N.Y. Comp. Codes R. & Regs. tit. 3 § 79.3

Current through Register Vol. 46, No. 45, November 2, 2024

Section 79.3 - Authority to make reverse mortgage loans

(a) No person or entity may engage in the business of making a reverse mortgage loan unless they are licensed to make mortgage loans pursuant to section 591 of the Banking Law or are an exempt organization.

(b) In addition to the requirements of subdivision (a) above, effective March 5, 2020, no person or entity may engage in the business of making a reverse mortgage loan unless they have applied and are granted such right by the superintendent.

(c) An application for authority to make reverse mortgage loans must be made in accordance with the following, as applicable:

(1) Any person or entity licensed pursuant to section 591 of the Banking Law must apply to the Department for authority to make reverse mortgages loans and demonstrate, to the satisfaction of the superintendent, the following:

(i) The lender satisfies the financial responsibility requirements set forth in section 410.1 of the Superintendent's Regulations and:

(a) as it relates to the origination of R PL 280 and R PL 280 -a loans, maintains an irrevocable standby letter of credit in favor of the lender:

(1) The irrevocable standby letter of credit must meet the following criteria:

(A)the initial term is at least two years;

(B) it is provided by a financial institution that is not affiliated with the lender; and

(C) it is in an amount necessary to fund all reverse mortgage loan requirements anticipated to be made over the next 12 rolling months or an amount to be determined by the superintendent and published on the Department's website, whichever is greater.

(2) The standby letter of credit requirements above do not apply to the origination of a loan:

(A)which is closed during a period of time when the lender has held a rating of either 4A1 or 5A1 from Dun & Bradstreet Credit Services for the immediately preceding three consecutive years; or

(B) the proceeds of which are fully dispersed at the loan closing.

(b) as it relates to the origination of R PL 280 -b loans, maintains authorization from the Federal Housing Administration ("FHA") to originate FHA loans.

(ii) As it relates to the origination of R PL 280, 280-a and 280-b loans, at the time of application and for as long as the lender makes reverse mortgage loans, the lender will maintain a minimum capital amount as published on the Department's website. A lender may rely on the capital of its parent to satisfy the requirements of this subdivision provided that for any year in which a lender seeks to so rely, it shall provide to the Department a certified financial statement of the parent showing a net worth of at least an amount to be determined by the superintendent and published on the Department's website, as of the close of its most recent fiscal year and a binding written commitment from the parent to the entity to make a minimum of such amount available to the lender as a capital contribution in connection with its reverse mortgage lending program; and

(iii)The following documents, as applicable, must be provided with any application made pursuant to section 79.3(c):

(a) a copy of the standby letter of credit;

(b) an audited financial statement for the most recent fiscal year;

(c) a copy of the lender's report issued by A.M. Best Company;

(d) a copy of the lender's approval letter authorizing the origination of FHA loans;

(e) proof of the lender's 4A1 or 5A1 rating from Dun & Bradstreet Credit Services; and

(f) such other information and documents as shall be requested by the superintendent.

(2) The application provisions of subsection (1) above shall not apply to exempt organizations provided that such exempt organization notifies the superintendent that it is making reverse mortgage loans in this State and submits the following information and documents as applicable:

(a) the name, address, telephone number, and principal place of business of the exempt organization;

(b) the name of an executive officer responsible for the exempt organization's reverse mortgage loan program;

(c) the basis for its exemption pursuant to section 590 (1)(e) of the Banking Law;

(d) the designation by any out-of-state exempt organization of an agent within the State of New York for service of process for any matter arising from a reverse mortgage loan;

(e) a copy of any trust agreement entered into between the exempt organization and a trustee pursuant to section 79.5(g)(2) of this Part;

(f) the name, address, telephone number, and principal place of business of any trustee and a designation in accordance with the requirements of section 131 (3) of the Banking Law.

(g) such other information and documents as shall be requested by the superintendent.

(d) In order to facilitate an orderly transition and minimize disruption in the mortgage marketplace, any person or entity, subject to the requirements of subsection (b) above, who was both licensed to make mortgage loans pursuant to section 591 of the Banking Law, or is an exempt organization and engaged in the business of making R PL 280 -b loans as of March 5, 2020, shall file with the superintendent, by June 5, 2020, an application in accordance with subsection (c) above.

(e) All persons and entities covered by this subdivision may continue to engage in the business of making R PL 280 -b loans until the earlier of the date they receive notice that their application under this Part has been denied or April 5, 2021 in the case of those covered by paragraph (1) of this subdivision (d) or June 5, 2021 in the case of those covered by paragraph (2) of subdivision (d).

N.Y. Comp. Codes R. & Regs. Tit. 3 § 79.3

Adopted New York State Register July 29, 2020/Volume XLII, Issue 30, eff. 7/29/2020