2);

(d) the information required by section 110.2(e)(2);

(e) the income and expense reports required by section 110.3(e);

(f) the statement required by section 110.3(f).

SL. SAVINGS AND LOAN ASSOCIATIONS SL. SAVINGS AND LOAN ASSOCIATIONS

1. AUTHORIZATION FOR TRUST POWERS FOR SAVINGS AND LOAN ASSOCIATIONS 1. AUTHORIZATION FOR TRUST POWERS FOR SAVINGS AND LOAN ASSOCIATIONS

3 CRR-NY Sup. Pol. SL 1.1 General statement {#sec-3-crr-ny-sup.-pol.-sl-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SL 1.1}

Pursuant to the provisions of section 380-h of the Banking Law, the Superintendent of Financial Services (“superintendent”) is prepared to authorize a State-chartered savings and loan association to exercise through a trust department any or all of the powers specified in sections 100, 100-a, 100-b and 100-c of the Banking Law in accordance with applicable law, provided that:

(a) the granting of such powers to the institution will promote the convenience and advantage of the public; and

3 CRR-NY Sup. Pol. SL 1.2 General criteria {#sec-3-crr-ny-sup.-pol.-sl-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SL 1.2}

In passing upon an application pursuant to section 380-h, the superintendent will consider, in addition to any other facts or circumstances deemed proper, the following:

(a) the financial condition of the applicant;

(b) the qualifications and experience of the proposed officer or officers of the trust department and the nature of the supervision to be exercised over the fiduciary activities;

3 CRR-NY Sup. Pol. SL 1.3 Specific requirements {#sec-3-crr-ny-sup.-pol.-sl-1.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SL 1.3}

An application for authority to exercise any fiduciary power shall consist of:

(a) a certified copy of a resolution of the applicant's board of directors, authorizing the applicant to file the application and to undertake the fiduciary activities specified in the application; and

(b) a written statement covering the matters specified in section 1.2(b)-(d) of this Supervisory Policy and such other matters as the Department of Financial Services shall request after consultation with the applicant.

3 CRR-NY Sup. Pol. SL 1.4 Application of other laws and regulations {#sec-3-crr-ny-sup.-pol.-sl-1.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. SL 1.4}

The provisions of Supervisory Procedure CB 119 shall to any savings and loan association which proposes to establish a common trust fund, and the provisions of Part 22 of this Title shall apply to any savings and loan association maintaining such a fund. The term trust company, as used in CB 119 and Part 22 of this Title, shall be deemed to mean the trust department of a savings and loan association.

101. APPLICATION FOR SAVINGS AND LOAN ASSOCIATION BRANCH OFFICES 101. APPLICATION FOR SAVINGS AND LOAN ASSOCIATION BRANCH OFFICES

3 CRR-NY Sup. Proc. SL 101.1 General information {#sec-3-crr-ny-sup.-proc.-sl-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 101.1}

(a) A savings and loan association that seeks permission to open a branch office should file an application therefor with the Superintendent of Financial Services (“superintendent”), as set forth in section 1.1 of Supervisory Policy G 1 of this Title which meets the requirements of this supervisory procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. The words “branch,” “office” and “offices” as used in this Supervisory Procedure shall include limited purpose branches, but shall not include automated teller machines, point-of-sale terminals or similar facilities.

(c) The Department of Financial Services (“department”) processes branch applications using either an expedited application process or a standard application process. An institution is eligible for the expedited process if it satisfies all of the following criteria:

(1) has a composite CAMELS rating of "1" or "2";

(2) has at least a satisfactory ("2") rating for management;

(3) is well capitalized in accordance with applicable Federal standards;

(4) has a CRA rating of "satisfactory" or better; and

(5) has no major unresolved supervisory issues outstanding (as determined by the department in its discretion).

Application requirements are set forth by the superintendent. Forms and instructions may be obtained directly from the department, and are available on the department's website (www.dfs.ny.gov).

(d) An application should be filed concurrently with the appropriate Federal supervisory authority if Federal approval is also required. An applicant may submit information to the department by submitting a copy of the appropriate Federal or uniform State application and providing cross-references to the information contained therein. Such Federal or uniform State applications shall be supplemented where necessary to comply with the department's specific application requirements.

3 CRR-NY Sup. Proc. SL 101.2 Application for community afforded home office protection {#sec-3-crr-ny-sup.-proc.-sl-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 101.2}

The department will not accept applications for branch offices in communities from which the applicant would be barred, at the time of filing, under the home office protection provisions of the New York Banking Law; provided, however, such a branch application may be accepted for filing if there exists on such date any application with the appropriate regulatory authorities which would, if approved, eliminate the protection provisions of section 396 of the New York Banking Law. No final action will be taken on such branch application until home office protection will have ceased under New York Banking Law.

110. MERGER OF SAVINGS AND LOAN ASSOCIATION OR SAVINGS BANK INTO A SAVINGS AND LOAN ASSOCIATION 110. MERGER OF SAVINGS AND LOAN ASSOCIATION OR SAVINGS BANK INTO A SAVINGS AND LOAN ASSOCIATION

3 CRR-NY Sup. Proc. SL 110.1 General information {#sec-3-crr-ny-sup.-proc.-sl-110.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 110.1}

(a) The instructions set forth in this Procedure shall apply to a merger proposed pursuant to Banking Law, section 600(3) and (4), where the surviving institution is a savings and loan association.

(b) A separate application shall be filed with respect to each merger for which the approval of the Superintendent of Financial Services (“superintendent”) is sought and six copies thereof, together with all exhibits thereto, including two executed copies of the exhibits referred to in section 110.3(a)-(c) of this Procedure, shall be filed with the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The application shall contain the information specified in sections 110.2 and 110.3 of this Procedure and shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Inquiries concerning the preparation of the application should be addressed to the superintendent.

(1) the plan of merger shall be approved, in the manner prescribed by Banking Law, section 601(3), by the board of directors of each savings and loan association and the board of trustees of each savings bank which is a party to the merger; and

(2) the board of trustees of each such savings bank shall approve, in the manner prescribed by Banking Law, section 277, the discontinuance of a life insurance department operated by such savings bank pursuant to article VI-A of the Banking Law.

(d) Approval by the superintendent will be conditioned in all cases upon the insurance by the Federal Savings and Loan Insurance Corporation of deposit accounts acquired as a result of the merger to the extent permitted by Federal law.

(e) If the surviving association plans to maintain as a branch office one or more offices, or maintain as its principal office the principal office of any bank or association being merged, the plan of merger must specifically provide therefor.

(f) After the merger, the powers of the surviving savings and loan association will be subject to the laws governing savings and loan associations, except to the extent it has, as a result of the merger, succeeded to any deposits, loans and borrowings which are legal for a savings bank but not legal for an association. While the surviving association will ordinarily be required to dispose of such deposits, loans and borrowings within two years after the date of the merger, it may discharge any legal obligations previously undertaken by the bank in connection with such nonconforming deposits, loans and borrowings. The plan of merger must specifically describe, by type and amount, any such nonconforming deposits, loans and borrowings, and indicate the manner in which they are to be disposed of by the surviving association.

(h) Unless otherwise indicated, all statistical data required to be submitted in the application shall be furnished as of the December 31st preceding the date of submission.

3 CRR-NY Sup. Proc. SL 110.2 Information required in the application {#sec-3-crr-ny-sup.-proc.-sl-110.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 110.2}

(a) General information.

Set forth the name and address of the applicants; the name and address of the officer to whom all communications from the Department of Financial Services should be addressed; and the date or proposed date of filing of any required applications or other documents with the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the Federal Home Loan Bank System.

(b) Banking offices.

List the name and address of the principal office of each party to the proposed merger and of the surviving savings and loan association; the branch office locations of each party; the road distance between the nearest offices of each party and the offices, if any, which will be closed if the application is approved.

(1) Number and volume. List in tabular form the number of accounts and dollar amount of deposits of each party to the merger, by type of account and type of depositor, as of December 31st for each of the preceding three years. For purposes of this Procedure, the terms deposits and depositors include shares and shareholders of any association.

(2) Primary and secondary service areas. Indicate the deposits, by number of accounts and dollar amount, which originate in the primary service area and the secondary service area, respectively, of each party to the merger. This computation should also be made for any office if the service area thereof is reasonably close to or overlaps any service area of the other party or any of its offices. The term primary service area, of a bank, association or any office thereof, means the area from which is derived approximately 75 percent of the dollar amount of deposits based on the record addresses of the depositors thereof.* The term secondary service area, of a bank, association or any office thereof, means the area contiguous to but outside of the primary service area from which is derived approximately an additional 15 percent of the dollar amount of deposits based on the record addresses of the depositors thereof.*

(4) Rates. For each party, describe the rates paid on savings and other time deposits and the methods of computation. If any of the rates or the methods of computation differ between the parties to the merger, include a statement specifically indicating how the differences will be resolved if the application is approved.

(d) Loans.

(1) Breakdown of loans. For each party, list in tabular form for each of the preceding three calendar years the breakdown of all major types of loans outstanding on each December 31st. The breakdown should be by number and dollar amount of loans on properties located:

(i) without New York State;

(ii) within New York State; and

(iii) within such party's primary and secondary service areas. Major types of loans should include at least the following categories:

(a) FHA and VA loans on one- and two-family residences;

(b) conventional loans on one- and two-family residences;

(d) conventional loans on other residential properties; and

(e) nonresidential mortgage loans.

(2) Overlap. Indicate the outstanding mortgage loans, by number and dollar amount, of each party to the merger on properties located in the primary and secondary service areas of the other party, separately itemized for each major type of loan.

(3) Loan policies. Describe the policies of each party with respect to the rates charged and the maximum maturities and maximum loan-value ratios on the major types of loans offered by such party. If any of the policies differ between the parties to the merger, include a statement specifically indicating how the differences will be resolved if the application is approved.

(4) Participation. List the loan participations, by number and dollar amount, which each party to the merger has originated or participated in during the three preceding calendar years, and the amount of such party's participation. List the participants in each such case.

(e) Other information.

(1) Economic characteristics. Describe the economic characteristics of each party's primary and secondary service areas and the population and average income, growth trend during the preceding 10-year period and current economic outlook thereof.

(2) Management.

List the names, ages and salaries of the senior executive and administrative officers of each party to the merger, including the composition of the board of trustees or board of directors and any advisory or similar committee, together with a brief summary of the educational background, banking experience and other qualifications of each such officer. Provide similar information with respect to the proposed management of the surviving savings and loan association. If management succession is a problem for any party to the merger, indicate specifically what attempts have been made in recent years to recruit management personnel and state how the merger is expected to solve the management succession problem.

(3) Inducements.

(f) Reasons for approval.

3 CRR-NY Sup. Proc. SL 110.3 Exhibits {#sec-3-crr-ny-sup.-proc.-sl-110.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 110.3}

The following exhibits shall be filed as part of the application:

(a) Plan of merger, setting forth the terms and conditions of the merger, executed by each party to the merger and otherwise complying with the requirements of Banking Law, section 601.

(b) Copies of resolutions adopted by the board of directors of each association and by the board of trustees of each savings bank which is a party to the merger, certified in each case by the president or secretary of the association or bank as to compliance with the requirements of Banking Law, section 601(3).

(c) Copy of resolution adopted by the board of trustees of each savings bank which is a party to the merger and which operates a life insurance department pursuant to article VI-A of the Banking Law, approving the discontinuance of such department, certified by the president or vice-president and the treasurer or assistant treasurer of the bank as to compliance with the requirements of Banking Law § 277.

(d) A statement as of the preceding December 31st of the assets and liabilities of each party to the merger and, on a pro forma basis, of the surviving savings and loan association.

(f) A statement showing a 12-months' projection for the surviving savings and loan association of (1) the asset structure, (2) the indicated yield for each asset category and for total assets, (3) earnings, (4) book net worth, (5) ratio of book net worth to total assets and (6) liquidity. Describe any anticipated material changes in the business of the surviving savings and loan association which will affect projected net worth.

(g) Maps, including (l) the primary and secondary service areas of each party to the merger, (2) the location of the respective offices of each of the parties and (3) the location, except in the case of a service area wholly within New York City, of every commercial bank, savings bank and savings and loan association office located in or near such primary and secondary service areas. A key to office numbers, scale of miles and compass points should be provided.

(h) Copy of the proposed by-laws for the surviving association.

(i) Copies of any agreements, in addition to the plan of merger, relating to the merger.

3 CRR-NY Sup. Proc. SL 110.4 Additional documents {#sec-3-crr-ny-sup.-proc.-sl-110.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 110.4}

The following additional documents shall be submitted to the superintendent as they become available to the parties:

(a) Copies of all approvals obtained pursuant to Federal law and regulations.

(b) Opinion of counsel for each party to the merger as to compliance of that party with all requirements of Federal and State law in connection with the merger.

3 CRR-NY Sup. Proc. SL 110.5 Confidential information {#sec-3-crr-ny-sup.-proc.-sl-110.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 110.5}

The following information is considered confidential and should be furnished on separate pages which can be detached from the rest of the application:

(a) that portion of the plan of merger which specifically describes nonconforming deposits, loans and borrowings (see section 110.1[f]), as required;

(b) the computation of deposits for any office of each party to the merger required by section 110.2(c)(2);

(d) the information required by section 110.2(e)(2);

(e) the income and expense reports required by section 110.3(e); and

(f) the statement required by section 110.3(f).

111. CONVERSION OF SAVINGS AND LOAN ASSOCIATION INTO SAVINGS BANK 111. CONVERSION OF SAVINGS AND LOAN ASSOCIATION INTO SAVINGS BANK

3 CRR-NY Sup. Proc. SL 111.1 General information {#sec-3-crr-ny-sup.-proc.-sl-111.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 111.1}

(a) A savings and loan association which seeks to convert itself into a savings bank pursuant to Banking Law, section 411 shall comply with the instructions set forth in this Supervisory Procedure SL 111.

(b) Six copies of a letter of application and each document referred to in section 111.2, including two executed copies of the documents referred to in subdivisions (a), (b), (c) and (f) of section 111.2, shall be filed with the Superintendent of Financial Services, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title, and shall be accompanied by payment of the fees specified in section 1.2 of Supervisory Policy G 1 of this Title; provided, however, that the organization certificate required by subdivision (b) of section 111.2 shall be filed only after receipt of the superintendent's written approval of the proposed conversion. Inquiries concerning the preparation thereof should be addressed to the superintendent. The letter of application shall set forth the name and address of the officer to whom all communications from the Department of Financial Services should be addressed and the date or proposed date of filing of any required applications or other documents with the Federal Deposit Insurance Corporation.

(c) Before an application for conversion is submitted, the plan of conversion shall be approved by the vote, in person or by proxy, of the holders of at least 662/3 percent in amount of book value of all outstanding shares of the association represented at a meeting held upon not less than 20 days' written notice to each shareholder. Notice of the shareholders' meeting, together with any proxy material, shall be served personally upon or mailed to each shareholder at his last known address and shall contain a statement of the time and place of the meeting, a full and clear statement of the purpose thereof and the effect of the proposed conversion upon the shareholder's right to vote on matters affecting the management of the resulting savings bank.

(d) Approval by the superintendent will be conditioned in all cases upon the insurance by the Federal Deposit Insurance Corporation of deposit accounts of the resulting bank to the extent permitted by Federal law.

(e) After the conversion, the powers of the resulting savings bank, including its powers to receive new deposits, make new loans and undertake new borrowings will be subject to the laws governing savings banks, except to the extent it has as a result of the conversion succeeded to certain deposits, loans and borrowings which are legal for an association but not legal for a savings bank. While the resulting bank will ordinarily be required to dispose of such deposits, loans and borrowings within two years after the date of the conversion, it may discharge any legal obligations which it had previously undertaken, as an association, in connection with such nonconforming deposits, loans and borrowings. The plan of conversion must specifically describe, by type and amount, such nonconforming deposits, loans and borrowings, and indicate the manner in which they are to be disposed of by the resulting savings bank.

(f) The superintendent reserves the right to require additional information in connection with the application. The applicant may, of course, submit any information in addition to that required by this procedure which it deems pertinent to the application.

3 CRR-NY Sup. Proc. SL 111.2 Documents required {#sec-3-crr-ny-sup.-proc.-sl-111.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 111.2}

The following documents shall be filed as part of the application:

(a) Plan of conversion, signed by the president of the association and attested by its secretary, setting forth the terms and conditions of the conversion and the manner in which it is to be accomplished, including the names of the principal executive and administrative officers and trustees of the proposed savings bank.

(b) Organization certificate, as required by Banking Law, section 230, executed by a majority of the directors of the association and by all of the persons who are to be the initial trustees of the proposed savings bank.

(c) Minutes of the meeting of shareholders of the association authorizing the conversion, including the notice to shareholders, proxy material and plan of conversion in the form submitted to shareholders, certified by the presiding officer and by the secretary of the meeting and otherwise in accordance with Banking Law, section 411. The presiding officer and the secretary of the meeting shall certify that

(1) the notice of the meeting and proxy material were served personally or mailed to each shareholder at his last known address at least 20 days prior to the shareholders' meeting and

(2) the plan of conversion in the form attached was the plan submitted to the shareholders at such meeting, and was approved by the vote, in person or by proxy, of the holders of at least 662/3 percent in amount of book value of all outstanding shares of the association represented at the meeting held for that purpose in accordance with Banking Law, section 411. Such certificate shall also indicate the actual vote of the shareholders for and against the plan of conversion.

(d) Proposed by-laws of the resulting savings bank, as required by Banking Law, section 251.

(e) A statement setting forth the reasons why the board of directors believe the conversion would be in the best interests of the savings and loan association and the public.

3 CRR-NY Sup. Proc. SL 111.3 Additional documents {#sec-3-crr-ny-sup.-proc.-sl-111.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 111.3}

The following additional documents shall be submitted to the superintendent as they become available to the association:

(a) Copies of all approvals and notices required by Federal law and regulations in connection with the conversion.

(b) Opinion of counsel for the association as to compliance with all requirements of Federal and State law in connection with the conversion.

112. CONVERSION OF FEDERAL SAVINGS AND LOAN ASSOCIATION TO STATE CHARTER 112. CONVERSION OF FEDERAL SAVINGS AND LOAN ASSOCIATION TO STATE CHARTER

3 CRR-NY Sup. Proc. SL 112.1 General information {#sec-3-crr-ny-sup.-proc.-sl-112.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 112.1}

(a) The instructions set forth in this Supervisory Procedure shall apply to the conversion of a Federal savings and loan association having its place of business in this State into a State savings and loan association pursuant to Banking Law, § 410.

(b) Six copies of a letter of application and each document referred to in section 112.2 of this Supervisory Procedure, including two executed copies of the documents referred to in section 112.2(a), (b) and (c) of this Supervisory Procedure, shall be filed with the superintendent, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The letter of application shall set forth the name and address of the officer to whom all communications from the Department of Financial Services should be addressed and the date or proposed date of filing of any required applications or other documents with any Federal agency and shall be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Inquiries concerning the preparation of the application should be addressed to the Superintendent of Financial Services (“superintendent”).

(c) Before submission of the application, the plan of conversion shall be approved at a meeting held upon not less than 10 days' written notice to each shareholder by the vote, in person or by proxy, of the holders of at least 662/3 percent in amount of the book value of all outstanding shares of the association, or at least 75 percent in amount of the book value of the outstanding shares of the association represented at the meeting. Notice of the shareholders' meeting, together with any proxy material, shall be served personally upon or mailed to each shareholder of the association at his last known address and shall contain a statement of the time, place and purpose of the meeting.

(d) Within 60 days after the date the application is filed, the association shall take the action prescribed or authorized by Federal law to effect such conversion.

(e) Approval by the superintendent will be conditioned in all cases upon the continued insurance by the Federal Savings and Loan Insurance Corporation of all deposit accounts to the extent permitted by Federal law.

(f) Following submission of the application, the Superintendent will ordinarily require a full examination of the Federal savings and loan association by State bank examiners before he acts on the application.

(g) The superintendent reserves the right to require additional information in connection with the application. The applicants may, of course, submit any information in addition to that required by this Supervisory Procedure which they deem pertinent to the application.

3 CRR-NY Sup. Proc. SL 112.2 Documents required {#sec-3-crr-ny-sup.-proc.-sl-112.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 112.2}

The following documents shall be filed as part of the application:

(b) Organization certificate, as required by Banking Law, section 375, executed by a majority of the directors of the association.

(c) Minutes of the meeting of shareholders of the association at which the plan of conversion was approved, including the notice to shareholders, proxy material and plan of conversion in the form submitted to shareholders, certified by the presiding officer and by the secretary of the meeting and otherwise in accordance with Banking Law, section 410. The presiding officer and the secretary of the meeting shall certify that (1) the notice of the meeting and proxy material were served personally or mailed to each shareholder at his last known address at least 10 days prior to the shareholders' meeting and (2) the plan of conversion in the form attached was the plan submitted to the shareholders at such meeting, and was approved by the vote, in person or by proxy, of the holders of at least 662/3 percent in amount of book value of all outstanding shares of the association, or at least 75 percent in amount of the book value of the outstanding shares of the association represented at the meeting. Such certificate shall also indicate the actual vote of the shareholders for and against the plan of conversion.

(d) Proposed by-laws of the State association as required by Banking Law, § 376.

3 CRR-NY Sup. Proc. SL 112.3 Additional documents {#sec-3-crr-ny-sup.-proc.-sl-112.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. SL 112.3}

The following additional documents shall be submitted to the superintendent as they become available to the association:

(a) Copies of all notices, consents and authorizations required by Federal law and regulations in connection with the conversion.

(b) Opinion of counsel for the association as to compliance with all requirements of Federal and State law in connection with the conversion.

FB. FOREIGN BANKING CORPORATIONS FB. FOREIGN BANKING CORPORATIONS

1. LICENSING POLICY FOR BRANCHES, AGENCIES AND REPRESENTATIVE OFFICES OF FOREIGN BANKING CORPORATIONS 1. LICENSING POLICY FOR BRANCHES, AGENCIES AND REPRESENTATIVE OFFICES OF FOREIGN BANKING CORPORATIONS

3 CRR-NY Sup. Pol. FB 1.1 General statement {#sec-3-crr-ny-sup.-pol.-fb-1.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 1.1}

No foreign banking corporation shall be granted a license to establish and maintain a branch, agency or representative office in this State, unless the Superintendent of Financial Services (“superintendent”) shall have found that:

(a) the proposed branch, agency or representative office will promote the public convenience and advantage; and

(b) the character, responsibility and general fitness of the foreign banking corporation, its principal shareholders, its management and the person(s) designated to represent such foreign banking corporation are such as to command confidence and warrant belief that the business of such foreign banking corporation will be honestly and efficiently conducted in accordance with the intent and purpose of the New York Banking Law.

3 CRR-NY Sup. Pol. FB 1.2 General standards {#sec-3-crr-ny-sup.-pol.-fb-1.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 1.2}

(a) In acting on any application to establish and maintain a branch or agency in this State under Banking Law, section 26, or a representative office in this State under Banking Law, section 221-c, the superintendent shall consider the following factors:

(1) the economic and political stability of the home country of the foreign banking corporation;

(2) the degree to which the foreign banking corporation and any foreign bank of which the foreign banking corporation is a subsidiary is subject to comprehensive supervision and regulation on a consolidated basis by the home country authorities;

(3) whether adequate information will be made available initially on a continuing basis to the Department of Financial Services on the operations and activities of the foreign banking corporation and its affiliates;

(4) the financial strength and resources of the foreign banking corporation (including compliance with international capital guidelines as promulgated by the Bank for International Settlements, the applicant's projected capital position, the history of the applicant's operating performance, and its future prospects);

(5) the integrity, competence and experience (including experience in international banking) of the management and principal shareholders of the foreign banking corporation and the person(s) designated to represent such foreign banking corporation;

(6) the supervisory evaluations of the foreign banking corporation by other regulatory authorities;

(7) the size and significance of the foreign banking corporation in relation to other banking corporations in its home country and worldwide; and

(8) any other factors the superintendent deems relevant.

(b) In applying the criteria listed in subdivision (a) of this section to an application by a foreign banking corporation to establish and maintain a representative office, the superintendent may take into account the limited nature of the activities that shall be conducted through such representative office.

2. REPRESENTATIVE OFFICES OF FOREIGN BANKING CORPORATIONS 2. REPRESENTATIVE OFFICES OF FOREIGN BANKING CORPORATIONS

3 CRR-NY Sup. Pol. FB 2.1 General {#sec-3-crr-ny-sup.-pol.-fb-2.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.1}

No foreign banking corporation may establish, maintain or use a representative office in this State without having first obtained a license from the Superintendent of Financial Services (“superintendent”). Representative offices of foreign banking corporations that were lawfully registered under article V-B of the Banking Law on or before September 1, 1992 shall be required to obtain a license from the superintendent to maintain such representative office prior to September 1, 1994.

3 CRR-NY Sup. Pol. FB 2.2 Definitions {#sec-3-crr-ny-sup.-pol.-fb-2.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.2}

For purposes of this Supervisory Policy:

(a) affiliate means any company that controls, is controlled by or is under common control with such foreign banking corporation;

(b) banking institution means any entity authorized by its charter to accept deposits and to make loans;

(c) control means the direct or indirect ownership, holding or control with power to vote of 25 percent or more of any class of voting stock or the ability to elect a majority of the directors of a company;

(d) foreign banking corporation means any banking institution organized under the laws of any jurisdiction other than the United States, any state of the United States, the District of Columbia, any territory of the United States or Puerto Rico; and

(e) regional administrative office means any representative office of a foreign banking corporation that:

(1) is established by a foreign banking corporation that operates one or more branches, agencies, article XII investment companies or banks in this State;

(2) is located in the same city as, but not on the same or contiguous premises (unless held out by the foreign banking corporation or determined by the superintendent to be a separate office) of, one or more of the foreign banking corporation's branches, agencies, article XII investment companies or banks in this State; and

(3) manages, supervises or coordinates the operations of the foreign bank or its affiliates, if any, in a particular geographic region; and

(f) representative office means any place of business located in this State of a foreign banking corporation other than a branch or agency, and any place of business located in this State of an affiliate of a foreign banking corporation that engages in representational functions (including, but not limited to, soliciting business, marketing services or acting as liaison with customers other than as an accommodation to customers of such affiliate) on behalf of the foreign banking corporation in connection with its banking activities; including a place of business in this State of a foreign banking corporation at which location the foreign banking corporation engages solely in limited administrative functions in connection with its banking activities that do not involve contact or liaison with customers or potential customers (such as back office support systems).

3 CRR-NY Sup. Pol. FB 2.3 Permissible activities {#sec-3-crr-ny-sup.-pol.-fb-2.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.3}

(a) The activities that may be conducted by a representative office of a foreign banking corporation in this State on behalf of such foreign banking corporation shall be limited to the following:

(1) solicitation of loans in principal amounts of $250,000 or more and, in connection therewith, assembly of credit information, making of property inspections and appraisals, securing of title information, preparation of applications for loans (including making recommendations with respect to action thereon);

(2) solicitation of purchasers of loans from the foreign banking corporation;

(3) solicitation of parties to contract with the foreign banking corporation for the servicing of its loans;

(4) solicitation of other banking business on behalf of the foreign banking corporation, except for solicitation of deposits or deposit-type liabilities;

(5) conduct of research;

(6) acting as liaison with customers of the foreign banking corporation;

(7) acting as liaison with correspondents of the foreign banking corporation;

(8) execution of loan documents for loans in principal amounts of $250,000 or more pursuant to specific written authorization with respect to each such loan;

(9) in the case of regional administrative offices, manage, supervise or coordinate the operations of the foreign bank or its affiliates, if any, in a particular geographic region, including credit approvals; and

(10) any other activity approved in writing by the superintendent.

(b) Notwithstanding the foregoing, a representative office may not engage in a banking business or trading activities for the account of the foreign banking corporation, or, on behalf of the foreign banking corporation, make final credit decisions (except in the case of a regional administrative office), execute documents for or solicit loans in principal amounts of less than $250,000, disburse funds, transmit funds, accept loan repayments or solicit, accept or contract for deposits or deposit-type liabilities.

3 CRR-NY Sup. Pol. FB 2.4 Other activities {#sec-3-crr-ny-sup.-pol.-fb-2.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.4}

A foreign banking corporation seeking written approval of the superintendent to engage in an activity not listed in section 2.3(a)(1)-(9), or otherwise prohibited under section 2.3(b), of this Supervisory Policy shall submit a letter application to the superintendent setting forth a description of the proposed activity and a detailed explanation of why the representative office should be permitted to engage in such activity.

3 CRR-NY Sup. Pol. FB 2.5 Prior notice for regional administrative offices {#sec-3-crr-ny-sup.-pol.-fb-2.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.5}

A foreign banking corporation may, unless otherwise advised by the superintendent, obtain a license to establish a regional administrative office in this State with 45 days prior written notice to the superintendent. If a foreign banking corporation maintaining a licensed branch, agency, article XII investment company or bank in this State is performing a regional administrative office function on the same or contiguous premises as the licensed or chartered entity of the foreign banking corporation, the foreign banking corporation shall provide written notice to the superintendent of such fact and the particular regional administrative office functions performed and shall identify relevant regional office personnel. No separate license for those regional administrative office functions will be issued, unless the regional administrative office functions are either held out by the foreign banking corporation or determined by the superintendent to be separate from the other functions taking place on the premises. The foreign banking corporation shall notify the superintendent within 45 days of any change in regional administrative functions or personnel.

3 CRR-NY Sup. Pol. FB 2.6 Prior notice for foreign banking corporations with branch or agency {#sec-3-crr-ny-sup.-pol.-fb-2.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.6}

A foreign banking corporation which maintains a New York State-licensed branch or agency may, unless otherwise advised by the superintendent, obtain a license to establish a representative office in this State with 45 days prior written notice to the superintendent.

3 CRR-NY Sup. Pol. FB 2.7 Exemption from licensing and prior notice procedure for establishment of office performing limited administrative function {#sec-3-crr-ny-sup.-pol.-fb-2.7 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Pol. FB 2.7}

Unless otherwise advised by the superintendent, a foreign banking corporation not otherwise maintaining a licensed branch or agency in this State may, with 45 days prior written notice to the superintendent, establish a place of business of the foreign banking corporation in this State at which location the foreign banking corporation engages solely in limited administrative functions (such as back office support systems) in connection with its banking activities that do not involve contact or liaison with customers or potential customers. Unless otherwise advised by the superintendent, if a foreign banking corporation already maintains a licensed branch or agency in this State it may establish an office that engages solely in limited administrative functions in connection with its banking activities that do not involve contact or liaison with customers or potential customers (such as back office support systems), by notifying the superintendent within 45 days of establishing such office.

101. APPLICATION BY A FOREIGN BANKING CORPORATION FOR A LICENSE TO ESTABLISH A BRANCH OR AGENCY 101. APPLICATION BY A FOREIGN BANKING CORPORATION FOR A LICENSE TO ESTABLISH A BRANCH OR AGENCY

3 CRR-NY Sup. Proc. FB 101.1 General information {#sec-3-crr-ny-sup.-proc.-fb-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 101.1}

A foreign banking corporation seeking a license under Banking Law, article V, to establish an initial branch or agency in New York State shall submit to the Superintendent of Financial Services (“superintendent”) an application on form FB-101 containing the information and documents required by section 101.3 of this Supervisory Procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. FB 101.2 Prior consultation {#sec-3-crr-ny-sup.-proc.-fb-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 101.2}

Preparation of the application on form FB-101 will be facilitated by prior consultation between the applicant and representatives of the Department of Financial Services (“department”). Arrangements for such a conference may be made and copies of form FB-101 may be obtained through the Foreign and Wholesale Banks Division of the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. FB 101.3 Information and documents requested {#sec-3-crr-ny-sup.-proc.-fb-101.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 101.3}

A foreign banking corporation seeking a license to establish a branch or agency must submit the following information and documents:

(a) an application certificate in duplicate containing the information required by Banking Law, section 201;

(b) the names of and biographical information, including a description of the educational and business background, for the two senior officers who will be in charge of the branch or agency;

(1) history of the foreign banking corporation;

(2) ranking by asset size in the home country;

(3) number of offices in the home country;

(4) description of organization structure of the foreign banking corporation (including shareholders directly or indirectly owning or controlling 10 percent or more of the capital stock of the applicant, any of its affiliates and any agencies, branches or representative offices of the applicant in the United States and other countries);

(5) description of management structure, including board of directors and principal officers of the foreign banking corporation;

(6) description of the business of the foreign banking corporation;

(d) an organization chart for the foreign banking corporation and its top tier parent, if any, showing all affiliated companies and the place where each company is organized;

(e) background and financial information on shareholders directly or indirectly owning or controlling 10 percent or more of the capital stock of the applicant;

(f) financial statements:

(1) a consolidated statement of the applicant's financial condition as of a date within 90 days prior to the date of application, certified by the applicant's chief executive or financial officer;

(2) audited consolidated financial statements, including statements of income and expense, for the applicant's latest three fiscal years or for the period that applicant has been in business if less than three years, certified by the applicant's chief executive or financial officer, with amounts to be shown in the applicant's local currency and the United States dollar equivalent; and

(3) calculation of applicant's risk-based capital ratio; and

(4) an English language copy of the applicant's latest annual report;

(g) an analysis of loans, including, but not limited to, information on delinquencies, nonaccrual loans, assets acquired in satisfaction of debts previously contracted, and loans with reduced interest charges;

(h) an analysis of the extent of country risk exposure of the applicant;

(i) a list of the major United States and other correspondent bank relationships of the applicant, a list of United States and other banks which have extended any lines of credit to the applicant and the amount of such lines;

(j) a profile of the home country including a description of:

(1) political and economic structure;

(2) economic ties with Export-Import Bank, International Monetary Fund, World Bank and other similar organizations;

(3) foreign trade, including balance of payments with the United States and other countries; and

(4) foreign exchange restrictions;

(k) a description of the bank regulatory system in the home country of the foreign banking corporation and, if different, any top tier foreign banking corporation that owns or controls the applicant, addressing in each case:

(1) the extent to which each foreign banking corporation is subject to comprehensive supervision or regulation on a consolidated basis by its home country authorities, including whether each foreign banking corporation is supervised or regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the foreign banking corporation (including the relationships of the foreign banking corporation to any affiliate) to assess the foreign banking corporation's overall financial condition and compliance with law and regulation;

(2) the powers and functions of the home country authorities;

(3) the frequency and scope of supervisory examinations of banking institutions;

(4) the function of the Central Bank and its relationship to private banking institutions in the home country;

(5) the deposit insurance system, if any, in the home country; and

(6) the extent to which banking institutions from other countries are permitted to conduct business in the applicant's home country;

(l) a statement from the home country authorities that:

(1) such authorities do not object to the establishment of the proposed branch or agency; and

(2) the foreign banking corporation is duly organized and licensed to conduct a general banking business and is in good standing;

(m) a description of the types of business to be conducted and the types of services to be offered at the proposed branch or agency;

(n) estimated start-up costs, projected balance sheets, income statements and contingent liabilities for the proposed branch or agency for the first three years of operations, including assumptions made in formulating projections;

(o) description of management and staffing of office, including number of persons to be employed and in what capacities and names and brief biographies of key personnel;

(p) a certified copy of resolutions of applicant's board of directors either sworn to before a United States Consular Official or, where the applicant's country of origin is a party to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, accompanied by an apostille as provided in Supervisory Procedure G 7 of this Title:

(1) authorizing the filing of the application and designating the officer who is to sign the application;

(2) designating the person or persons who is/are to be in charge of the business and affairs of the branch or agency or who shall be authorized to appoint such person or persons;

(3) authorizing the appointment of the superintendent as true and lawful attorney for service of process; and

(4) authorizing the designation of the person to whom process may be forwarded by the superintendent;

(q) a duly executed instrument appointing the superintendent the applicant's true and lawful attorney for the service of process;

(r) a certificate of designation, specifying the name and address of the person to whom process may be forwarded by the superintendent;

(s) an affidavit of the proposed manager and deputy manager describing any legal proceedings against each of them;

(t) two duly authenticated copies of applicant's charter and bylaws or the equivalent thereof;

(u) an opinion of a member of the bar of the applicant's home country that:

(1) applicant's charter authorizes it to carry on the business contemplated by the application; and

(2) the application complies with the laws of the applicant's home country;

(v) a certificate signed by a senior executive officer of the applicant certifying that the applicant is conducting its business as authorized by its charter and bylaws and in compliance with the laws of the applicant's home country;

(w) a statement containing factual data to demonstrate that the public convenience and advantage will be promoted by approval of the application, including at a minimum:

(1) rationale for wishing to establish a branch or agency in New York State;

(2) description of the manner in which New York State and the general public will be better served as a result of the establishment of the proposed office;

(3) description of the manner in which the proposed office will contribute to the promotion of international trade; and

(4) description of the competitive effect of the proposed office on existing banking facilities in New York;

(x) a certificate of the applicant's paid-in capital stock, surplus fund and undivided profits, expressed in each case in the currency of the country of origin and in United States dollars, based on the current conversion rate;

(y) a statement from the foreign banking corporation providing the superintendent with adequate assurances that information will be made available to the superintendent on the operations or activities of the foreign banking corporation and any of its affiliates that the superintendent deems necessary to determine and enforce compliance with applicable New York State laws and regulations; and

(z) such additional documents or information as the superintendent may require.

3 CRR-NY Sup. Proc. FB 101.4 Conversion of license from agency to branch, or branch to agency {#sec-3-crr-ny-sup.-proc.-fb-101.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 101.4}

When an agency applies to convert to a branch, or when a branch applies to convert to an agency, the information and documentation required for an initial license in section 101.3(a), (l), (m), (p), (q), (r), (u), (v), (w) and (z) of this Supervisory Procedure shall be submitted to the department.

3 CRR-NY Sup. Proc. FB 101.5 Additional branches and agencies {#sec-3-crr-ny-sup.-proc.-fb-101.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 101.5}

A foreign banking corporation that has received a license to open and maintain a branch or agency in this State may, unless otherwise advised by the superintendent, open and occupy an additional branch or agency with 30 days prior notice to the superintendent. Such notice shall contain the information required under section 101.3(b), (l) through (s), (w) and (z) of this Supervisory Procedure.

102. APPLICATION BY A FOREIGN BANKING CORPORATION FOR A LICENSE TO ESTABLISH OR MAINTAIN A REPRESENTATIVE OFFICE 102. APPLICATION BY A FOREIGN BANKING CORPORATION FOR A LICENSE TO ESTABLISH OR MAINTAIN A REPRESENTATIVE OFFICE

3 CRR-NY Sup. Proc. FB 102.1 General information {#sec-3-crr-ny-sup.-proc.-fb-102.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.1}

A foreign banking corporation seeking a license under Banking Law, article V-B and Supervisory Policy FB 2, to establish, maintain or use a representative office in New York State shall submit to the Superintendent of Financial Services (“superintendent”) an application on form FB-102, or written notification as appropriate, containing the information and documents required by section 102.3 of this Supervisory Procedure, or written notification as appropriate, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. FB 102.2 Prior consultation {#sec-3-crr-ny-sup.-proc.-fb-102.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.2}

Preparation of the application on form FB-102 will be facilitated by prior consultation between the applicant and representatives of the Department of Financial Services (“department”). Arrangements for such a conference may be made through the Foreign and Wholesale Banks Division of the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. FB 102.3 Information and documents requested {#sec-3-crr-ny-sup.-proc.-fb-102.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.3}

A foreign banking corporation seeking a license to establish or maintain a representative office must submit the following information and documents:

(a) the name and principal place of business of such foreign banking corporation;

(b) the place where the proposed representative office will be located;

(c) the names of and biographical information, including a description of the educational and business background, for any person(s) who shall act as representative(s) of the corporation;

(d) a description of the history and background of the foreign banking corporation, including the following:

(1) brief history of the foreign banking corporation;

(2) ranking by asset size in the home country;

(3) number of offices in the home country;

(4) description of organization structure of the foreign banking corporation (including shareholders directly or indirectly owning or controlling 10 percent or more of the capital stock of the applicant, its affiliates and any agencies, branches or representative offices of the applicant in the United States and other countries);

(5) description of management structure, including board of directors and principal officers of the foreign banking corporation;

(6) description of the business of the foreign banking corporation;

(e) an organization chart for the foreign banking corporation and its top tier parent, if any, showing all affiliated companies and the place where each company is organized;

(f) financial statements:

(1) a consolidated statement of the applicant's financial condition as of a date within 90 days prior to the date of application, certified by the applicant's chief executive or financial officer;

(3) calculation of applicant's risk-based capital ratio; and

(4) an English language copy of the applicant's latest annual report;

(h) an analysis of the extent of country risk exposure of the applicant;

(j) a profile of the home country including a description of:

(1) political and economic structure;

(2) economic ties with Export-Import Bank, International Monetary Fund, World Bank and other similar organizations;

(3) foreign trade, including balance of payments with the United States and other countries; and

(4) foreign exchange restrictions;

(k) a description of the bank regulatory system in the home country of the applicant and, if different, any top tier foreign banking corporation that owns or controls the applicant, addressing in each case:

(1) the extent to which the foreign banking corporation is subject to comprehensive supervision or regulation on a consolidated basis by its home country authorities, including whether each foreign banking corporation is supervised or regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the foreign banking corporation (including the relationships of the foreign banking corporation to any affiliate) to assess the foreign banking corporation's overall financial condition and compliance with law and regulation;

(2) the powers and functions of the home country authorities;

(3) the frequency and scope of supervisory examinations of banking institutions;

(4) the function of the Central Bank and its relationship to private banking institutions in the home country;

(5) the deposit insurance system, if any, in the home country; and

(6) the extent to which banking institutions from other countries are permitted to conduct business in the applicant's home country;

(l) a statement from the home country authorities that:

(1) such authorities do not object to the establishment of the proposed representative office; and

(2) the foreign banking corporation is duly organized and licensed to conduct a general banking business and is in good standing;

(m) a description of the types of activities to be conducted and, if applicable, the types of business to be solicited at the proposed representative office;

(n) a description of the staffing of the office and the manner in which the office will be supervised by the applicant, including number of persons to be employed, their capacities and names and brief biographies of the representative(s) and other key personnel;

(o) a certified copy of resolutions of applicant's board of directors either sworn to before a United States Consular Official or, where the applicant's country of origin is a party to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, accompanied by an apostille as provided in Supervisory Procedure G 7 of this Title:

(1) authorizing the filing of the application and designating the officer who is to sign the application;

(2) designating the person or persons who is/are to be the representative(s) of the applicant or who shall be authorized to appoint such person or persons;

(3) authorizing the appointment of the superintendent as true and lawful attorney for service of process; and

(4) authorizing the designation of the person to whom process may be forwarded by the superintendent;

(p) a duly executed instrument appointing the superintendent the applicant's true and lawful attorney for the service or process;

(q) a certificate of designation, specifying the name and address of the person to whom process may be forwarded by the superintendent;

(r) an affidavit of the proposed representative(s) describing any legal proceedings against him or her;

(s) two duly authenticated copies of applicant's charter and bylaws or the equivalent thereof;

(t) an opinion of a member of the Bar of the State of New York stating that the activities of the proposed representative office are in compliance with section 221-a(3) of the Banking Law and Supervisory Policy FB 2;

(u) an opinion of a member of the bar of the applicant's home country that:

(1) applicant's charter authorizes it to conduct the activities permitted to the proposed representative office; and

(2) the application complies with the laws of the applicant's home country;

(w) a statement containing factual data to demonstrate that the public convenience and advantage will be promoted by approval of the application, including the applicant's rationale for wishing to establish a representative office in New York State;

(x) a statement from the foreign banking corporation providing the superintendent with adequate assurances that information will be made available to the superintendent on the operations or activities of the foreign banking corporation and any of its affiliates that the superintendent deems necessary to determine and enforce compliance with applicable New York State laws and regulations; and

(y) such additional documents or information as the superintendent may require.

3 CRR-NY Sup. Proc. FB 102.4 Prior notice for regional administrative offices {#sec-3-crr-ny-sup.-proc.-fb-102.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.4}

The notice required by section 2.4 of Supervisory Policy FB 2 for establishing a regional administrative office shall contain the information required under section 102.3(a)-(c), (m)-(n), (p)-(r), (u) and (y) of this Supervisory Procedure.

3 CRR-NY Sup. Proc. FB 102.5 Foreign banking corporations with branch or agency {#sec-3-crr-ny-sup.-proc.-fb-102.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.5}

The notice required by section 2.5 of Supervisory Policy FB 2 for a foreign banking corporation currently maintaining a New York State-licensed branch or agency to obtain a license to establish a representative office in New York State shall contain the information required under section 102.3(a)-(c), (l)-(r), (t)-(w) and (y) of this Supervisory Procedure.

3 CRR-NY Sup. Proc. FB 102.6 Notice for establishment of an office performing limited administrative functions {#sec-3-crr-ny-sup.-proc.-fb-102.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 102.6}

The notice required by section 2.7 of Supervisory Policy FB 2 for establishing an office performing limited administrative functions shall contain the following information:

(a) the name and address of the foreign banking corporation;

(b) the location in New York of the office performing limited administrative functions and the office(s) of the bank for which the New York office is performing the limited administrative functions;

(d) a description of the staffing of the New York office; and

(e) any additional material as requested by the superintendent.

103. AUTHORIZATION OF FIDUCIARY POWERS FOR FOREIGN BANKING CORPORATIONS 103. AUTHORIZATION OF FIDUCIARY POWERS FOR FOREIGN BANKING CORPORATIONS

3 CRR-NY Sup. Proc. FB 103.1 General statement {#sec-3-crr-ny-sup.-proc.-fb-103.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 103.1}

Pursuant to the provisions of section 201-b of the Banking Law, the Superintendent of Financial Services (“superintendent”) is prepared to authorize a New York State-licensed branch or agency of a foreign banking corporation to exercise any or all of the powers specified in sections 100, 100-a, 100-b and 100-c of the Banking Law, in accordance with applicable law.

3 CRR-NY Sup. Proc. FB 103.2 General criteria {#sec-3-crr-ny-sup.-proc.-fb-103.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 103.2}

In passing upon an application pursuant to section 201-b of the Banking Law, the superintendent will consider, in addition to any other facts or circumstances deemed proper, the following:

(a) the financial condition of the applicant;

(b) the qualifications and experience of the proposed officer or officers of the trust operation, and the nature of the supervision to be exercised over the fiduciary activities;

(d) the plan of the applicant's trust operation, including information as to the manner in which legal, accounting, investment and recordkeeping functions of such operation are to be performed, and information as to any plans to obtain related services from outside sources.

3 CRR-NY Sup. Proc. FB 103.3 Application {#sec-3-crr-ny-sup.-proc.-fb-103.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 103.3}

(a) An application for authority to exercise fiduciary powers shall be submitted in letter form and shall contain, in reasonable detail, information concerning the personnel and operations of the proposed trust operation as described in section 103.2(b)-(d) of this Supervisory Procedure.

(b) In addition, applicant shall furnish an opinion of counsel:

(1) that the laws of the country in which the bank is incorporated, as well as the bank's articles of incorporation or similar document, empower the bank to engage in the type or types of fiduciary activities proposed to be undertaken;

(2) that the bank has taken all necessary actions, corporate or otherwise, as are necessary to authorize the filing of such application and to permit its personnel to undertake fiduciary engagements in New York; and

(3) that the written appointment of the superintendent as attorney for service of process, and the written designation relative thereto, having been filed with the superintendent pursuant to Banking Law, section 200(3), extend to transactions involving the bank as fiduciary.

3 CRR-NY Sup. Proc. FB 103.4 Application of other regulations {#sec-3-crr-ny-sup.-proc.-fb-103.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 103.4}

The provisions of Supervisory Procedure CB 119 of this Title shall apply to any branch or agency of a foreign banking corporation which proposes to establish a common trust fund, and the provisions of Part 22 of this Title shall apply to any such licensee maintaining such a fund. The terms trust company and board of directors, as used in CB 119 and Part 22 of this Title, shall be deemed to refer to the trust operation of the licensed New York branch or agency and the board of directors of the licensee foreign banking corporation, respectively.

104. APPLICATION BY A FOREIGN BANKING CORPORATION FOR PERMISSION TO CHANGE ITS NAME 104. APPLICATION BY A FOREIGN BANKING CORPORATION FOR PERMISSION TO CHANGE ITS NAME

3 CRR-NY Sup. Proc. FB 104.1 General information {#sec-3-crr-ny-sup.-proc.-fb-104.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 104.1}

A foreign banking corporation maintaining a New York State-licensed branch, agency or representative office that proposes to change its name shall submit a letter application to the Superintendent of Financial Services.

3 CRR-NY Sup. Proc. FB 104.2 Information and documents required {#sec-3-crr-ny-sup.-proc.-fb-104.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 104.2}

The letter application required pursuant to section 104.1 of this Supervisory Procedure shall contain a description of the reasons for and indicate the effective date of such change of name and shall be accompanied by certified copies (with translation into English if applicable) of:

(a) resolutions adopted by the foreign banking corporation's board of directors authorizing the change of name; and

(b) a statement from the home country authorities that such authorities approve or do not object to the change of name.

105. PROCEDURE FOR A FOREIGN BANKING CORPORATION FOR A CHANGE OF MANAGER, DEPUTY MANAGER, REPRESENTATIVE OR INDIVIDUAL DESIGNATED TO RECEIVE PROCESS 105. PROCEDURE FOR A FOREIGN BANKING CORPORATION FOR A CHANGE OF MANAGER, DEPUTY MANAGER, REPRESENTATIVE OR INDIVIDUAL DESIGNATED TO RECEIVE PROCESS

3 CRR-NY Sup. Proc. FB 105.1 General information {#sec-3-crr-ny-sup.-proc.-fb-105.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 105.1}

A foreign banking corporation maintaining a New York State-licensed branch, agency or representative office that proposes to change its manager, deputy manager, representative or individual designated to receive process, shall submit a letter to the Superintendent of Financial Services (“superintendent”) indicating the name(s) of the individual(s) to whom such change is being made.

3 CRR-NY Sup. Proc. FB 105.2 Documents required {#sec-3-crr-ny-sup.-proc.-fb-105.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. FB 105.2}

The letter shall be accompanied by:

(a) A certified copy of the resolution of the foreign banking corporation's board of directors (accompanied by a translation into English if applicable) sworn to before a United States Consular Official (or accompanied by an apostille):

(1) authorizing designation of the person who is to be in charge of the business and affairs of the branch or agency, or named as the representative of the bank, and/or authorizing designation of the officer to whom process may be forwarded by the superintendent; or

(2) evidencing that the board of directors has designated a person in the bank who is authorized to appoint persons to the position of general manager, deputy general manager, representative of the bank, or officer to whom process may be forwarded by the superintendent, accompanied by a certificate (in English), signed by the person designated in the resolution, appointing an individual to such position.

(b) Certificate of designation, specifying the name and address of the officer to whom process may be forwarded by the superintendent if different (form available from superintendent).

(1) a litigation affidavit executed by the new individual (form available from superintendent); and

(2) a brief resume of the new individual, disclosing his or her educational and business background.

MB. MORTGAGE BANKS MB. MORTGAGE BANKS

101. APPLICATION FOR A LICENSE AS A MORTGAGE BANKER 101. APPLICATION FOR A LICENSE AS A MORTGAGE BANKER

3 CRR-NY Sup. Proc. MB 101.1 General information {#sec-3-crr-ny-sup.-proc.-mb-101.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 101.1}

(a) General requirements.

Any person or entity seeking to engage in the business of making five or more mortgage loans in any one calendar year shall submit to the Superintendent of Financial Services (superintendent) an application on Form MB-101 containing the information and documents required by section 101.4 of this Supervisory Procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. A separate check that may be either certified, bank check or money order payable to the "New York State Department of Financial Services" to cover the processing of the New York State and FBI fingerprints cards is to be included. The application, questionnaires and other related documents shall be filed in duplicate under oath with Mortgage Banking Division.

(b) Time periods.

All of the information and documents required to be submitted by an applicant pursuant to this Supervisory Procedure shall be supplied to the superintendent. The statutory period for approval or disapproval set forth in section 592 of the Banking Law shall commence on the date that the department has received both the applicable filing fee and an application determined by the department to be complete and prepared in accordance with this Supervisory Procedure.

Each copy of the application shall be signed by the applicant. If the applicant is a partnership, corporation, trust or other entity, the application shall be signed by a controlling member, authorized executive officer or trustee as applicable. A corporate applicant shall submit a copy of the corporate resolution authorizing the officer to sign the application on behalf of the corporation. Each person signing the application shall:

(1) certify that the superintendent will be promptly advised of any changes which may occur in the information furnished in the application subsequent to the date upon which the information was furnished; and

(d) Additional information and in-person conferences.

The superintendent reserves the right to require additional information in connection with the application. In the absence of a showing of undue hardship, the superintendent may also require that the applicant and any officers, directors and/or representatives of the applicant appear at the department for conferences. The applicant may submit any additional information it deems pertinent to the application.

3 CRR-NY Sup. Proc. MB 101.2 Application forms and assistance {#sec-3-crr-ny-sup.-proc.-mb-101.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 101.2}

Application forms and assistance in preparing such applications may be obtained through Mortgage Banking Division of the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. MB 101.3 Definitions {#sec-3-crr-ny-sup.-proc.-mb-101.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 101.3}

For purposes of this Supervisory Procedure:

(a) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the institution, regardless of his or her title.

(b) Controlling member of a partnership is any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(c) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(d) Subsidiary is any company, a majority of the voting stock of which is directly or indirectly owned, controlled or held with power to vote, by an applicant or any entity controlled by an applicant.

(e) Adjusted net worth is defined in Part 410 of this Title.

(f) Principal stockholder is any person who directly or indirectly owns, controls or holds with power to vote 10 percent or more of any class of outstanding capital stock of a corporation or possesses the power to direct or cause the direction of the management and policies of a mortgage banker.

(g) Principal beneficiary is any person or entity entitled to 10 percent or more of the benefit of the trust.

3 CRR-NY Sup. Proc. MB 101.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-101.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 101.4}

Each applicant for a mortgage banking license must submit information and documents as set forth below:

(a) Name and address of applicant.

Set forth the name, address, principal place of business and telephone and fax numbers of the applicant. If applicable, also state any trade or fictitious names which have been or will be used by the applicant.

(b) Organizational structure and ownership of applicant.

State whether the applicant is an individual, corporation, partnership or trust. If an individual, set forth the name, residence address and telephone and fax numbers of the individual applicant. If a corporation, set forth the name, residence address, telephone and fax numbers and percent of each class of outstanding capital stock owned by each executive officer, director and principal stockholder. If a partnership, set forth the name, residence address, telephone and fax numbers and percentage ownership of each controlling member of the partnership. If a trust, set forth the name, residence address and telephone and fax numbers of each trustee and principal beneficiary of the trust. If a corporation, list the number and percentage of stock owned by each stockholder owning less than 10 percent of any class of the outstanding capital stock. If a partnership, state where the articles of partnership were filed and the date of filing. If a corporation, indicate the state of incorporation and the date of filing. List the complete name and address of any branch, subsidiary, or other affiliate of the applicant operating in this State.

Set forth the name, complete address and telephone and fax numbers of the person(s) having general responsibility for the applicant to whom all communications from the department should be addressed and the person(s) responsible for regulatory and financial matters.

(d) Licenses received.

List all states in which the applicant, under this or any other name, or any subsidiary or other affiliate of the applicant, is licensed to engage in any of the following: banking, insurance, sales finance, small loan, mortgage lending, insurance premium financing, real estate or securities, together with the name of the operating company and the name and address of the agency responsible for supervising the person or entity. Also, list any other professional licenses held by any of the foregoing.

(e) Prior applications.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any refusal, revocation or suspension of license(s) in this or any other state and/or any prior bankruptcy adjudications or criminal convictions in this or any other state.

(f) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having conducted unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(g) Financial information.

(1) The applicant, at the time of application, shall submit audited financial statements showing an adjusted net worth of no less than $250,000 as of the close of its most recent fiscal year. In addition, the applicant shall submit the most recent quarterly financial statements subsequent to such annual statements. If the applicant is a corporation, partnership or trust financial statements, audited if available, shall be submitted for the previous two years if the applicant was in existence for that period. If applicable, submit the most recent consolidated audited financial statements of the applicant's parent corporation.

(2) The applicant, at the time of application, shall submit written documentation from an unaffiliated third party provider that the applicant has a line of credit of no less than $1,000,000. The line of credit shall be provided by a bank, insurance company, or similar credit facility approved by the superintendent.

(3) Prior to obtaining a license, the applicant shall file a surety bond in the principal sum of $50,000 in a form satisfactory to the superintendent or execute a deposit agreement approved by the superintendent coupled with a pledged deposit of securities, funds or other assets in the amount of $50,000 valued at the lower of principal amount or market, pursuant to Part 410 of this Title. Surety bonds and depository agreement forms may be obtained from Mortgage Banking Division.

(h) Personal information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. All of the above shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current, personal financial statement.

(i) Minimum experience qualifications.

Set forth the name of the person who meets the minimum experience qualifications as described in Part 410 of this Title. That person shall be either an owner, general partner, trustee or executive officer of the applicant, as applicable, and shall be actively engaged in the daily operations of the mortgage banker.

(j) Corporate, partnership or trade style documents to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(5) a certificate of the county clerk that a trade name or “doing business as” certificate has been filed in the office of the county clerk pursuant to section 130 of the General Business Law; and

(6) a copy of an executed trust agreement.

(k) Other documents to be submitted:

(1) affidavit of ownership filed by the applicant;

(2) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant;

(3) fingerprint cards (New York State NON-CRIMINAL and FBI) for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant, together with such fees as may be required for processing the fingerprints;

(4) a background report for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant (names of acceptable companies that supply such reports may be obtained from the department’s Mortgage Banking Division);

(5) executed certificate of compliance in accordance with section 296-a of the Executive Law;

(6) taxpayer identification information form for the applicant; and

(7) a surety bond in the principal sum of $50,000 or a deposit agreement coupled with a pledged deposit of securities, funds or other assets in the amount of $50,000 valued at the lower of principal amount or market, pursuant to Part 410 of this Title. Such bond or deposit agreement must be approved by the superintendent. Model forms may be obtained from Mortgage Banking Division.

102. APPLICATION FOR REGISTRATION AS A MORTGAGE BROKER 102. APPLICATION FOR REGISTRATION AS A MORTGAGE BROKER

3 CRR-NY Sup. Proc. MB 102.1 General information {#sec-3-crr-ny-sup.-proc.-mb-102.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 102.1}

(a) General requirements.

Any person or entity seeking to engage in the business of soliciting, processing, placing or negotiating a mortgage loan or offering to solicit, process, place or negotiate a mortgage loan in this State shall submit an application to the superintendent on form MB-102 containing the information and documents required by section 102.4 of this Supervisory Procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. A separate check that may be either certified, bank check or money order payable to the "New York State Department of Financial Services" to cover the processing of the New York State and FBI fingerprints cards is to be included. The application, questionnaires and other related documents shall be filed in duplicate under oath with Mortgage Banking Division of the Department of Financial Services.

(b) Time periods.

All of the information and documents required to be submitted by an applicant pursuant to this Supervisory Procedure shall be supplied to the superintendent. The statutory period for approval or disapproval set forth in section 592-a of the Banking Law shall commence on the date that the department has received both the applicable filing fee and an application determined by the department to be complete and prepared in accordance with this Supervisory Procedure.

(2) affirm, under penalty of perjury, that the application was reviewed and that the application does not make any untrue statement of a material fact or omit any material fact necessary in order that the application not be misleading. If the application is executed outside of New York State, a county clerk's certificate authenticating the signatures of the notaries taking the acknowledgements must be affixed to the application.

(d) Additional information and in-person conferences.

3 CRR-NY Sup. Proc. MB 102.2 Application forms and assistance {#sec-3-crr-ny-sup.-proc.-mb-102.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 102.2}

3 CRR-NY Sup. Proc. MB 102.3 Definitions {#sec-3-crr-ny-sup.-proc.-mb-102.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 102.3}

For purposes of this Supervisory Procedure:

(a) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the institution, regardless of his or her title.

(b) Controlling member of a partnership is any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(c) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(e) Principal stockholder is any person who directly or indirectly owns, controls or holds with power to vote 10 percent or more of any class of outstanding capital stock of a corporation or possesses the power to direct or cause the direction of the management and policies of a mortgage broker.

(f) Principal beneficiary is any person or entity entitled to 10 percent or more of the benefit of the trust.

3 CRR-NY Sup. Proc. MB 102.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-102.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 102.4}

Each applicant for a mortgage broker registration must submit information and documents as set forth below:

(a) Name and address of applicant.

Set forth the name, address, principal place of business, telephone and fax numbers of the applicant. If applicable, also state any trade or fictitious names which have been or will be used by the applicant.

(b) Organizational structure and ownership of applicant.

(d) Licenses received.

(e) Prior applications.

(f) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having conducted unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(g) Personal and financial information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the registered mortgage broker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall file a credit report and a personal history questionnaire which may be obtained from the department. Each principal stockholder shall complete a personal financial questionnaire. All of the above shall file an authority to release information form.

(h) Personnel.

List all of applicant's W-2 employees (name and social security number), excluding clerical staff unless involved in the actual mortgage brokerage business, with their titles and a statement of occupational activities. List all persons (name and social security number) for whom an undertaking of accountability will be filed.

(i) Minimum experience qualifications.

(1) real estate broker;

(2) credit experience;

(3) relevant business experience;

(4) attorney.

(j) Corporate, partnership or trade style documents to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(6) a copy of an executed trust agreement.

(k) Other documents to be submitted:

(1) fingerprint cards (New York State NON-CRIMINAL and FBI) for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant, together with such fees as may be required for processing the fingerprints:

(2) affidavit of ownership filed by the applicant;

(3) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant;

(4) taxpayer identification information form for the applicant; and

(5) credit report for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant.

103. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE BANKER 103. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE BANKER

3 CRR-NY Sup. Proc. MB 103.1 General information {#sec-3-crr-ny-sup.-proc.-mb-103.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 103.1}

(a) General requirements.

Any person or entity seeking to acquire control of a mortgage banker under section 594-b of the Banking Law shall submit to the Superintendent of Financial Services (“superintendent”) an application on Form MB-103 containing the information and documents required by section 103.4 of this Supervisory Procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. A separate check that may be either certified, bank check or money order payable to the "New York State Department of Financial Services" to cover the processing of the New York State and FBI fingerprints cards is to be included. The application, questionnaires and other related documents shall be filed in duplicate under oath with Mortgage Banking Division of the Department of Financial Services (“department”).

(b) Time periods.

All of the information and documents required to be submitted by an applicant pursuant to this Supervisory Procedure shall be supplied to the superintendent. The statutory period for approval or disapproval set forth in section 594-b(2) of the Banking Law shall commence on the date that the department has received both the applicable filing fee and an application determined by the department to be complete and prepared in accordance with this Supervisory Procedure.

Each copy of the application shall be signed by the applicant. If the applicant is a partnership, corporation, trust or other entity, the application shall be signed by a partner, authorized executive officer or trustee as applicable. A corporate applicant shall submit a copy of the corporate resolution authorizing the officer to sign the application on behalf of the corporation. Each person signing the application shall:

(d) Additional information and in-person conferences.

(e) Notification.

If, as a result of the acquisition, there will be changes in the locations where the examination of the mortgage banker is to be conducted or other address changes involving the location of the items listed below, Mortgage Banking Division should be notified at the time of application or as soon as the decision to make the change has been made:

(1) examination;

(2) mortgage files;

(3) accounting records;

(4) executive offices;

(5) internal auditing department;

(6) servicing department;

(7) mailing address;

(8) person in overall charge;

(9) person in charge of New York operations;

(10) contact for regulatory matters;

(11) contact for financial matters.

3 CRR-NY Sup. Proc. MB 103.2 Application forms and assistance {#sec-3-crr-ny-sup.-proc.-mb-103.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 103.2}

Application forms and assistance in preparing such applications may be obtained through Mortgage Banking Division, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. MB 103.3 Definitions {#sec-3-crr-ny-sup.-proc.-mb-103.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 103.3}

For purposes of this Supervisory Procedure:

(a) Person and control are as defined in section 594-b(4) of the Banking Law.

(b) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(c) Subsidiary is any company, a majority of the voting stock of which is directly or indirectly owned, controlled or held with power to vote, by an applicant or any entity controlled by an applicant.

(d) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the institution, regardless of his or her title.

(e) Controlling member of a partnership is any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(g) Principal beneficiary is any person or entity entitled to 10 percent or more of the benefit of the trust.

3 CRR-NY Sup. Proc. MB 103.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-103.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 103.4}

A person seeking to acquire control of a mortgage banker must submit information and documents as set forth below:

(a) Name and address of mortgage banker and applicant.

Set forth the name, address, principal place of business, telephone and fax numbers of the applicant and of the mortgage banker in which an interest is being acquired. If applicable, also state any trade or fictitious names which have been or will be used by the applicant.

(b) Type of qualifying experience.

Each mortgage banker must have a person with the qualifying experience, as described in Part 410 of this Title, as either an owner, general partner, trustee or executive officer of the corporation. Such person shall be actively engaged in the daily operations of the mortgage banker. State the name of the person who, subsequent to the proposed change of control, will have such experience.

(d) Name and address of principal contact person.

(e) Licenses received.

List all states in which the applicant, under this or any other name, or any entity controlled by the applicant, is licensed to engage in any of the following: banking, insurance, sales finance, small loan, mortgage lending, insurance premium financing, real estate or securities, together with the name of the operating company and the name and address of the agency responsible for supervising the person or entity. Also, list any professional licenses held by any of the foregoing.

(f) Prior applications.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and trustee and principal beneficiary of a trust applicant shall submit information with respect to any refusal, revocation or suspension of license(s), registration(s) or authorization(s) to do business in this or any other state and/or any prior bankruptcy adjudications or criminal convictions in this or any other state.

(g) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having conducted unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(h) Financial information.

The applicant shall file:

(1) an audited consolidated financial statement of the mortgage banker (only if the most recent financial statement has not been filed with the department) prepared by an independent certified public accountant as of the close of its most recent fiscal year end with an opinion prepared by an independent certified public accountant showing an adjusted net worth of no less than $250,000;

(2) if the applicant is a corporation, partnership or trust, a financial statement, audited if available, for the previous two years and unaudited financial statements of the applicant for each fiscal quarter since the end of the most recent fiscal year end;

(3) written documentation that a line of credit of not less than $1,000,000, provided by an unaffiliated banking institution, insurance company or similar credit facility approved by the superintendent will remain in effect after the change of control; and

(4) a pro forma financial statement for the successor company, if applicable, showing an adjusted net worth of no less than $250,000.

(i) Personal information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. All of the above shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the licensed mortgage banker and principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current, personal financial statement.

(j) Description of acquisition.

Describe the acquisition indicating the purpose, source of funds, financing terms, if applicable, and any contemplated changes in the organizational structure, management and staffing of the existing licensee.

(k) Corporate, partnership, trust or trade style documents of the applicant to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(5) a certificate of the county clerk that a trade name or “doing business as” certificate has been filed in the office of the county clerk pursuant to section 130 of the General Business Law;

(6) a copy of an executed trust agreement; and

(7) a copy of any contract of sale or purchase agreement.

(l) Other documents to be submitted:

(1) affidavit of ownership filed by the applicant;

(2) litigation affidavit describing any legal proceedings against the applicant and against any executive officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant;

(5) executed certificate of compliance in accordance with section 296-a of the Executive Law;

(6) taxpayer identification information form for the applicant; and

(7) a surety bond in the principal sum of $50,000 or an executed deposit agreement coupled with a pledged deposit of securities, funds or other assets in the amount of $50,000 valued at the lower of principal amount or market, pursuant to Part 410 of this Title. Such bond or deposit agreement must be approved by the superintendent. Model forms may be obtained from Mortgage Banking.

104. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE BROKER 104. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE BROKER

3 CRR-NY Sup. Proc. MB 104.1 General information {#sec-3-crr-ny-sup.-proc.-mb-104.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 104.1}

(a) General requirements.

Any person or entity seeking to acquire control of a mortgage broker under section 594-b of the Banking Law shall submit to the Superintendent of Financial Services (“superintendent”) an application on Form MB-104 containing the information and documents required by section 104.4 of this Supervisory Procedure, accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. A separate check that may be either certified, bank check or money order payable to the "New York State Department of Financial Services" to cover the processing of the New York State and FBI fingerprints cards is to be included. The application, questionnaires and other related documents shall be filed in duplicate under oath with Mortgage Banking Division.

(b) Time periods.

All of the information and documents required to be submitted by an applicant pursuant to this Supervisory Procedure shall be supplied to the superintendent. The statutory period for approval or disapproval set forth in section 594-b(2) of the Banking Law shall commence on the date that the Department of Financial Services has received both the applicable filing fee and an application determined by the department to be complete and prepared in accordance with this Supervisory Procedure.

(d) Additional information and in-person conferences.

(e) Notification.

If, as a result of the acquisition, there will be changes in the location where the examination of the mortgage broker is to be conducted or other address changes involving the location of the items listed below, Mortgage Banking Division should be notified at the time of application or as soon as the decision to make the change has been made:

(1) examination;

(2) mortgage files;

(3) accounting records;

(4) executive offices;

(5) internal auditing department;

(6) servicing department;

(7) mailing address;

(8) person in overall charge;

(9) person in charge of New York operations;

(10) contact for regulatory matters;

(11) contact for financial matters.

3 CRR-NY Sup. Proc. MB 104.2 Application forms and assistance {#sec-3-crr-ny-sup.-proc.-mb-104.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 104.2}

Application forms and assistance in preparing such applications may be obtained through Mortgage Banking, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. MB 104.3 Definitions {#sec-3-crr-ny-sup.-proc.-mb-104.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 104.3}

For purposes of this Supervisory Procedure:

(a) Person and control are as defined in section 594-b(4) of the Banking Law.

(b) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(d) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the institution, regardless of his or her title.

(e) Controlling member of a partnership is any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(g) Principal beneficiary is any person or entity entitled to 10 percent or more of the benefit of the trust.

3 CRR-NY Sup. Proc. MB 104.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-104.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 104.4}

A person seeking control of a mortgage broker must submit information and documents as set forth below:

(a) Name and address of mortgage broker and applicant.

Set forth the name, address, principal place of business, telephone and fax numbers of the applicant and of the mortgage broker in which an interest is being acquired. If applicable, also state any trade or fictitious names which have been or will be used by the applicant.

(b) Type of qualifying experience.

Each mortgage broker must have a person with the qualifying experience, as described in Part 410 of this Title, as either an owner, general partner, trustee or executive officer of the corporation. Such person shall be actively engaged in the daily operation of the mortgage broker. State the name of the person who, subsequent to the proposed change of control, will have such experience and the category that best describes the type of experience:

(1) real estate broker;

(2) credit experience;

(3) relevant business experience;

(4) attorney.

(d) Name and address of principal contact person.

(e) Personal and financial information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the registered mortgage broker and principal stockholder of a corporate applicant, controlling member of a partnership applicant or trustee and principal beneficiary of a trust applicant shall file a credit report and a personal history questionnaire which may be obtained from the department. Each principal stockholder shall complete a personal financial questionnaire. All of the above shall file an authority to release information form.

(f) Prior applications.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder or a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any refusal, revocation or suspension of license(s), registration(s) or authorization(s) to do business in this or any other state and/or any prior bankruptcy adjudications or criminal convictions in this or any other state.

(g) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having conducted unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(h) Licenses received.

List all states in which the applicant under this or any other name, or any subsidiary or other affiliate of the applicant, is licensed to engage in any of the following: banking, insurance, sales finance, small loan, mortgage lending, insurance premium financing, real estate or securities, together with the name of the operating company and the name and address of the agency responsible for supervising the person or entity. Also, list any other professional licenses held by any of the foregoing.

(i) Description of acquisition.

(j) Corporate, partnership, trust or trade style documents of the applicant, to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(5) a certificate of the county clerk that a trade name or “doing business as” certificate has been filed in the office of the county clerk pursuant to section 130 of the General Business Law;

(6) a copy of an executed trust agreement; and

(7) a copy of any contract of sale or purchase agreement.

(k) Other documents to be submitted:

(2) credit report for each individual applicant, executive officer, director and principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant;

(3) affidavit of ownership filed by the applicant;

(4) litigation affidavit describing any legal proceedings against the applicant or against any executive officer, director or principal stockholder of a corporate applicant, controlling member of a partnership applicant, or trustee or principal beneficiary of a trust applicant; and

(5) taxpayer identification information form for the applicant.

105. APPLICATION BY A MORTGAGE BROKER FOR INACTIVE STATUS 105. APPLICATION BY A MORTGAGE BROKER FOR INACTIVE STATUS

3 CRR-NY Sup. Proc. MB 105.1 Definitions {#sec-3-crr-ny-sup.-proc.-mb-105.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 105.1}

For purposes of this Supervisory Procedure:

(a) Employee is:

(2) any person engaged in regulated activities as an associate or affiliate of any one of either a mortgage broker, mortgage banker or exempt organization which has filed an undertaking of accountability with the superintendent in such form as may be prescribed by the Superintendent of Financial Services (“superintendent”).

(b) Mortgage broker is any person or entity registered pursuant to article 12-D of the Banking Law and any principal stockholder(s) of a corporation or controlling member(s) of a partnership or trustee of a trust registered as a mortgage broker pursuant to article 12-D of the Banking Law.

(c) Inactive mortgage broker is any mortgage broker registered pursuant to section 591-a of the Banking Law that decides not to engage in the business of soliciting, processing, placing, or negotiating mortgage loans for others, but wishes to maintain its registration as a mortgage broker and has filed an application to be placed on inactive status which has been approved by the superintendent.

(d) Controlling member of a partnership is any general partner or any limited partner with 10 percent or more equity interest in the partnership.

3 CRR-NY Sup. Proc. MB 105.2 General information {#sec-3-crr-ny-sup.-proc.-mb-105.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 105.2}

(a) Need for application.

No registered mortgage broker may perform the services of an employee of a mortgage broker, mortgage banker or exempt organization while registered as a mortgage broker in his/her own right unless an application for inactive status has been filed with and approved by the superintendent.

(b) Execution.

The application shall be signed by the applicant. If the applicant is an individual, the application shall be executed by such individual and the signature shall be notarized. If the applicant is a corporation, the application shall be executed by each principal stockholder, the signature shall be notarized and the application shall be accompanied by a duly executed corporate board resolution indicating the board's approval of the application. If the applicant is a partnership, the application shall be executed by each partner and each signature shall be notarized. If the applicant is a trust, the application shall be executed by each trustee and each signature shall be notarized. The application may be executed in counter-parts, provided that all counter-parts are submitted together.

The superintendent reserves the right to require additional information in connection with the application. In the absence of the showing of undue hardship the superintendent may also require that the applicant and any officers, directors and/or representatives of the applicant appear at the Department of Financial Services (“department”) for conferences. The applicant may submit any additional information it deems pertinent to the application.

3 CRR-NY Sup. Proc. MB 105.3 Application assistance {#sec-3-crr-ny-sup.-proc.-mb-105.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 105.3}

Application forms and assistance in preparing such applications may be obtained through Mortgage Banking, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. MB 105.4 Application and undertaking {#sec-3-crr-ny-sup.-proc.-mb-105.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 105.4}

(a) General requirements.

Any mortgage broker seeking to effectuate a change to an inactive status shall file a letter application with the superintendent requesting the change in status and explaining the reason for such request. The application shall be accompanied by the existing valid registration certificate, which will be returned stamped inactive, and an undertaking to the superintendent containing the following provisions:

(1) that the general assessment charged for each year of such inactive status is to be paid pursuant to sections 17 and 591-a(1) of the New York Banking Law;

(2) that at the superintendent's discretion the inactive broker continues to be subject to an examination of its books and records, the cost of which will be borne by the mortgage broker;

(3) that a written notification of intent to resume business will be filed with the superintendent at least 30 days prior to the resumption of business along with the registration certificate stamped inactive;

(4) that the superintendent will be immediately notified of any change in the official address of record of the mortgage broker;

(5) that the superintendent will be immediately notified of any change in the telephone number of record of the mortgage broker; and

(6) that an annual certification of inactive status shall be filed with the superintendent on a form provided by Mortgage Banking Division.

(b) Publications.

The superintendent shall publish receipt of the application in the department's weekly bulletin.

3 CRR-NY Sup. Proc. MB 105.5 Resumption of active status {#sec-3-crr-ny-sup.-proc.-mb-105.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 105.5}

Within 30 days of receiving written notification of intent to resume business and the registration certificate stamped inactive, the superintendent shall issue a new registration certificate authorizing the resumption of the mortgage brokerage business, which action shall be published in the department's weekly bulletin.

106. APPLICATION TO ACT AS AN FHA MORTGAGE LOAN CORRESPONDENT 106. APPLICATION TO ACT AS AN FHA MORTGAGE LOAN CORRESPONDENT

3 CRR-NY Sup. Proc. MB 106.1 General information {#sec-3-crr-ny-sup.-proc.-mb-106.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 106.1}

(a) Any person or entity seeking to act as an FHA mortgage loan correspondent shall submit to the Superintendent of Financial Services (“superintendent”) a letter application containing the information and documents required by section 106.3 of this Supervisory Procedure. The letter application shall be signed by the applicant. If the applicant is a partnership, corporation, trust or other entity, the application shall be signed by a controlling member, authorized executive officer or trustee as applicable. A corporate applicant shall submit a copy of the corporate resolution authorizing the officer to sign the application on behalf of the corporation. Each person signing the application shall:

(b) The superintendent reserves the right to require additional information in connection with the application. In the absence of a showing of undue hardship, the superintendent may also require that the applicant and any officers, directors and/or representatives of the applicant appear at the Department of Financial Services for conferences. The applicant may submit any additional information it deems pertinent to the application.

(c) Assistance in preparing such applications and documentation may be obtained through Mortgage Banking Division of the department, at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title.

3 CRR-NY Sup. Proc. MB 106.2 Definitions {#sec-3-crr-ny-sup.-proc.-mb-106.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 106.2}

For purposes of this Supervisory Procedure:

(a) The term mortgage banker shall mean a mortgage banker as defined in section 590(1)(f) of the Banking Law.

(b) The term mortgage broker shall mean a mortgage broker as defined in section 590(1)(g) of the Banking Law.

(d) The term FHA mortgage loan correspondent shall mean a mortgagee approved by the Secretary of Housing and Urban Development which either:

(1) has as its principal activity the origination of mortgages for sale or transfer to a sponsor or sponsors; or

(2) satisfies the definition of a supervised mortgagee contained in the regulations of the Secretary of the Department of Housing and Urban Development.

(f) The term HUD shall mean the Department of Housing and Urban Development.

(g) The term FHA insured mortgage loan shall mean a loan made through an approved lender and insured by the Federal Housing Administration.

(h) The term FHA shall mean Federal Housing Administration.

3 CRR-NY Sup. Proc. MB 106.3 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-106.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 106.3}

An applicant must submit a letter application requesting approval to make FHA insured mortgage loans accompanied by the following documentation in order to obtain the approval of the superintendent to make FHA insured mortgage loans:

(a) a copy of the FHA approval letter issued by the Director, Lender Approval and Recertification Division or similar official with equivalent status;

(b) a copy of the completed application submitted to the Department of Housing and Urban Development including all supporting documents including, but not limited to, the following:

(1) HUD Form 92001 E, Application for Approval as Mortgagee/Loan Correspondent;

(2) HUD Form 92001 C, Supplement to Application for Approval, Schedule I;

(3) HUD Form 92001 D, Supplement to Approval, Schedule II; and

(4) HUD Form 92001 B, Branch Office Notification, if applicable;

(d) letter(s) establishing sponsor funding;

(e) sponsor certification that applicant satisfies FHA requirements, if applicable;

(f) certification that applicant has not been denied an operating license or registration or otherwise been sanctioned by any licensing or regulatory body;

(g) a copy of the Quality Control Program or HUD checklist accompanied by a certification that the plan is complete and satisfies all requirements;

(h) a notarized undertaking to the superintendent from each sponsor which includes the following representations:

(1) that it is a licensed mortgage banker or exempt organization;

(2) that it will honor all interest rate lock-in agreements and commitments to lend and fund all FHA insured mortgages for which the applicant has obtained its underwriting approval to issue interest rate lock-in agreements or commitments to lend;

(3) that within 48 hours after termination, it will notify the superintendent in writing of the termination of its agreement to fund all FHA insured mortgages for the loan correspondent; and

(4) that the notification it submits to the superintendent will include the following information:

(i) the specific reason(s) for the termination of its agreement to fund all FHA insured mortgages for the loan correspondent;

(ii) a list of all outstanding loan commitments and interest rate lock-in agreements which the sponsor has approved on behalf of the loan correspondent; and

(iii) a list of any interest rate lock-in agreements and loan commitments which the sponsor does not intend to honor and the reason(s) for this decision;

(i) a surety bond in the principal sum of $25,000 or a deposit agreement coupled with a pledged deposit of securities, funds or other assets in the amount of $25,000 valued at the lower of principal amount or market, pursuant to Part 413 of this Title. Such bond or deposit agreement must be approved by the superintendent. Model forms may be obtained from Mortgage Banking Division; and

(j) such other information and documentation as shall be required by the superintendent.

107. APPLICATION FOR INITIAL LICENSE AS A MORTGAGE LOAN ORIGINATOR; REQUEST FOR RENEWAL OF LICENSE 107. APPLICATION FOR INITIAL LICENSE AS A MORTGAGE LOAN ORIGINATOR; REQUEST FOR RENEWAL OF LICENSE

3 CRR-NY Sup. Proc. MB 107.1 Definitions {#sec-3-crr-ny-sup.-proc.-mb-107.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.1}

(a) For purposes of this Supervisory Procedure:

(1) Annual expiration date has the meaning set forth in section 420.3(a) of this Title.

(2) Mortgage loan originator or MLO has the meaning set forth in section 420.3(g) of this Title.

(3) National Mortgage Licensing System and Registry (NMLS) has the meaning set forth in section 420.3(h) of this Title.

(4) Originating entity has the meaning set forth in section 420.3(i) of this Title.

3 CRR-NY Sup. Proc. MB 107.2 General information {#sec-3-crr-ny-sup.-proc.-mb-107.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.2}

(a) Application for initial license.

Any individual seeking an initial license as an MLO shall submit an application for initial license. The application shall be sworn to or affirmed by the applicant and submitted in such form and in such manner as may be prescribed by the superintendent. Applicants will be required to submit certain parts of an application electronically through the NMLS. Certain information must be submitted by mail to the department at the address set forth in Supervisory Policy G 1 of this Title.

The application form prescribed by the superintendent and instructions on how to use the NMLS will be available on the department's website (www.dfs.ny.gov) or in links provided in the department's website.

(b) Request for annual renewal required.

An MLO seeking annual renewal of a license shall submit a request for renewal. The annual renewal request shall be sworn to or affirmed by the MLO and submitted in such form and in such manner as may be prescribed by the superintendent.

All licenses and renewals issued by the superintendent under the provisions of article 12-E of the Banking Law shall expire annually on the annual expiration date; provided that the license maybe renewed for an additional year by:

(1) paying the annual renewal fee;

(2) submitting an annual request for renewal during the renewal period announced by the superintendent and available on the department's website (www.dfs.ny.gov). Applicants shall submit renewal applications electronically through the NMLS. The form of renewal applicable will be available on the website of the NMLS and will also be available on the website of the department; and

(3) providing evidence that the requisite continuing education courses have been completed.

(d) License not transferable.

A license as an MLO shall not be transferable or assignable.

3 CRR-NY Sup. Proc. MB 107.3 Application for initial license {#sec-3-crr-ny-sup.-proc.-mb-107.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.3}

(a) Application requirements.

Each applicant for a license as an MLO shall submit the following documents as part of his or her application:

(1) A completed application form, in the form prescribed by the superintendent, a copy of which is available on the department's website, which application shall be attested to by the applicant. An individual who was engaged in mortgage loan origination activities as of July 11, 2009, and who filed an application pursuant to the prior version of article 12-E shall update his or her background information upon request by the superintendent. For all such applicants, the superintendent shall indicate when information regarding prior education, testing and bonding requirements must be submitted.

(2) Two fingerprint cards with fingerprint certification, which shall be submitted to the address specified in section 107.2(a) of this Supervisory Procedure. When required by the superintendent, an applicant who has previously submitted his or her fingerprint cards also shall submit his or her fingerprints through the NMLS.

(3) The prescribed fee, which shall be submitted electronically together with the application. A schedule of fees and a list of acceptable forms of payment shall be available at the department's website (www.dfs.ny.gov). The fee shall consist of:

(i) an investigation fee of $125;

(ii) a fingerprint processing fee charged by the State Division of Criminal Justice Services and established pursuant to article 35 of the Executive Law. If the NMLS develops the capacity to process fingerprints through the FBI, the superintendent may as noted above require the applicant to submit a new set of fingerprints in the form required by the NMLS and to pay any processing fees required by the FBI and the NMLS;

(iii) a processing fee charged by the NMLS; and

(iv) an initial license fee of $50.

If the application is rejected or withdrawn, none of these fees will be refunded.

(4) The applicant's credit report, which shall have been issued by a recognized credit reporting agency no more than 30 days prior to the date that the application is submitted. If the NMLS develops the capacity to process credit reports through the NMLS, the superintendent may require an applicant to submit his or her credit report through the NMLS and to pay any processing fees required by the NMLS.

(5) An affidavit in the form prescribed by the superintendent and subscribed by the applicant under penalty of perjury stating that:

(i) the applicant will promptly advise the superintendent of any changes that occur in the information furnished in the application after the application is submitted; and

(ii) the applicant has personally reviewed the application and certifies that the application does not contain any untrue statement or omission of any material fact.

(b) Additional information and in-person conferences.

The superintendent may require additional information in connection with the application for initial license, in order to determine the applicant's character and fitness. In the absence of a showing of undue hardship, the superintendent may also require that the applicant and any officers, directors and/or representatives of the originating entity with which the applicant is employed or affiliated appear at the department to present such information. The applicant may submit any additional information the applicant deems pertinent to the application for initial license.

(1) No application shall be deemed to be complete until the superintendent has received all required information, documents and fees. If an application is determined by the superintendent to be incomplete, the superintendent will send written notification to the applicant indicating the items that must be addressed in order for the department to continue the application review process.

(2) If a complete response fully addressing all such items is not received by the Department of Financial Services within 30 days of the sending of such notice, the superintendent may consider the application withdrawn.

(3) Any individual seeking an initial license following withdrawal of an application shall submit a new application that includes all required information, documents and fees.

3 CRR-NY Sup. Proc. MB 107.4 Requirements for renewal {#sec-3-crr-ny-sup.-proc.-mb-107.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.4}

(a) Submission date.

A completed request for renewal shall be submitted according to the schedule determined by the superintendent and available at the department's website (www.dfs.ny.gov).

(b) Requirements for renewal.

A completed request for renewal shall consist of the following:

(1) The renewal request form, which shall be attested to by the licensed MLO and submitted electronically to the Department of Financial Services through the NMLS. The information provided shall be accurate as of the date of such renewal.

(2) The annual license fee, which shall be submitted electronically together with the renewal request form, in the amount and paid by a method specified on the department's website (www.dfs.ny.gov).

(3) Such additional information and documents as may be prescribed by the superintendent and listed at the department's website (www.dfs.ny.gov).

The superintendent reserves the right to acquire additional information in connection with the request for renewal. In the absence of a showing of undue hardship, the superintendent may also require that the MLO requesting renewal and any officers, directors and/or representatives of the originating entity with which such MLO is employed or affiliated appear at the department to present such information. The MLO may submit any additional information he or she deems pertinent to the request for renewal.

3 CRR-NY Sup. Proc. MB 107.5 Inactive status {#sec-3-crr-ny-sup.-proc.-mb-107.5 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.5}

(a) An MLO may not engage in mortgage loan originating during any period when the MLO is not employed by or affiliated with a mortgage broker or mortgage banker registered or licensed pursuant to article 12-D of the Banking Law. During such period the mortgage loan originator license shall be placed in inactive status and shall remain in inactive status until the superintendent receives written or electronic notice of the MLO's new employment or affiliation with an originating entity.

(b) An MLO may renew his or her license while in inactive status as long as the MLO pays the renewal fee and complies with the education requirements of article 12-E.

3 CRR-NY Sup. Proc. MB 107.6 Instructions and assistance {#sec-3-crr-ny-sup.-proc.-mb-107.6 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 107.6}

(a) Additional instructions and assistance relating to this Supervisory Procedure may be obtained:

(1) at the department's website (www.dfs.ny.gov);

(2) by e-mail ([email protected]);

(3) by mail addressed to: New York State Department of Financial Services, Mortgage Banking Unit, One State Street, New York, NY 10004-1417; or

(4) by calling Mortgage Banking Unit at (212) 709-3535.

109. APPLICATION FOR REGISTRATION AS A MORTGAGE LOAN SERVICER 109. APPLICATION FOR REGISTRATION AS A MORTGAGE LOAN SERVICER

3 CRR-NY Sup. Proc. MB 109.1 Definitions {#sec-3-crr-ny-sup.-proc.-mb-109.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 109.1}

For purposes of this Supervisory Procedure:

(a) Mortgage loan servicer or MLS has the meaning set forth in section 418.3 of this Title.

(b) Third party servicer has the meaning set forth in section 418.3 of this Title.

(c) National Mortgage Licensing System and Registry or NMLSR means the web-based system developed and from time to time modified by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators or their designees that allows mortgage loan servicers to apply for, amend, update or renew a registration in New York as well as in other participating states. The system also uses the trade name “NMLS”.

(d) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the institution, regardless of his or her title.

(e) Controlling member of a partnership means any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(f) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(g) Subsidiary is any company, a majority of the voting stock of which is directly or indirectly owned, controlled or held with power to vote, by an applicant or any entity controlled by an applicant.

(h) Net worth shall have the meaning set forth in section 418.12(a) of this Title.

(i) Principal stockholder is any person who directly or indirectly owns, controls or holds with power to vote 10 percent or more of any class of outstanding capital stock of a corporation or possesses the power to direct or cause the direction of the management and policies of a mortgage loan servicer.

(j) Principal beneficiary is any person or entity entitled to 10 percent or more of the benefit of a trust.

(k) Surety bond means the bond required by section 418.12(b) of this Title.

(l) Fidelity and E&O bond means the bond or evidence of coverage required by section 418.12(c) of this Title.

3 CRR-NY Sup. Proc. MB 109.2 General information {#sec-3-crr-ny-sup.-proc.-mb-109.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 109.2}

Any person or entity seeking to register as an MLS shall submit an application for registration. The application shall be submitted in such form and in such manner as may be prescribed by the superintendent. Applicants will be required to submit certain parts of an application electronically through the NMLSR. Information to be submitted by mail should be sent to the department at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The application form prescribed by the superintendent and instructions on how to use the NMLSR will be available on the department's website as set forth in section 1.1 of Supervisory Policy G 1 of this Title or in links provided in the department's website.

3 CRR-NY Sup. Proc. MB 109.3 Registration application {#sec-3-crr-ny-sup.-proc.-mb-109.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 109.3}

(a) Application requirements.

Each applicant for registration as an MLS shall submit the following documents as part of its application:

(1) A completed application form, in the form prescribed by the superintendent, a copy of which is available on the department's website, which application shall be attested to by the applicant.

(2) Fingerprint cards with fingerprint certification, which shall be submitted to the address specified in section 109.2 of this Supervisory Procedure.

(3) The prescribed fees, which shall be submitted electronically together with the application. A schedule of fees and a list of acceptable forms of payment shall be available at the department's website as set forth in section 1.1 of Supervisory Policy G 1 of this Title. The fees shall consist of:

(i) an investigation fee in the amount, if any, specified in section 18-a of the Banking Law;

(ii) fingerprint processing fees collected by the State Division of Criminal Justice Services and/or the NMLSR; and

(iii) a processing fee charged by the NMLSR.

If the application is denied or withdrawn, none of these fees will be refunded.

(b) Execution.

The application shall contain the acknowledgment and attestation of the applicant. If the applicant is a partnership, corporation, trust or other entity, the acknowledgment and attestation shall be made by a controlling member, authorized executive officer or trustee as applicable. A corporate applicant shall submit a copy of the corporate resolution authorizing the officer to execute the application on behalf of the corporation. Each person executing the application shall:

If the application is executed outside of New York State, a county clerk's certificate authenticating the signatures of the notaries taking the acknowledgments must be affixed to the application.

The superintendent reserves the right to require additional information in connection with the application. In the absence of a showing of undue hardship, the superintendent may also require that the applicant and any officers, directors and/or representatives of the applicant appear at the Department of Financial Services for conferences. The applicant may submit any additional information it deems pertinent to the application.

3 CRR-NY Sup. Proc. MB 109.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-109.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 109.4}

Each applicant for registration as a mortgage loan servicer shall submit information and documents as set forth below:

(a) Name and address of applicant.

(b) Organizational structure and ownership of applicant.

State whether the applicant is an individual, corporation, partnership or trust. If an individual, set forth the name, residence address and telephone and fax numbers of the individual applicant. If a corporation, set forth the name, residence address, telephone and fax numbers and percent of each class of outstanding capital stock owned by each executive officer, director and principal stockholder. If a partnership, set forth the name, residence address, telephone and fax numbers and percentage ownership of each controlling member of the partnership. If a trust, set forth the name, residence address and telephone and fax numbers of each trustee and principal beneficiary of the trust. If a corporation, list the number and percentage of stock owned by each stockholder owning not less than 10 percent of any class of the outstanding capital stock. If a partnership, state where the articles of partnership were filed and the date of filing. If a corporation, indicate the state of incorporation and the date of filing. List the complete name and address of any branch, subsidiary, or other affiliate of the applicant operating in this State.

(d) Licenses received.

List all states in which the applicant, under this or any other name, or any subsidiary or other affiliate of the applicant, is licensed to engage in any of the following businesses: banking, insurance, sales finance, small loan, mortgage lending, mortgage loan servicing, insurance premium financing, real estate or securities, together with the name of the operating company and the name and address of the agency responsible for supervising the person or entity. Also, list any other professional licenses held by any of the foregoing.

(e) Prior applications.

(f) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any executive officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having engaged in unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(g) Financial information; financial responsibility requirements.

(1) Unless exempted as provided in section 418.14(a) of this Title, the applicant, at the time of application, shall submit audited annual financial statements showing a net worth as of the close of its most recent fiscal year of at least $250,000 plus:

(i) ¼ of one percent of the outstanding principal balance of loans to be serviced; or

(ii) if such applicant will be solely a third-party servicer, ¼ of one percent of the outstanding principal amount of New York mortgage loans for which it will be a third-party servicer; or

(iii) if such applicant will be a third-party servicer with respect to certain mortgage loans and will own other mortgage loans or the servicing rights thereto, ¼ of one percent of the outstanding principal balance of the non-third-party servicer loans and ¼ of one percent of the outstanding principal amount of the New York mortgage loans for which it is a third-party servicer. In addition, the applicant shall submit the most recent quarterly financial statements subsequent to such annual statements. If the applicant is a corporation, partnership or trust, financial statements, audited if available, shall be submitted for the previous two years if the applicant was in existence for that period. If applicable, submit the most recent consolidated audited annual financial statements of the applicant's ultimate parent corporation.

(2) Unless the superintendent determines otherwise, prior to obtaining a license the applicant shall file a surety bond in the principal sum of not less than $250,000 in a form satisfactory to the superintendent. Surety bond forms may be obtained from Mortgage Banking Division of the department.

(3) Prior to obtaining a license the applicant shall also file fidelity and E&O bonds in an amount based on its anticipated volume of business, but in no event less than the principal sum of $300,000, in a form satisfactory to the superintendent. Fidelity and E&O bond forms may be obtained from Mortgage Banking Unit of the department.

(h) Personal information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) in charge of the New York operations of the applicant and the principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. Each such person shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers, and, if different, any officer(s) in charge of the New York operations of the applicant and the principal stockholder of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current personal financial statement.

(i) Minimum experience qualifications.

Set forth the name of the person who meets the minimum experience qualifications described in section 418.11(a) of this Title. That person shall be either an owner, general partner, trustee or executive officer of the applicant, as applicable, and shall be actively engaged in the daily operations of the applicant.

(j) Corporate, partnership or trade style documents to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(5) a certificate of the county clerk or Secretary of State, as may be appropriate, that a trade name or "doing business as'' certificate has been filed pursuant to section 130 of the General Business Law; and

(6) a copy of an executed trust agreement.

(k) Other documents to be submitted:

(1) affidavit of ownership filed by the applicant;

(5) taxpayer identification information form for the applicant; and

(6) unless exempted, a surety bond and fidelity and E&O bonds, each in the principal sum specified in subdivision (g) of this section.

(l) Checklist.

A checklist of the information and documents required to be submitted with the application for registration as a mortgage loan servicer may be found on the department's website set forth in section 1.1 of Supervisory Policy G 1 of this Title along with the instructions for completing and submitting the application.

110. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE LOAN SERVICER 110. APPLICATION FOR A CHANGE IN CONTROL OF A MORTGAGE LOAN SERVICER

3 CRR-NY Sup. Proc. MB 110.1 Definitions {#sec-3-crr-ny-sup.-proc.-mb-110.1 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 110.1}

For purposes of this Supervisory Procedure:

(a) Mortgage loan servicer or MLS has the meaning set forth in section 418.3 of this Title.

(b) Change in control shall have the meaning set forth in section 418.8 of this Title.

(d) Executive officer is any officer who participates or has authority to participate in major policy-making functions of the entity, regardless of his or her title.

(e) Controlling member of a partnership means any general partner or any limited partner with 10 percent or more equity interest in the partnership.

(f) Affiliate is any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(h) Net worth shall have the meaning set forth in section 418.12(a) of this Title.

(j) Principal beneficiary means any person or entity entitled to 10 percent or more of the benefit of the trust.

(k) Surety bond means the bond required by section 418.12(b) of this Title.

(l) E&O bond means the bond or bonds required by section 418.12(c) of this Title.

3 CRR-NY Sup. Proc. MB 110.2 General information {#sec-3-crr-ny-sup.-proc.-mb-110.2 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 110.2}

(a) General requirements.

Any person or entity seeking approval to acquire of control of a mortgage loan servicer shall submit an application in such form and in such manner as may be prescribed by the superintendent.

Applicants will be required to submit certain parts of an application electronically through the NMLSR. Information to be submitted by mail should be sent to the department at the address set forth in section 1.1 of Supervisory Policy G 1 of this Title. The application form prescribed by the superintendent and instructions on how to use the NMLSR will be available on the department's website set forth in section 1.1 of Supervisory Policy G 1 of this Title or in links provided in the department's website.

3 CRR-NY Sup. Proc. MB 110.3 Change of control application {#sec-3-crr-ny-sup.-proc.-mb-110.3 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 110.3}

(a) Application requirements.

Each applicant for approval of a change of control of an MLS shall submit the following documents as part of its application:

(1) A completed application form, in the form prescribed by the superintendent, a copy of which is available on the department's website, which application shall be attested to by the applicant.

(2) Fingerprint cards with fingerprint certification, which shall be submitted to the address specified in section 110.2 of this Supervisory Procedure.

(3) The prescribed fees, which shall be submitted electronically together with the application. A schedule of fees and a list of acceptable forms of payment shall be available at the department's website set forth in section 1.1 of Supervisory Policy G 1 of this Title. The fees shall consist of:

(i) an investigation fee in the amount, if any, specified in section 18-a of the Banking Law;

(ii) fingerprint processing fees collected by the State Division of Criminal Justice Services and/or the NMLSR; and

(iii) a processing fee charged by the NMLSR.

If the application is denied or withdrawn, none of these fees will be refunded.

(b) Time periods.

The superintendent shall approve or disapprove the application in writing within 90 days after the date the application is filed with the superintendent. The period for approval or disapproval shall commence on the date that the department has received both the applicable filing fee and an application determined by the department to be complete and prepared in accordance with this Supervisory Procedure.

(2) affirm, under penalty of perjury, that such person has reviewed the application and that the application does not make any untrue statement of a material fact or omit any material fact necessary in order that the application not be misleading. If the application is executed outside of New York State, a county clerk's certificate authenticating the signatures of the notaries taking the acknowledgments must be affixed to the application.

(d) Additional information and in-person conferences.

(e) Notification.

If, as a result of the acquisition, there will be changes in the locations where the examination of the mortgage loan servicer is to be conducted or other address changes involving the location of the items listed below, Mortgage Banking Division of the department should be notified at the time of application or as soon as the decision to make the change has been made:

(1) examination;

(2) mortgage servicing files;

(3) accounting records;

(4) executive offices;

(5) internal auditing department;

(6) servicing department;

(7) mailing address;

(8) person in overall charge;

(9) person in charge of New York operations;

(10) contact for regulatory matters;

(11) contact for financial matters.

3 CRR-NY Sup. Proc. MB 110.4 Information and documents required to be submitted {#sec-3-crr-ny-sup.-proc.-mb-110.4 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY Sup. Proc. MB 110.4}

A person seeking to acquire control of a mortgage loan servicer shall submit information and documents as set forth below:

(a) Name and address of mortgage loan servicer and applicant.

Set forth the name, address, principal place of business, telephone and fax numbers of the applicant and of the mortgage loan servicer in which an interest is being acquired. If applicable, also state any trade or fictitious names which have been or will be used by the applicant.

(b) Type of qualifying experience.

Each mortgage loan servicer must have a person with the qualifying experience, as described in Part 418 of this Title, as either an owner, general partner, trustee or executive officer of the corporation. Such person shall be actively engaged in the daily operations of the mortgage loan servicer. State the name of the person who, subsequent to the proposed change of control, will have such experience.

State whether the applicant is an individual, corporation, partnership or trust. If an individual, set forth the name, residence address and telephone and fax numbers of the individual applicant. If a corporation, set forth the name, residence address, telephone and fax numbers and percent of each class of outstanding capital stock owned by each executive officer, director and principal stockholder. If a partnership, set forth the name, residence address, telephone and fax numbers and percentage ownership of each controlling member of the partnership. If a trust, set forth the name, residence address and telephone and fax numbers of each trustee and principal beneficiary of the trust. If a corporation, list the number and percentage of stock owned by each stockholder owning not less than 10 percent of any class of the outstanding capital stock. If a partnership, state where the articles of partnership were filed and the date of filing. If a corporation, indicate the state of incorporation and the date of filing. List the complete name and address of any branch, subsidiary, or other affiliate of the applicant operating in this State.

(d) Name and address of principal contact person.

(e) Licenses received.

List all states in which the applicant, under this or any other name, or any subsidiary or other affiliate of the applicant, is licensed to engage in any of the following businesses: banking, insurance, sales finance, small loan, mortgage lending, mortgage loan servicing, insurance premium financing, real estate or securities, together with the name of the operating company and the name and address of the agency responsible for supervising the person or entity. Also, list any professional licenses held by any of the foregoing.

(f) Prior applications.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and trustee and principal beneficiary of a trust applicant shall submit information with respect to any refusal, revocation or suspension of license(s), registration(s) or authorization(s) to do business in this or any other state and/or any prior bankruptcy adjudications or criminal convictions in this or any other state.

(g) Unsafe or unsound banking practices.

The applicant, under this or any other name, any subsidiary or other affiliate of the applicant, and, as applicable, any executive officer, director and principal stockholder of a corporate applicant, any controlling member of a partnership applicant and any trustee and principal beneficiary of a trust applicant shall submit information with respect to any finding of having conducted unsafe or unsound practices while employed as an officer, director, or trustee of a banking organization or having been removed as an officer, director, or trustee of a banking organization by any bank regulatory agency.

(h) Financial information; financial responsibility requirements.

The applicant shall file:

(1) unless exempted as provided in section 418.13(a) of this Title, an audited consolidated annual financial statement of the applicant prepared by an independent certified public accountant as of the close of its most recent fiscal year end with an opinion prepared by an independent certified public accountant showing net worth at the close of its most recent fiscal year of at least $250,000 plus:

(i) ¼ of one percent of the outstanding balance of loans to be serviced; or

(ii) if such applicant will be solely a third-party servicer, ¼ of one percent of the outstanding principal amount of New York mortgage loans for which it will be a third-party servicer; or

(2) if the applicant is a corporation, partnership or trust, annual financial statements, audited if available, for the previous two years and unaudited financial statements of the applicant for each fiscal quarter since the end of the most recent fiscal year end;

(3) evidence, satisfactory to the superintendent, that the proposed change of control will not adversely affect the continued coverage of the registrant either under its existing surety bond or under a substitute surety bond acceptable to the superintendent;

(4) evidence, satisfactory to the superintendent, that the proposed change of control will not adversely affect the continued coverage of the registrant either under its existing fidelity and E&O bonds or under substitute fidelity and E&O Bonds acceptable to the superintendent; and

(5) a pro forma financial statement for the successor company, if applicable, showing net worth of at least $250,000 plus:

(i) ¼ of one percent of the outstanding principal balance of New York mortgage loans; or

(ii) if such successor company will be solely a third-party servicer, ¼ of one percent of the outstanding principal amount of New York mortgage loans for which it will be a third-party servicer; or

(iii) if such successor company will be a third-party servicer with respect to certain mortgage loans and will own other mortgage loans or the servicing rights thereto, ¼ of one percent of the outstanding principal balance of the non-third-party servicer loans and ¼ of one percent of the outstanding principal amount of the New York mortgage loans for which it is a third-party servicer.

(i) Personal information.

As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) who will be in charge of the New York operations of the MLS and the each principal stockholder of a corporate applicant, each controlling member of a partnership applicant or trustee and principal beneficiary of a trust applicant shall complete a personal history questionnaire obtained from the department. Each such person shall file an authority to release information form. As applicable, each individual applicant, each director, the three most senior executive officers and, if different, any officer(s) who will be in charge of the New York operations of the MLS and the principal stockholders of a corporate applicant, each controlling member of a partnership applicant, or trustee and principal beneficiary of a trust applicant shall submit a signed and acknowledged current personal financial statement.

(j) Description of acquisition.

Describe the proposed transaction which will result in a change of control, indicating the purpose, source of funds, financing terms, if applicable, and any contemplated changes in the organizational structure, management and staffing of the existing mortgage loan servicer.

(k) Corporate, partnership, trust or trade style documents of the applicant to be submitted, as applicable:

(1) a copy of the certificate of incorporation;

(2) a copy of the qualification to do business in this State;

(3) a copy of the certificate of limited or general partnership;

(4) a copy of an executed partnership agreement;

(6) a copy of an executed trust agreement; and

(7) a copy of any contract of sale or purchase agreement.

(l) Other documents to be submitted:

(1) affidavit of ownership filed by the applicant;

(5) taxpayer identification information form for the applicant.

(m) Checklist.

A checklist of the information and documents required to be submitted with the application to acquire control of a mortgage loan servicer may be found on the department's website set forth in section 1.1 of Supervisory Policy G 1 of this Title along with the instructions for completing and submitting the application.

3 CRR-NY App. 13 Appendix 13 {#sec-3-crr-ny-app.-13 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY App. 13}

(cf. Part 13)

ABOUT YOUR ACCOUNT

ANNUAL INTEREST RATE (AIR)

Your account earns interest at an annual interest rate of __%.

ANNUAL PERCENTAGE YIELD (APY)

If you leave your money on deposit for a full year, and leave the interest earned in your account, your account will earn an annual percentage yield of __ % (__ % in leap year).

For example, if you deposit $100 on January 1 and don't withdraw any money until December 31, you'll earn $__.

PERIODIC PERCENTAGE RATE (PPR)

The periodic percentage rate is the rate applied on a daily basis to the principal amount on deposit in your account on that day. This rate computes the earnings you are entitled to on that day.

Each day, your account will earn __ cents per $100.

HOW INTEREST IS CALCULATED

You earn interest every day on the amount of money in your account at __ p.m. that day.

INTEREST IS PAID TO YOUR ACCOUNT

On the __ day of every __ (Dates: __, __, __, __)

MINIMUM BALANCE

You must have at least $ __ in your account in order to earn interest.

MINIMUM TIME

You must have a savings account with us for at least __ days in order to earn interest.

CHARGES FOR WITHDRAWALS

You may withdraw money from your account __ times every __ without being charged. After that, you'll be charged __ for each withdrawal.

GRACE PERIODS

You earn interest from the first day of the month on money you deposit during the first __ days of the month.

You earn interest through the last day of the month on money you withdraw the last __ days of the month.

OTHER CHARGES

If you don't deposit or withdraw money from your account for __ years, you'll be charged $ __ a year until you deposit or withdraw money.

You will be charged $ __ if a check you deposit is returned because of insufficient funds or because the person who wrote the check ordered payment to be stopped.

QUESTIONS YOU MAY HAVE

(1) WHEN ARE DEPOSITS CREDITED TO MY ACCOUNT?

Cash, money orders, certified checks and cashier's checks deposited before __ p.m. Monday through Friday are credited the day you deposit them. Those deposited after 3 p.m., or on a Saturday, Sunday or bank holiday, are credited on the next banking day.

Checks from banks in New York City will be credited to your account within __ business days after they are deposited. Checks from bank outside New York City will be credited to your account within __ business days after they are deposited.

(2) WHAT HAPPENS IF A CHECK I DEPOSIT IN MY SAVINGS ACCOUNT BOUNCES?

We will mail the returned check to you with a statement of the balance in your account after the check was returned. You will be charged $ __whenever a check you deposit is returned because of insufficient funds, or because the person who wrote the check ordered payment to be stopped.

(3) WHAT HAPPENS IF I DON'T MAKE ANY DEPOSITS IN MY ACCOUNT OR PRESENT MY PASSBOOK TO THE BANK FOR POSTING OF INTEREST (OR DIVIDENDS)?

If you don't deposit or withdraw money from your account or present your passbook to the bank for posting of interest (or dividends) for __ years, you will be charged $ __ a year until you either deposit or withdraw money or present your passbook to the bank for posting of interest (or dividends).

If you don't deposit or withdraw money from your account or present your passbook to the bank for __ years, the account will be considered abandoned and will be turned over to New York State. You may get the money back from New York State by __.

(4) WOULD YOU REFUSE TO PAY ME THE MONEY IN MY ACCOUNT FOR ANY REASON?

If you owe us money for any reason (on a loan, or on checks not yet paid), we'll withhold that amount from your account before we will allow you to withdraw any money.

By law, we may require you to tell us __ days before you plan to withdraw money from your account.

(5) HOW CAN I CHECK THE INTEREST PAID TO MY ACCOUNT TO MAKE SURE IT IS THE CORRECT AMOUNT?

NOTE: Savings organizations should disclose all the information a consumer would need to verify interest paid on an account, including the periodic percentage rate, the period for which that rate was applied, and the method used to determine the balance to which the periodic percentage rate was applied.

Examples of model verification forms can be found in Check Your Interest by Richard Morse, Morse Publications, 2429 Lookout Drive, Manhattan, Kans. 66502.

3 CRR-NY App. 14 Appendix 14 {#sec-3-crr-ny-app.-14 omnilex-key=us-ny-regs-official--title-3--3 CRR-NY App. 14}

(cf. Part 13)

These tables have purposely not been copyrighted. Thus, they may be reproduced in whole or in part. Printed acknowledgment of the source accompanying any reproduction would be appreciated.

Research Paper no. 27, Kansas Agricultural Experiment Station Dr. Richard L. D. Morse, Family Economist, KSU, Manhattan, KS 66506

PPR= 0.014583333333% APR= 5.250000000000% APY= 5.466721985347% DAILY COMPOUNDING

CENTS EARNED BY $100 IN INDICATED NUMBER OF DAYS 360-DAY BASIS

DAYS CENTS

| | | | | --- | --- | --- | | 1 | 1.458 | 3333333 | | 2 | 2.916 | 8793402 | | 3 | 4.375 | 6380518 | | 4 | 5.834 | 6094990 | | 5 | 7.293 | 7937129 | | 6 | 8.753 | 1907245 | | 7 | 10.212 | 8005648 | | 8 | 11.672 | 6232649 | | 9 | 13.132 | 6588558 | | 10 | 14.592 | 9073685 | | 11 | 16.053 | 3688342 | | 12 | 17.514 | 0432838 | | 13 | 18.974 | 9307485 | | 14 | 20.436 | 0312592 | | 15 | 21.897 | 3448471 | | 16 | 23.358 | 8715432 | | 17 | 24.820 | 6113786 | | 18 | 26.282 | 5643845 | | 19 | 27.744 | 7305918 | | 20 | 29.207 | 1100316 | | 21 | 30.669 | 7027352 | | 22 | 32.132 | 5087335 | | 23 | 33.595 | 5280577 | | 24 | 35.058 | 7607389 | | 25 | 36.522 | 2068081 | | 26 | 37.985 | 8662966 | | 27 | 39.449 | 7302355 | | 28 | 40.913 | 8256558 | | 29 | 42.378 | 1255837 | | 30 | 43.842 | 6390653 | | 31 | 45.307 | 3061169 | | 32 | 46.772 | 3067144 | | 33 | 48.237 | 4610692 | | 34 | 49.702 | 8290322 | | 35 | 51.168 | 4106948 | | 36 | 52.634 | 2060880 | | 37 | 54.100 | 2152431 | | 38 | 55.566 | 4381911 | | 39 | 57.032 | 8749634 | | 40 | 58.499 | 5255910 | | 41 | 59.966 | 3901051 | | 42 | 61.433 | 4685370 | | 43 | 62.900 | 7609178 | | 44 | 64.368 | 2672788 | | 45 | 65.835 | 9876511 | | 46 | 67.303 | 9220660 | | 47 | 68.772 | 0705546 | | 48 | 70.240 | 4331482 | | 49 | 71.709 | 0098781 | | 50 | 73.177 | 8007754 | | 51 | 74.646 | 8058713 | | 52 | 76.116 | 0251972 | | 53 | 77.585 | 4587842 | | 54 | 79.055 | 1066636 | | 55 | 80.524 | 9688666 | | 56 | 81.995 | 0454246 | | 57 | 83.465 | 3363687 | | 58 | 84.935 | 8417303 | | 59 | 86.406 | 5615405 | | 60 | 87.877 | 4958307 | | 61 | 89.348 | 6446322 | | 62 | 90.820 | 0079762 | | 63 | 92.291 | 5858941 | | 64 | 93.763 | 3784170 | | 65 | 95.235 | 3855763 | | 66 | 96.707 | 6074034 | | 67 | 98.180 | 0439295 | | 68 | 99.652 | 6951859 | | 69 | 101.125 | 5612039 | | 70 | 102.598 | 6420150 | | 71 | 104.071 | 9376502 | | 72 | 105.545 | 4481412 | | 73 | 107.019 | 1735190 | | 74 | 108.493 | 1138151 | | 75 | 109.967 | 2690609 | | 76 | 111.441 | 6392877 | | 77 | 112.916 | 2245267 | | 78 | 114.391 | 0248095 | | 79 | 115.866 | 0401672 | | 80 | 117.341 | 2706314 | | 81 | 118.816 | 7162334 | | 82 | 120.292 | 3770045 | | 83 | 121.768 | 2529762 | | 84 | 123.244 | 3441797 | | 85 | 124.720 | 6506466 | | 86 | 126.197 | 1724081 | | 87 | 127.673 | 9094958 | | 88 | 129.150 | 8619409 | | 89 | 130.628 | 0297749 | | 90 | 132.105 | 4130293 | | 91 | 133.583 | 0117354 | | 92 | 135.060 | 8259246 | | 93 | 136.538 | 8556283 | | 94 | 138.017 | 1008781 | | 95 | 139.495 | 5617053 | | 96 | 140.974 | 2381414 | | 97 | 142.453 | 1302178 | | 98 | 143.932 | 2379660 | | 99 | 145.411 | 5614173 | | 100 | 146.891 | 1006034 | | 101 | 148.370 | 8555556 | | 102 | 149.850 | 8263053 | | 103 | 151.331 | 0128842 | | 104 | 152.811 | 4153235 | | 105 | 154.292 | 0336549 | | 106 | 155.772 | 8679098 | | 107 | 157.253 | 9181197 | | 108 | 158.735 | 1843161 | | 109 | 160.216 | 6665305 | | 110 | 161.698 | 3647944 | | 111 | 163.180 | 2791393 | | 112 | 164.662 | 4095966 | | 113 | 166.144 | 7561980 | | 114 | 167.627 | 3189750 | | 115 | 169.110 | 0979590 | | 116 | 170.593 | 0931816 | | 117 | 172.076 | 3046744 | | 118 | 173.559 | 7324688 | | 119 | 175.043 | 3765965 | | 120 | 176.527 | 2370889 | | 121 | 178.011 | 3139776 | | 122 | 179.495 | 6072942 | | 123 | 180.980 | 1170703 | | 124 | 182.464 | 8433374 | | 125 | 183.949 | 7861270 | | 126 | 185.434 | 9454708 | | 127 | 186.920 | 3214004 | | 128 | 188.405 | 9139473 | | 129 | 189.891 | 7231430 | | 130 | 191.377 | 7490193 | | 131 | 192.863 | 9916077 | | 132 | 194.350 | 4509398 | | 133 | 195.837 | 1270473 | | 134 | 197.324 | 0199616 | | 135 | 198.811 | 1297145 | | 136 | 200.298 | 4563376 | | 137 | 201.785 | 9998625 | | 138 | 203.273 | 7603208 | | 139 | 204.761 | 7377442 | | 140 | 206.249 | 9321643 | | 141 | 207.738 | 3436127 | | 142 | 209.226 | 9721212 | | 143 | 210.715 | 8177213 | | 144 | 212.204 | 8804447 | | 145 | 213.694 | 1603231 | | 146 | 215.183 | 6573881 | | 147 | 216.673 | 3716715 | | 148 | 218.163 | 3032049 | | 149 | 219.653 | 4520199 | | 150 | 221.143 | 8181483 | | 151 | 222.634 | 4016218 | | 152 | 224.125 | 2024721 | | 153 | 225.616 | 2207308 | | 154 | 227.107 | 4564296 | | 155 | 228.598 | 9096003 | | 156 | 230.090 | 5802747 | | 157 | 231.582 | 4684843 | | 158 | 233.074 | 5742609 | | 159 | 234.566 | 8976363 | | 160 | 236.059 | 4386423 | | 161 | 237.552 | 1973104 | | 162 | 239.045 | 1736725 | | 163 | 240.538 | 3677603 | | 164 | 242.031 | 7796056 | | 165 | 243.525 | 4092401 | | 166 | 245.019 | 2566957 | | 167 | 246.513 | 3220039 | | 168 | 248.007 | 6051967 | | 169 | 249.502 | 1063058 | | 170 | 250.996 | 8253630 | | 171 | 252.491 | 7624000 | | 172 | 253.986 | 9174487 | | 173 | 255.482 | 2905408 | | 174 | 256.977 | 8817082 | | 175 | 258.473 | 6909826 | | 176 | 259.969 | 7183959 | | 177 | 261.465 | 9639798 | | 178 | 262.962 | 4277662 | | 179 | 264.459 | 1097869 | | 180 | 265.956 | 0100738 | | 181 | 267.453 | 1286586 | | 182 | 268.950 | 4655732 | | 183 | 270.448 | 0208494 | | 184 | 271.945 | 7945191 | | 185 | 273.443 | 7866142 | | 186 | 274.941 | 9971664 | | 187 | 276.440 | 4262076 | | 188 | 277.939 | 0737698 | | 189 | 279.437 | 9398847 | | 190 | 280.937 | 0245843 | | 191 | 282.436 | 3279004 | | 192 | 283.935 | 8498648 | | 193 | 285.435 | 5905098 | | 194 | 286.935 | 5498668 | | 195 | 288.435 | 7279676 | | 196 | 289.936 | 1248446 | | 197 | 291.436 | 7405295 | | 198 | 292.937 | 5750541 | | 199 | 294.438 | 6284505 | | 200 | 295.939 | 9007505 | | 201 | 297.441 | 3919860 | | 202 | 298.943 | 1021890 | | 203 | 300.445 | 0313914 | | 204 | 301.947 | 1796251 | | 205 | 303.449 | 5469222 | | 206 | 304.952 | 1333144 | | 207 | 306.454 | 9388339 | | 208 | 307.957 | 9635124 | | 209 | 309.461 | 2073821 | | 210 | 310.964 | 6704749 | | 211 | 312.468 | 3528226 | | 212 | 313.972 | 2544574 | | 213 | 315.476 | 3754112 | | 214 | 316.980 | 7157159 | | 215 | 318.485 | 2754037 | | 216 | 319.990 | 0545063 | | 217 | 321.495 | 0530559 | | 218 | 323.000 | 2710845 | | 219 | 324.505 | 7086240 | | 220 | 326.011 | 3657065 | | 221 | 327.517 | 2423640 | | 222 | 329.023 | 3386286 | | 223 | 330.529 | 6545321 | | 224 | 332.036 | 1901067 | | 225 | 333.542 | 9453844 | | 226 | 335.049 | 9303973 | | 227 | 336.557 | 1151774 | | 228 | 338.064 | 5297567 | | 229 | 339.572 | 1641673 | | 230 | 341.080 | 0184412 | | 231 | 342.588 | 0926106 | | 232 | 344.096 | 3867074 | | 233 | 345.604 | 9007638 | | 234 | 347.113 | 6348118 | | 235 | 348.622 | 5888836 | | 236 | 350.131 | 7630111 | | 237 | 351.641 | 1572265 | | 238 | 353.150 | 7715620 | | 239 | 354.660 | 6060495 | | 240 | 356.170 | 6607212 | | 241 | 357.680 | 9356092 | | 242 | 359.191 | 4307457 | | 243 | 360.702 | 1461627 | | 244 | 362.213 | 0818923 | | 245 | 363.724 | 2379668 | | 246 | 365.235 | 6144181 | | 247 | 366.747 | 2112786 | | 248 | 368.259 | 0286802 | | 249 | 369.771 | 0663552 | | 250 | 371.283 | 3246357 | | 251 | 372.795 | 8034539 | | 252 | 374.308 | 5028419 | | 253 | 375.821 | 4228319 | | 254 | 377.334 | 5634561 | | 255 | 378.847 | 9247468 | | 256 | 380.361 | 5067356 | | 257 | 381.875 | 3094553 | | 258 | 383.389 | 3329379 | | 259 | 384.903 | 5772157 | | 260 | 386.418 | 0423207 | | 261 | 387.932 | 7282852 | | 262 | 389.447 | 6351414 | | 263 | 390.962 | 7629215 | | 264 | 392.478 | 1116578 | | 265 | 393.993 | 6813824 | | 266 | 395.509 | 4721276 | | 267 | 397.025 | 4839256 | | 268 | 398.541 | 7168087 | | 269 | 400.058 | 1708091 | | 270 | 401.574 | 8459590 | | 271 | 403.091 | 7422907 | | 272 | 404.608 | 8598364 | | 273 | 406.126 | 1986285 | | 274 | 407.663 | 7586991 | | 275 | 409.161 | 3400806 | | 276 | 410.619 | 5428053 | | 277 | 412.197 | 7669052 | | 278 | 413.716 | 2124128 | | 279 | 415.234 | 8793605 | | 280 | 416.753 | 7677804 | | 281 | 418.272 | 8777049 | | 282 | 419.792 | 2091662 | | 283 | 421.311 | 7621967 | | 284 | 422.831 | 5388287 | | 285 | 424.351 | 5330945 | | 286 | 425.871 | 7510264 | | 287 | 427.392 | 1906567 | | 288 | 428.912 | 8520179 | | 289 | 430.433 | 7351421 | | 290 | 431.954 | 8400618 | | 291 | 433.476 | 1668093 | | 292 | 434.997 | 7154170 | | 293 | 436.519 | 4859172 | | 294 | 438.041 | 4783422 | | 295 | 439.563 | 6927245 | | 296 | 441.086 | 1290963 | | 297 | 442.608 | 7874901 | | 298 | 444.131 | 6679383 | | 299 | 445.654 | 7704732 | | 300 | 447.178 | 0951273 | | 301 | 448.701 | 6419328 | | 302 | 450.225 | 4109222 | | 303 | 451.749 | 4021280 | | 304 | 453.273 | 6155825 | | 305 | 454.798 | 0518181 | | 306 | 456.322 | 7093672 | | 307 | 457.847 | 5897624 | | 308 | 459.372 | 6925359 | | 309 | 460.898 | 0177202 | | 310 | 462.423 | 5653478 | | 311 | 468.949 | 3354510 | | 312 | 465.475 | 3280625 | | 313 | 467.001 | 5432145 | | 314 | 468.527 | 9809395 | | 315 | 470.054 | 6412701 | | 316 | 471.581 | 5242386 | | 317 | 473.108 | 6298776 | | 318 | 474.635 | 9582194 | | 319 | 476.163 | 5092967 | | 320 | 477.691 | 2831418 | | 321 | 479.219 | 2797872 | | 322 | 480.747 | 4992655 | | 323 | 482.275 | 9416092 | | 324 | 483.804 | 6068506 | | 325 | 485.333 | 4950225 | | 326 | 486.862 | 6061572 | | 327 | 488.391 | 9402872 | | 328 | 489.921 | 4974452 | | 329 | 491.451 | 2776636 | | 330 | 492.981 | 2809749 | | 331 | 494.511 | 5074117 | | 332 | 496.041 | 9570045 | | 333 | 497.572 | 6297919 | | 334 | 499.103 | 5258004 | | 335 | 500.634 | 6450646 | | 336 | 502.165 | 9876170 | | 337 | 503.697 | 5534902 | | 338 | 505.229 | 3427168 | | 339 | 506.761 | 3553293 | | 340 | 508.293 | 5913602 | | 341 | 509.826 | 0508423 | | 342 | 511.358 | 7338081 | | 343 | 512.891 | 6402901 | | 344 | 514.424 | 7703209 | | 345 | 515.958 | 1239333 | | 346 | 517.491 | 7011597 | | 347 | 519.025 | 5020328 | | 348 | 520.559 | 5265852 | | 349 | 522.093 | 7748495 | | 350 | 523.628 | 2468583 | | 351 | 525.162 | 9426443 | | 352 | 526.697 | 8622401 | | 353 | 528.233 | 0056783 | | 354 | 529.768 | 3729917 | | 355 | 531.303 | 9642127 | | 356 | 532.839 | 7793742 | | 357 | 534.875 | 8185087 | | 358 | 535.912 | 0816489 | | 359 | 537.448 | 5688274 | | 360 | 538.985 | 2800771 | | 361 | 540.522 | 2154304 | | 362 | 542.059 | 3749201 | | 363 | 543.596 | 7585790 | | 364 | 545.134 | 3664396 | | 365 | 546.672 | 1985347 | | 366 | 548.210 | 2548970 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | QUARTERS | | | | | | | | | | | | DAYS | CENTS | | | 91.25 | 133.952 | 4450799 | | 182.50 | 269.699 | 2159141 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 360-DAY BASIS | | |

PPR= 0.014583333333% APR= 5.250000000000% APY= 5.466721985347% DAILY COMPOUNDING

Morse Daily Rate Tables

These tables have purposely not been copyrighted. Thus, they may be reproduced in whole or in part. Printed acknowledgment of the source accompanying any reproduction would be appreciated.

Research Paper no. 27, Kansas Agricultural Experiment Station Dr. Richard L. D. Morse, Family Economist, KSU, Manhattan, KS 66506

3 CRR-NY App. A Appendix A {#sec-3-crr-ny-app.-a omnilex-key=us-ny-regs-official--title-3--3 CRR-NY App. A}

SAMPLE FORM FOR COLLECTING CERTAIN APPLICANT-PROVIDED DATA UNDER SECTION 76.16

(cf. Part 76)