senate Bill S5450

Relates to the authority of the superintendent to suspend the license of a mortgage banker or broker for cause

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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

  • 16 / May / 2013
    • REFERRED TO BANKS
  • 08 / Jan / 2014
    • REFERRED TO BANKS

Summary

Authorizes the superintendent of financial services to suspend the license of a mortgage banker or broker for cause.

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Bill Details

Versions:
S5450
Legislative Cycle:
2013-2014
Current Committee:
Senate Banks
Law Section:
Banking Law
Laws Affected:
Amd ยง595, Bank L

Sponsor Memo

BILL NUMBER:S5450

TITLE OF BILL: An act to amend the banking law, in relation to
suspending the license of mortgage bankers and brokers for cause

PURPOSE:

To make the suspension and revocation process for mortgage bankers and
mortgage brokers more effective and more efficient.

SUMMARY OF PROVISIONS:

The bill amends Section 595 of the Banking Law to modify the process
for suspending or revoking the authorization of a mortgage banker or
mortgage broker.

The bill allows the Superintendent to suspend a license or
registration without having to hold a hearing in cases where the
entity has failed to make a required payment to the Department, failed
to submit a required report to the Department, failed to maintain a
required surety bond or line of credit, or has filed a bankruptcy
petition. If the deficiency has not been cured within 90 days, the
license or registration is automatically terminated. It allows
suspension for a maximum of 60 days pending investigation. The bill
also provides that a license or registration may be surrendered only
with the prior approval of the Superintendent.

JUSTIFICATION:

These amendments would help make the Department of Financial Services'
suspension and revocation process for mortgage bankers and mortgage
brokers more effective and cost-efficient. One ongoing problem and
expense has been the need to conduct hearings, with hearing officers,
for situations where there are no facts in dispute, such as failure to
make a required report or maintain a required surety bond. The bill
allows suspension without a hearing in those cases, and provides for
automatic termination if the problem has not been fixed within 90
days.

By requiring prior approval for the surrender of a license or
registration, this bill ensures that regulated entities are not able
to short-circuit the regulatory process and evade responsibilities for
their actions.

LEGISLATIVE HISTORY:

These provisions were part of bill S.5463 of 2011-12, which passed the
Senate in 2011 and 2012.

FISCAL IMPLICATIONS:

This bill should reduce the administrative costs incurred by the
Department of Financial Services in having to conduct hearings when
there is no factual dispute (such as situations where a regulated
entity has not paid its assessment or has failed to file a required
report).


EFFECTIVE DATE:

Immediately

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

                                  5450

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 16, 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 suspending  the  license
  of mortgage bankers and brokers for cause

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

  Section 1.  Section 595 of the banking law, as amended by chapter  571
of  the  laws of 1986, paragraph (a) of subdivision 1 as further amended
by section 104 of part A of chapter 62 of the laws  of  2011,  paragraph
(c)  of  subdivision  1 as amended and paragraph (d) of subdivision 1 as
added by chapter 164 of the laws of 2003, subdivision 2  as  amended  by
chapter 121 of the laws of 1993, subdivision 3 as amended by chapter 516
of the laws of 1996, subdivisions 4, 5 and 6 as amended and subdivisions
4-a  and  7-a as added by chapter 400 of the laws of 1993, is amended to
read as follows:
  S 595. Grounds for suspension or revocation of license, or  suspension
or  deletion of name from mortgage broker roll. 1.  [The] IN ADDITION TO
THE AUTHORITY SET FORTH IN SUBDIVISION TWO OF THIS SECTION,  THE  super-
intendent may SUSPEND OR revoke any license to engage in the business of
a  mortgage  banker issued pursuant to this article or SUSPEND OR delete
the name of a mortgage broker [from the roll of mortgage brokers]  OR  A
MORTGAGE  LOAN  SERVICER  registered  pursuant  to  this  article  (EACH
REFERRED TO IN THIS SECTION AS A REGISTRANT) if he  OR  SHE  shall  find
AFTER NOTICE AND A HEARING, that:
  (a)  Through  a  course  of  conduct,  the  licensee or registrant has
violated any provisions of this  article,  or  any  rule  or  regulation
promulgated  by the superintendent of financial services, or any rule or
regulation prescribed by the superintendent under and within the author-
ity of this article or of any other law,  rule  or  regulation  of  this
state or the federal government;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11093-01-3

S. 5450                             2

  (b)  Any fact or condition exists which, if it had existed at the time
of the original application for such license or registration, would have
warranted the  superintendent  in  refusing  originally  to  issue  such
license;
  (c)  The commission by a licensee or registrant of a crime against the
laws of this state or any other state or of the United States  involving
moral  turpitude  or  fraudulent or dishonest dealing, or the entry of a
final judgment against a licensee or registrant in a civil  action  upon
grounds of fraud, misrepresentation or deceit;
  (d)  As  a  part of such determination regarding suspension or revoca-
tion, the superintendent is authorized to require the fingerprinting  of
any  licensee or registrant. Such fingerprints shall be submitted to the
division of criminal justice  services  for  a  state  criminal  history
record  check,  as  defined in subdivision one of section three thousand
thirty-five of the education law, and may be submitted  to  the  federal
bureau of investigation for a national criminal history record check.
  2.  (A)  The  superintendent may, [on] FOR good cause [shown], WITHOUT
NOTICE OR A HEARING, or where there is  a  substantial  risk  of  public
harm,  [suspend]  ISSUE  AN  ORDER SUSPENDING any license or [delete the
name of any registrant] REGISTRATION ISSUED PURSUANT TO THIS ARTICLE for
a period not exceeding [thirty] SIXTY days, pending investigation. "Good
cause", as used in this subdivision, shall exist only when the  licensee
or  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 this article.
  (B) THE SUPERINTENDENT MAY, IN HIS OR HER SOLE DISCRETION,  WITHOUT  A
HEARING,  ISSUE  A  NOTICE SUSPENDING THE LICENSE OR REGISTRATION OF ANY
MORTGAGE BANKER OR MORTGAGE LOAN SERVICER THIRTY DAYS AFTER THE DATE  OR
DATES IT FAILS TO MAKE ANY PAYMENTS REQUIRED BY THIS CHAPTER.
  (C)  THE  SUPERINTENDENT  MAY,  IN HIS OR HER SOLE DISCRETION, WITHOUT
NOTICE OR A HEARING, ISSUE AN ORDER SUSPENDING ANY LICENSE OR  REGISTRA-
TION ISSUED PURSUANT TO THIS ARTICLE: (I) THIRTY DAYS AFTER THE DATE THE
LICENSEE  OR REGISTRANT FAILS TO FILE ANY REPORT REQUIRED TO BE FILED BY
IT WITH THE SUPERINTENDENT PURSUANT TO THE AUTHORITY PROVIDED BY SECTION
FIVE HUNDRED NINETY-SEVEN OF THIS ARTICLE; (II) IMMEDIATELY UPON  NOTICE
TO THE SUPERINTENDENT THAT ANY REQUIRED SURETY BOND OR LINE OF CREDIT IS
BEING  CANCELED  OR  IS  EXPIRING, IF THE LICENSEE OR REGISTRANT HAS NOT
PROVIDED THE SUPERINTENDENT WITH PROOF OF A REPLACEMENT BOND OR LINE  OF
CREDIT SATISFACTORY TO THE SUPERINTENDENT; (III) IMMEDIATELY UPON NOTICE
TO  THE SUPERINTENDENT THAT THE LICENSEE OR REGISTRANT HAS FILED A PETI-
TION IN BANKRUPTCY; OR (IV) AT LEAST THIRTY DAYS AFTER THE  LICENSEE  OR
REGISTRANT HAS HAD FILED AGAINST IT A PETITION IN BANKRUPTCY.
  3.  IF  THE SUPERINTENDENT HAS ISSUED AN ORDER SUSPENDING A LICENSE OR
REGISTRATION PURSUANT TO  PARAGRAPH  (A)  OF  SUBDIVISION  TWO  OF  THIS
SECTION,  SUCH  LICENSE  OR REGISTRATION MAY BE REINSTATED IF THE SUPER-
INTENDENT DETERMINES, IN HIS OR HER SOLE DISCRETION AFTER INVESTIGATION,
THAT GOOD CAUSE THEREFOR DID NOT EXIST  OR  NO  LONGER  EXISTS.  IF  THE
SUPERINTENDENT  HAS  ISSUED  AN  ORDER OR NOTICE SUSPENDING A LICENSE OR
REGISTRATION PURSUANT TO PARAGRAPH (B) OR PARAGRAPH (C)  OF  SUBDIVISION
TWO  OF THIS SECTION, SUCH LICENSE OR REGISTRATION MAY BE REINSTATED, IF
THE SUPERINTENDENT DETERMINES, IN HIS OR HER SOLE DISCRETION,  THAT  THE
LICENSEE  OR  REGISTRANT  HAS  CURED  ALL DEFICIENCIES SET FORTH IN SUCH
SUSPENSION ORDER OR THE NOTICE BY THE  CLOSE  OF  BUSINESS  NINETY  DAYS
AFTER  THE  DATE  OF SUCH SUSPENSION ORDER OR NOTICE, INCLUDING, WITHOUT
LIMITATION, MAKING ANY OVERDUE PAYMENT, HAVING ANY SUCH BANKRUPTCY PETI-

S. 5450                             3

TION DISMISSED OR HAVING SUCH BOND REINSTATED  OR  REPLACED.  OTHERWISE,
UNLESS THE SUPERINTENDENT HAS, IN HIS OR HER SOLE DISCRETION, EXTENDED A
SUSPENSION PURSUANT TO PARAGRAPH (B) OR PARAGRAPH (C) OF SUBDIVISION TWO
OF  THIS  SECTION,  SUCH  LICENSE  OR REGISTRATION SHALL BE DEEMED TO BE
AUTOMATICALLY TERMINATED BY OPERATION OF LAW AT THE CLOSE OF BUSINESS ON
SUCH NINETIETH DAY.
  4. Except as provided in subdivision two of this section,  no  license
or  registration shall be revoked or suspended except after notice and a
hearing thereon. Any order of suspension issued after notice and a hear-
ing may include as a condition of reinstatement  that  the  licensee  or
registrant  make restitution to consumers of fees or other charges which
have been improperly charged or collected as determined  by  the  super-
intendent.
  [4.  Any] 5. WITH THE PRIOR APPROVAL OF THE SUPERINTENDENT, ANY licen-
see or registrant UNDER  THIS  ARTICLE  may  surrender  any  license  or
[certificate]  REGISTRATION  by delivering to the superintendent written
notice that it thereby surrenders such license or  [certificate]  REGIS-
TRATION,  but  such surrender shall not affect such licensee's or regis-
trant's civil or criminal liability for acts  committed  prior  to  such
surrender.  [If  such surrender is made after the issuance by the super-
intendent of a statement of charges and notice of  hearing,  the  super-
intendent  may  proceed  against  the  licensee or registrant as if such
surrender had not taken place.
  4-a.  An expiration] 6. A TERMINATION of registration  OR  LICENSE  in
accordance with THIS section [five hundred ninety-two-a of this article]
shall  not  affect  such  registrant's  OR  LICENSEE'S civil or criminal
liability for acts committed prior to  such  [expirations]  TERMINATION.
If such [expiration] TERMINATION occurs after the issuance by the super-
intendent  of  a  statement of charges and notice of hearing, the super-
intendent may proceed against the registrant  OR  LICENSEE  as  if  such
[expiration] TERMINATION had not taken place.
  [5]  7.    No revocation, suspension, surrender or [expiration] TERMI-
NATION of any license or  [certificate]  REGISTRATION  shall  impair  or
affect  the  obligation  of  any preexisting lawful contract between the
licensee or registrant and any person.
  [6] 8.  Every license or registration issued pursuant to this  article
shall  remain  in  force  and effect until the same shall have [expired]
TERMINATED in accordance with [section five hundred ninety-two-a of this
article] SUBDIVISION TWO OR THREE OF THIS SECTION  or  shall  have  been
surrendered,   revoked   or  suspended  in  accordance  with  any  other
provisions of this article, but the superintendent shall have  authority
to  reinstate  a  suspended  license or [certificate] REGISTRATION or to
issue a new license or  [certificate]  REGISTRATION  to  a  licensee  or
registrant  whose  license or registration shall have been TERMINATED OR
revoked if no fact or condition then exists which would  have  warranted
the  superintendent  in  refusing  originally  to  issue such license or
registration under this article.
  [7] 9.  Whenever the superintendent shall revoke or suspend a  license
or  registration  issued pursuant to this article OTHER THAN PURSUANT TO
PARAGRAPH (B) OF SUBDIVISION TWO OF THIS SECTION, he OR SHE shall forth-
with execute in duplicate a written order to  that  effect.  The  super-
intendent shall file one copy of such order in the office of the depart-
ment  of  banking  and  shall  forthwith  serve  the other copy upon the
licensee or registrant. Any such order may be  reviewed  in  the  manner
provided  by  article seventy-eight of the civil practice law and rules.
Such application for review as authorized by this section must  be  made

S. 5450                             4

within  thirty days from the date of such order of suspension or revoca-
tion.
  [7-a]  10.    Whenever  a registration OR LICENSE shall have [expired]
TERMINATED in accordance with [section  five  hundred  ninety-two-a  of]
this article, the superintendent shall notify the registrant OR LICENSEE
that  the  registration OR LICENSE has [expired] TERMINATED and that the
registrant OR LICENSEE may not engage in [the  business  of  soliciting,
processing, placing or negotiating a mortgage loan or offering to solic-
it,  process, place or negotiate a mortgage loan] ANY ACTIVITY REQUIRING
REGISTRATION OR A LICENSE in this state.
  [8] 11.  Any hearing held pursuant to the provisions of  this  section
shall  be  noticed,  conducted  and  administered in compliance with the
state administrative procedure act.
  S 2. This act shall take effect immediately.

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