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This entry was published on 2014-09-22
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SECTION 595-C
Regulation of dealings of mortgage brokers and home improvement contractors
Banking (BNK) CHAPTER 2, ARTICLE 12-D
§ 595-c. Regulation of dealings of mortgage brokers and home
improvement contractors. 1. No home improvement contractor nor any
agents or salespersons thereof shall represent, act as an agent for, or
advertise, promote or arrange for the services of a mortgage broker or
its affiliate while soliciting home improvement contracts nor receive
anything of value from a mortgage broker or its affiliate for the
referral of a borrower to a mortgage broker. The staff of a home
improvement contractor shall not act on behalf of a mortgage broker in
any transaction.

2. Where a mortgage broker has solicited, processed, placed or
negotiated 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
accordance with the terms established in a written agreement signed by
the borrower, the lender and the contractor prior to disbursement. A
mortgage broker shall not offer a homeowner different loan terms
contingent on the homeowner executing an agreement for payment through
an independent third party as described in the preceding sentence. Any
such agreement 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
housing 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.

3. A mortgage broker shall not permit a home improvement contractor to
be a cosigner or to act as a guarantor for a mortgage loan for home
improvement.

4. For the purpose of this section, "home improvement contractor",
means, with respect to any home improvement, a person, firm or
corporation which owns or operates a home improvement business or who
undertakes, offers to undertake or agrees to perform any home
improvement for a fee and for whom the total price for all labor,
materials and other items is equal to or greater than two hundred
dollars. Home improvement contractor does not include a person, firm,
corporation, landlord, cooperative corporation, condominium board of
managers, joint tenant or co-tenant that owns, in whole or in part, the
property to be improved.

5. This section shall not annul, alter, affect or exempt any person
subject to the provisions of this section from complying with the laws,
ordinances, rules or regulations of any locality or other governmental
body, relating to home improvement contracts, except to the extent that
such laws, ordinances, rules or regulations are inconsistent with any
provision of this section, but no such law, ordinance, rule or
regulation shall be considered inconsistent, if it affords greater
protection to the homeowner from persons subject to this section.