Bill S3832-2013

Relates to conforming criminal provisions of the mortgage banking provisions to those relating to mortgage loan originators

Conforms criminal provisions of the mortgage banking provisions to those relating to mortgage loan originators.

Details

Actions

  • Mar 31, 2014: ADVANCED TO THIRD READING
  • Mar 27, 2014: 2ND REPORT CAL.
  • Mar 26, 2014: 1ST REPORT CAL.365
  • Jan 8, 2014: REFERRED TO BANKS
  • Jan 8, 2014: returned to senate
  • Jan 8, 2014: died in assembly
  • Jun 12, 2013: referred to banks
  • Jun 12, 2013: DELIVERED TO ASSEMBLY
  • Jun 12, 2013: PASSED SENATE
  • Jun 11, 2013: ADVANCED TO THIRD READING
  • Jun 10, 2013: 2ND REPORT CAL.
  • Jun 5, 2013: 1ST REPORT CAL.1130
  • Feb 21, 2013: REFERRED TO BANKS

Votes

VOTE: COMMITTEE VOTE: - Banks - Jun 5, 2013
Ayes (18): Griffo, Farley, Bonacic, DeFrancisco, Golden, Marchione, Martins, Marcellino, O'Mara, Ranzenhofer, Savino, Valesky, O'Brien, Breslin, Diaz, Avella, Parker, Sanders
Ayes W/R (1): Gipson
VOTE: COMMITTEE VOTE: - Banks - Mar 26, 2014
Ayes (19): Griffo, Farley, Bonacic, DeFrancisco, Golden, Marchione, Martins, Marcellino, O'Mara, Ranzenhofer, Valesky, Avella, O'Brien, Breslin, Diaz, Parker, Sanders, Gipson, Kennedy

Memo

BILL NUMBER:S3832

TITLE OF BILL: An act to amend the banking law, in relation to applications for a license to engage in the business of mortgage banking and to register as a mortgage broker

PURPOSE: To conform the character and fitness standards for mortgage bankers and mortgage brokers to the character and fitness standards for mortgage loan originators.

SUMMARY OF PROVISIONS:

Section 1 of the bill amends Section 592(2) of the Banking Law regarding mortgage bankers, and section 2 of the bill amends Section 592-a(2) of the Banking Law regarding mortgage brokers.

Both sections are amended to provide that the Superintendent shall not issue a mortgage banker license, or a mortgage broker certificate, to a person who has been convicted of a felony in the preceding seven years, or if the person has ever been convicted of a felony involving an act of fraud, dishonesty, or a breach of trust, or money laundering.

The existing restriction on issuing a mortgage banker license or a mortgage broker certificate where the applicant has previously had a license or certificate revoked by the Superintendent of Banks is amended to prohibit the issuance of such license or certificate if the person has had a mortgage banking license, mortgage broker authorization or mortgage loan originator license revoked in any governmental jurisdiction.

EXISTING LAW:

Sections 592 and 592-a of the Banking Law currently provide that the Superintendent of Banks may refuse to issue a mortgage banker license or a mortgage broker certificate where a person has been convicted of certain felony violations or has had a license or registration revoked by the Superintendent.

JUSTIFICATION: The Banking Law currently provides for the licensing of mortgage bankers and the certification of mortgage brokers. In addition, a 2006 law established registration and education requirements for persons who work for mortgage bankers and mortgage brokers. These persons are known as mortgage loan originators.

In 2008, the federal Secure and Fair Enforcement for Mortgage. Licensing Act of 2008 (the "SAFE Act") was enacted to foster a uniform system of MLO licensing at the state level. This federal law required certain minimum standards for licensing, including restrictions on approving persons who have felony convictions.

In 2009, New York's law was amended to conform to the federal standards. However, as a result of the 2009 amendments, the approval standards for mortgage loan originators (MLO) are now stricter than the approval standards for mortgage banking and mortgage broker companies which employ such MLOs.

For example, sections 592 and 592-a of the Banking Law provide that the Superintendent may refuse to issue a mortgage banking license or mortgage broker certification when a person has been convicted of certain specified felonies. In contrast, section 599-e of the Banking Law provides that the Superintendent shall not issue a mortgage loan originator license if the person has been convicted of any felony within the preceding seven year period, or if the person has ever been convicted of a felony involving an act of fraud, dishonesty, or a breach of trust, or money laundering.

This situation creates an undesirable inconsistency in the approval standards. A person who is ineligible to be a mortgage loan originator would be able to act in a governing capacity as an officer or director of a mortgage banker or mortgage broker. In order to protect the public, and ensure the integrity of the mortgage lending process, this bill would strengthen the approval standards for mortgage bankers and mortgage brokers so they are consistent with the standards for mortgage loan originators.

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: Immediately


Text

STATE OF NEW YORK ________________________________________________________________________ 3832 2013-2014 Regular Sessions IN SENATE February 21, 2013 ___________
Introduced by Sen. FARLEY -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to applications for a license to engage in the business of mortgage banking and to register as a mortgage broker THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 592 of the banking law, as amended by chapter 472 of the laws of 2008, is amended to read as follows: 2. [The] NOTWITHSTANDING ANY OTHER LAW, THE superintendent [may refuse to] SHALL NOT issue a license pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person having a relationship with the applicant similar to a consultant, (a) has been convicted of [a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if committed and prosecuted under the laws of this state] OR PLED NOLO CONTENDERE TO, A FELONY IN A DOMESTIC, FOREIGN, OR MILITARY COURT DURING THE SEVEN-YEAR PERIOD PRECEDING THE DATE OF THE APPLICATION FOR LICENSING OR AT ANY TIME PRECEDING SUCH DATE OF APPLICATION, IF SUCH FELONY INVOLVED AN ACT OF FRAUD, DISHONESTY, OR A BREACH OF TRUST, OR MONEY LAUNDERING or (b) has had a MORTGAGE BANKER license [or], MORTGAGE BROKER registration OR MORTGAGE LOAN ORIGINATOR AUTHORIZATION, LICENSE OR LICENSE EQUIVALENT revoked [by the superintendent] IN ANY GOVERN- MENTAL JURISDICTION, EXCEPT THAT A SUBSEQUENT FORMAL VACATION OF SUCH REVOCATION SHALL NOT BE DEEMED TO BE A REVOCATION or (c) has been a
director, partner, or substantial stockholder of an entity which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibil- ity in connection with the revocation. The term "substantial stockhold- er", as used in this subdivision, shall be deemed to refer to a person owning or controlling directly or indirectly ten [per centum] PERCENT or more of the total outstanding stock of a corporation. S 2. Subdivision 2 of section 592-a of the banking law, as amended by chapter 472 of the laws of 2008, is amended to read as follows: 2. [The] NOTWITHSTANDING ANY OTHER LAW, THE superintendent [may refuse to] SHALL NOT issue a certificate pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person having a relationship with the applicant similar to a consultant, (a) has been convicted [of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if committed and prosecuted under the laws of this state] IN A DOMESTIC, FOREIGN, OR MILITARY COURT OR PLED NOLO CONTENDERE TO, A FELONY DURING THE SEVEN-YEAR PERIOD PRECEDING THE DATE OF THE APPLICA- TION FOR LICENSING OR AT ANY TIME PRECEDING SUCH DATE OF APPLICATION, IF SUCH FELONY INVOLVED AN ACT OF FRAUD, DISHONESTY, OR A BREACH OF TRUST, OR MONEY LAUNDERING or (b) has had a MORTGAGE BANKER license [or], MORT- GAGE BROKER registration OR MORTGAGE LOAN ORIGINATOR AUTHORIZATION, LICENSE OR LICENSE EQUIVALENT revoked [by the superintendent] IN ANY GOVERNMENTAL JURISDICTION, EXCEPT THAT A SUBSEQUENT FORMAL VACATION OF SUCH REVOCATION SHALL NOT BE DEEMED TO BE A REVOCATION or (c) has been a director, partner, or substantial stockholder of an entity which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibil- ity in connection with the revocation. The term "substantial stockhold- er", as used in this subdivision, shall be deemed to refer to a person owning or controlling directly or indirectly ten [per centum] PERCENT or more of the total outstanding stock of a corporation. S 3. This act shall take effect immediately.

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