§ 6-m. Subprime home loans. 1. Definitions. The following definitions\napply for the purposes of this section:\n (a) "Annual percentage rate" means the annual percentage rate for the\nloan calculated according to the provisions of the Federal\nTruth-in-Lending Act (15 U.S.C. § 1601, et seq.), and the regulations\npromulgated thereunder by the federal reserve board (as said act and\nregulations are amended from time to time).\n (b) "Fully indexed rate" means: (i) for an adjustable rate loan based\non an index, the annual percentage rate calculated using the index rate\non the loan on the date the lender provides the "good faith estimate"\nrequired under 12 USC §2601 et seq. plus the margin to be added to it\nafter the expiration of any introductory period or periods; or (ii) for\na fixed rate loan, the annual percentage rate on the loan disregarding\nany introductory rate or rates and any interest rate caps that limit how\nquickly the contractual interest rate may be reached calculated at the\ntime the lender issues its commitment.\n (c) "Subprime home loan" means a home loan in which the initial\ninterest rate or the fully-indexed rate, whichever is higher, exceeds by\nmore than one and three-quarters percentage points for a first-lien\nloan, or by more than three and three-quarters percentage points for a\nsubordinate-lien loan, the average commitment rate for loans in the\nnortheast region with a comparable duration to the duration of such home\nloan, as published by the Federal Home Loan Mortgage Corporation (herein\n"Freddie Mac") in its weekly Primary Mortgage Market Survey (PMMS)\nposted in the week prior to the week in which the lender provides the\n"good faith estimate" required under 12 USC §2601 et seq. The term\n"subprime home loan" excludes a transaction to finance the initial\nconstruction of a dwelling, i.e., a construction only loan, a temporary\nor "bridge" loan with a term of twelve months or less, such as a loan to\npurchase a new dwelling where the borrower plans to sell a current\ndwelling within twelve months, or a home equity line of credit but shall\ninclude any loan, however structured, that thereafter is converted into\na permanent loan.\n (i) The comparable duration for a home loan shall be determined as\nfollows: for an adjustable or variable home loan with an initial rate\nthat is fixed for less than three years, the Freddie Mac survey result\nfor a one-year adjustable rate mortgage; for an adjustable or variable\nhome loan with an initial rate that is fixed for at least three years,\nthe Freddie Mac survey result for a five-year hybrid adjustable rate\nmortgage; for a fixed rate home loan with a term of fifteen years or\nless, the Freddie Mac survey result for a fifteen-year fixed rate\nmortgage; and for a fixed rate home loan with a term of more than\nfifteen years, the Freddie Mac survey result for a thirty-year fixed\nrate mortgage. The superintendent may prescribe by regulation a\ndifferent comparable duration standard as necessary or appropriate to\nreflect changes in the terms and types of mortgages included in the\nFreddie Mac survey.\n (ii) Notwithstanding the comparable rates set forth in this paragraph,\nand notwithstanding any other law, if the superintendent determines that\nby statute, rule or regulation, different thresholds for determining\nunderwriting standards for subprime loans become applicable to\nnationally chartered lending institutions, or the provisions of this\nsection have had an unduly negative effect upon the availability or\nprice of mortgage financing in this state, the superintendent may from\ntime to time designate such other threshold rates as may be necessary to\nachieve parity between such nationally chartered institutions and\nbanking organizations, mortgage banks and mortgage brokers in this state\nor to alleviate such unduly negative effects. Such determination shall\npromptly be published on the website of the department of financial\nservices.\n (iii)
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