Law360: NY Ahead of the Curve with Ban on Mortgage Rate-Based Pay
Law360 reports on a new law passed by Sen. Krueger which bans a predatory lending practice that created instability in the mortgage market and contributed to the financial crisis.
From Law360's Pete Brush:
Yield spread premiums are fees paid by lenders to mortgage brokers that place borrowers in loans with higher interest rates, according to the legislation.
"Yield spread premiums have created perverse incentives, driving irresponsible, dangerous activity in the mortgage market,” Krueger said. “I thank my colleagues and Governor Cuomo for acting swiftly to ban this predatory and risky practice.”
The new law amends statutory language that previously had banned "abusive" yield spread premiums — language that was essentially toothless — and bans them outright. It took effect Friday.
Read the full article at Law360.