Legislation

Search OpenLegislation Statutes
This entry was published on 2014-09-22
The selection dates indicate all change milestones for the entire volume, not just the location being viewed. Specifying a milestone date will retrieve the most recent version of the location before that date.
SECTION 14-B
Power of the superintendent of financial services to prescribe minimum rate of interest on mortgage escrow accounts
Banking (BNK) CHAPTER 2, ARTICLE 2
§ 14-b. Power of the superintendent of financial services to prescribe
minimum rate of interest on mortgage escrow accounts. 1. The
superintendent shall have the power to prescribe, from time to time but
not more often than once in every three month period, by regulation a
minimum rate of, and method or basis of computing, interest that a
mortgage investing institution shall be required to pay on each escrow
account maintained with respect to a mortgage on a one to six family
residence occupied by the owner or on any property owned by a
cooperative apartment corporation, as defined in subdivision twelve of
section three hundred sixty of the tax law, (as such subdivision was in
effect on December thirtieth, nineteen hundred sixty), and located in
this state, which rate shall be greater than the rate of interest
required to be paid under section 5-601 or 5-602 of the general
obligations law.

2. In making such determination the superintendent shall consider
pertinent economic and cost factors including, but not limited to: (i)
current yields on short term investments, (ii) current dividend rates
paid on regular savings accounts throughout this state, (iii) currently
prevailing interest rates on conventional and insured or guaranteed
mortgage loans in this state, (iv) cost factors in maintaining escrow
accounts and (v) such other pertinent economic or cost factors that the
superintendent shall deem to be appropriate. Prior to the
superintendent's prescription of any such minimum rate of interest, the
superintendent shall issue a statement in writing setting forth the
economic and cost data and criteria upon which such determination is
based. Prior to making such determination, the superintendent may invite
presentation, by interested persons, of information and data relating to
economic and cost factors relevant to such minimum rate of interest.

3. The superintendent may promulgate such regulations as the
superintendent deems necessary and proper to implement and define the
provisions of this section. The superintendent may prescribe the minimum
rate of interest from time to time, but not more often than once in any
three-month period, and shall provide reasonable notice to the public of
any change in the rate of interest, of the effective date of such
change, which shall be not less than seven days following the adoption
of such change by the superintendent, and of any rule or regulation
adopted pursuant to this subdivision.

4. In no event shall interest be required to be paid on escrow
accounts where (i) there is a contract between the mortgagor and the
mortgage investing institution, entered into before the date this
subdivision shall have become a law which contains an express disclaimer
of an obligation on the part of the mortgage investing institution to
pay interest on such accounts, or (ii) the payment of such interest
would violate any federal law or regulation, or (iii) such accounts are
maintained with a mortgage servicing company, neither affiliated with
nor owned in whole or in part by the mortgage investing institution,
under a written contract, entered into before the date this subdivision
shall have become a law, which contract does not permit the mortgage
investing institution to earn or receive a return from the investment of
such accounts.

5. "Mortgage investing institution" as used in this section and in
section 5-601 or 5-602 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 or any
property owned by a cooperative apartment corporation, as defined in
subdivision twelve of section three hundred sixty of the tax law, (as
such subdivision was in effect on December thirtieth, nineteen hundred
sixty), and located in this state.

6. "Escrow account" as used in this section and in section 5-601 or
5-602 of the general obligations law shall mean 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 his designee amounts to be used for the payment of
insurance premiums, water rents or any similar charges, and shall also
include real property tax escrow accounts as defined in title three-A of
article nine of the real property tax law.

7. "One to six family residence" as used in this section and in
section 5-601 or 5-602 of the general obligations law shall mean
property used primarily for residential purposes for one to six
families, including property held in condominium form, and which is
occupied in whole or in part by the owner.

8. If any provision of this section, or the application of such
provision to any individual, company, corporation or circumstance, shall
be held invalid, the remainder of this section, and the application of
such section to individuals, companies, corporations, or circumstances
other than those to which it is held invalid, shall not be affected
thereby.