senate Bill S6124

Relates to the dealings of mortgage brokers and home improvement contractors

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 04 / Jan / 2012
    • REFERRED TO BANKS
  • 09 / Jan / 2012
    • REPORTED AND COMMITTED TO RULES
  • 09 / Jan / 2012
    • ORDERED TO THIRD READING CAL.17
  • 18 / Jan / 2012
    • SUBSTITUTED BY A8909

Summary

Relates to the dealings of mortgage brokers and home improvement contractors; exempts from provisions relating to payment of mortgage proceeds to a borrower or third party, rather than directly to a home improvement contractor, those home improvement loans insured by the FHA under the National Housing Act or the Energy Policy Act of 1992.

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Bill Details

See Assembly Version of this Bill:
A8909
Versions:
S6124
Legislative Cycle:
2011-2012
Law Section:
Banking Law
Laws Affected:
Amd ยง595-c, Bank L
Versions Introduced in 2011-2012 Legislative Cycle:
A8909

Sponsor Memo

BILL NUMBER:S6124

TITLE OF BILL:

An act
to amend the banking law, in relation to the dealings of mortgage
brokers and home improvement contractors

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to clarify that certain Federal Housing
Administration (FHA) loans will not be subject to payment
restrictions when dealing with home improvement contractors.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:

This bill would amend Subdivision 2 of section 595-c of the Banking
Law, as added by Chapter 593 of the Laws of 2011 to exclude home
improvement loans insured by the FHA under section 203(k) of the
National Housing Act, 12 U.S.C. 1709(k) (Rehabilitation Mortgage
Insurance) and section 106 of the Energy Policy Act of 1992 (Energy
Efficient Mortgage Pilot Program).
Current law prohibits mortgage brokers from directly paying home
improvement contractors.

JUSTIFICATION:

FHA loans are subject to particular requirements that conflict with
what is required under current State law. FHA guidelines provide a
different payment structure that allows a home improvement contractor
to be directly paid by a mortgage broker. This chapter amendment
would exclude FHA loans from the provisions of state law that would
otherwise prohibit mortgage brokers from directly paying home
improvement contractors.

PRIOR LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

EFFECTIVE DATE:

This act shall take effect on the same date and in the same manner as
Chapter 593 of the Laws of 2011.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6124

                            I N  S E N A T E

                               (PREFILED)

                             January 4, 2012
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be committed to the Committee on Banks

AN ACT to amend the banking law, in relation to the dealings of mortgage
  brokers and home improvement contractors

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 2 of section 595-c of the banking law, as added
by chapter 593 of the laws of 2011, is amended to read as follows:
  2. Where a mortgage broker has solicited, processed, placed or negoti-
ated  a  mortgage  loan, a home improvement contractor shall not be paid
directly but instead may receive payment from the  proceeds  of  a  home
improvement  loan  payable solely to the borrower or, at the election of
the borrower, through an independent third party escrow agent in accord-
ance with the terms established in a written  agreement  signed  by  the
borrower,  the  lender and the contractor prior to disbursement. A mort-
gage broker shall not offer a homeowner different loan terms  contingent
on the homeowner executing an agreement for payment through an independ-
ent  third party as described in the preceding sentence. Any such agree-
ment shall contain a clear  and  conspicuous  disclosure:  YOU  ARE  NOT
REQUIRED  TO  EXECUTE  THIS  AGREEMENT.  YOU MAY INSTEAD RECEIVE PAYMENT
DIRECTLY.  (NAME OF MORTGAGE BROKER) MAY NOT OFFER YOU  DIFFERENT  TERMS
ON YOUR LOAN TO SIGN THIS AGREEMENT.  THE PROVISIONS OF THIS SUBDIVISION
SHALL  NOT APPLY TO A HOME IMPROVEMENT LOAN INSURED BY THE FEDERAL HOUS-
ING ADMINISTRATION UNDER SECTION 203(K) OF THE NATIONAL HOUSING ACT,  12
U.S.C.  1709(K), OR TO AMOUNTS ADDED TO A FEDERAL HOUSING ADMINISTRATION
INSURED MORTGAGE UNDER THE ENERGY EFFICIENCY MORTGAGE PROGRAM ORIGINALLY
ESTABLISHED UNDER SECTION 106 OF THE ENERGY POLICY ACT OF 1992, AS  FROM
TIME TO TIME AMENDED.
  S  2.  This  act  shall  take  effect on the same date and in the same
manner as section 1 of chapter 593 of the laws of 2011, takes effect.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD12084-02-2

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