senate Bill S3832

Relates to conforming criminal provisions of the mortgage banking provisions to those relating to mortgage loan originators

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Sponsor

Bill Status


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

  • 21 / Feb / 2013
    • REFERRED TO BANKS
  • 05 / Jun / 2013
    • 1ST REPORT CAL.1130
  • 10 / Jun / 2013
    • 2ND REPORT CAL.
  • 11 / Jun / 2013
    • ADVANCED TO THIRD READING
  • 12 / Jun / 2013
    • PASSED SENATE
  • 12 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 12 / Jun / 2013
    • REFERRED TO BANKS
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO BANKS
  • 26 / Mar / 2014
    • 1ST REPORT CAL.365
  • 27 / Mar / 2014
    • 2ND REPORT CAL.
  • 31 / Mar / 2014
    • ADVANCED TO THIRD READING
  • 05 / May / 2014
    • PASSED SENATE
  • 05 / May / 2014
    • DELIVERED TO ASSEMBLY
  • 05 / May / 2014
    • REFERRED TO BANKS

Summary

Conforms criminal provisions of the mortgage banking provisions to those relating to mortgage loan originators.

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Bill Details

Versions:
S3832
Legislative Cycle:
2013-2014
Current Committee:
Assembly Banks
Law Section:
Banking Law
Laws Affected:
Amd ยงยง592 & 592-a, Bank L
Versions Introduced in 2011-2012 Legislative Cycle:
S5144

Sponsor Memo

BILL NUMBER:S3832

TITLE OF BILL: An act to amend the banking law, in relation to
applications for a license to engage in the business of mortgage
banking and to register as a mortgage broker

PURPOSE: To conform the character and fitness standards for mortgage
bankers and mortgage brokers to the character and fitness standards
for mortgage loan originators.

SUMMARY OF PROVISIONS:

Section 1 of the bill amends Section 592(2) of the Banking Law
regarding mortgage bankers, and section 2 of the bill amends Section
592-a(2) of the Banking Law regarding mortgage brokers.

Both sections are amended to provide that the Superintendent shall not
issue a mortgage banker license, or a mortgage broker certificate, to
a person who has been convicted of a felony in the preceding seven
years, or if the person has ever been convicted of a felony involving
an act of fraud, dishonesty, or a breach of trust, or money
laundering.

The existing restriction on issuing a mortgage banker license or a
mortgage broker certificate where the applicant has previously had a
license or certificate revoked by the Superintendent of Banks is
amended to prohibit the issuance of such license or certificate if the
person has had a mortgage banking license, mortgage broker
authorization or mortgage loan originator license revoked in any
governmental jurisdiction.

EXISTING LAW:

Sections 592 and 592-a of the Banking Law currently provide that the
Superintendent of Banks may refuse to issue a mortgage banker license
or a mortgage broker certificate where a person has been convicted of
certain felony violations or has had a license or registration revoked
by the Superintendent.

JUSTIFICATION: The Banking Law currently provides for the licensing
of mortgage bankers and the certification of mortgage brokers. In
addition, a 2006 law established registration and education
requirements for persons who work for mortgage bankers and mortgage
brokers. These persons are known as mortgage loan originators.

In 2008, the federal Secure and Fair Enforcement for Mortgage.
Licensing Act of 2008 (the "SAFE Act") was enacted to foster a uniform
system of MLO licensing at the state level. This federal law required
certain minimum standards for licensing, including restrictions on
approving persons who have felony convictions.

In 2009, New York's law was amended to conform to the federal
standards. However, as a result of the 2009 amendments, the approval
standards for mortgage loan originators (MLO) are now stricter than
the approval standards for mortgage banking and mortgage broker
companies which employ such MLOs.


For example, sections 592 and 592-a of the Banking Law provide that
the Superintendent may refuse to issue a mortgage banking license or
mortgage broker certification when a person has been convicted of
certain specified felonies. In contrast, section 599-e of the Banking
Law provides that the Superintendent shall not issue a mortgage loan
originator license if the person has been convicted of any felony
within the preceding seven year period, or if the person has ever been
convicted of a felony involving an act of fraud, dishonesty, or a
breach of trust, or money laundering.

This situation creates an undesirable inconsistency in the approval
standards. A person who is ineligible to be a mortgage loan originator
would be able to act in a governing capacity as an officer or director
of a mortgage banker or mortgage broker. In order to protect the
public, and ensure the integrity of the mortgage lending process, this
bill would strengthen the approval standards for mortgage bankers and
mortgage brokers so they are consistent with the standards for
mortgage loan originators.

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: Immediately

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

                                  3832

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 21, 2013
                               ___________

Introduced  by  Sen.  FARLEY -- 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  applications  for  a
  license  to engage in the business of mortgage banking and to register
  as a mortgage broker

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

  Section 1. Subdivision 2 of section 592 of the banking law, as amended
by chapter 472 of the laws of 2008, is amended to read as follows:
  2. [The] NOTWITHSTANDING ANY OTHER LAW, THE superintendent [may refuse
to]  SHALL  NOT  issue  a  license pursuant to this article if he or she
shall find that the applicant, or any person who is a director, officer,
partner, agent, employee,  substantial  stockholder  of  the  applicant,
consultant or person having a relationship with the applicant similar to
a  consultant,  (a) has been convicted of [a crime involving an activity
which is a felony under  this  chapter  or  under  article  one  hundred
fifty-five,  one  hundred seventy, one hundred seventy-five, one hundred
seventy-six, one hundred eighty, one hundred  eighty-five,  one  hundred
eighty-seven,  one  hundred ninety, two hundred, two hundred ten or four
hundred seventy of the penal law or any comparable felony under the laws
of any other state or the United States, provided that such crime  would
be a felony if committed and prosecuted under the laws of this state] OR
PLED  NOLO  CONTENDERE  TO, A FELONY IN A DOMESTIC, FOREIGN, OR MILITARY
COURT DURING THE SEVEN-YEAR PERIOD PRECEDING THE DATE OF THE APPLICATION
FOR LICENSING OR AT ANY TIME PRECEDING SUCH DATE OF APPLICATION, IF SUCH
FELONY INVOLVED AN ACT OF FRAUD, DISHONESTY, OR A BREACH  OF  TRUST,  OR
MONEY LAUNDERING or (b) has had a MORTGAGE BANKER license [or], MORTGAGE
BROKER  registration  OR MORTGAGE LOAN ORIGINATOR AUTHORIZATION, LICENSE
OR LICENSE EQUIVALENT revoked [by the  superintendent]  IN  ANY  GOVERN-
MENTAL  JURISDICTION,  EXCEPT  THAT A SUBSEQUENT FORMAL VACATION OF SUCH
REVOCATION SHALL NOT BE DEEMED TO BE A REVOCATION  or  (c)  has  been  a

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08149-01-3

S. 3832                             2

director, partner, or substantial stockholder of an entity which has had
a  license or registration revoked by the superintendent or (d) has been
an agent, employee or officer of an  entity,  or  a  consultant  to,  or
person  having had a similar relationship with, any entity which has had
a license or registration  revoked  by  the  superintendent  where  such
person  shall have been found by the superintendent to bear responsibil-
ity in connection with the revocation. The term "substantial  stockhold-
er",  as  used in this subdivision, shall be deemed to refer to a person
owning or controlling directly or indirectly ten [per centum] PERCENT or
more of the total outstanding stock of a corporation.
  S 2. Subdivision 2 of section 592-a of the banking law, as amended  by
chapter 472 of the laws of 2008, is amended to read as follows:
  2. [The] NOTWITHSTANDING ANY OTHER LAW, THE superintendent [may refuse
to]  SHALL NOT issue a certificate pursuant to this article if he or she
shall find that the applicant, or any person who is a director, officer,
partner, agent, employee,  substantial  stockholder  of  the  applicant,
consultant or person having a relationship with the applicant similar to
a  consultant,  (a) has been convicted [of a crime involving an activity
which is a felony under  this  chapter  or  under  article  one  hundred
fifty-five,  one  hundred seventy, one hundred seventy-five, one hundred
seventy-six, one hundred eighty, one hundred  eighty-five,  one  hundred
eighty-seven,  one  hundred ninety, two hundred, two hundred ten or four
hundred seventy of the penal law or any comparable felony under the laws
of any other state or the United States, provided that such crime  would
be a felony if committed and prosecuted under the laws of this state] IN
A  DOMESTIC,  FOREIGN,  OR  MILITARY COURT OR PLED NOLO CONTENDERE TO, A
FELONY DURING THE SEVEN-YEAR PERIOD PRECEDING THE DATE OF  THE  APPLICA-
TION FOR LICENSING OR AT ANY TIME PRECEDING SUCH DATE OF APPLICATION, IF
SUCH  FELONY INVOLVED AN ACT OF FRAUD, DISHONESTY, OR A BREACH OF TRUST,
OR MONEY LAUNDERING or (b) has had a MORTGAGE BANKER license [or], MORT-
GAGE BROKER registration  OR  MORTGAGE  LOAN  ORIGINATOR  AUTHORIZATION,
LICENSE  OR  LICENSE  EQUIVALENT  revoked [by the superintendent] IN ANY
GOVERNMENTAL JURISDICTION, EXCEPT THAT A SUBSEQUENT FORMAL  VACATION  OF
SUCH REVOCATION SHALL NOT BE DEEMED TO BE A REVOCATION or (c) has been a
director, partner, or substantial stockholder of an entity which has had
a  license or registration revoked by the superintendent or (d) has been
an agent, employee or officer of an  entity,  or  a  consultant  to,  or
person  having had a similar relationship with, any entity which has had
a license or registration  revoked  by  the  superintendent  where  such
person  shall have been found by the superintendent to bear responsibil-
ity in connection with the revocation. The term "substantial  stockhold-
er",  as  used in this subdivision, shall be deemed to refer to a person
owning or controlling directly or indirectly ten [per centum] PERCENT or
more of the total outstanding stock of a corporation.
  S 3. This act shall take effect immediately.

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