S6124-2011 - NY Senate Open Legislation - Relates to the dealings of mortgage brokers and home improvement contractors

Relates to the dealings of mortgage brokers and home improvement contractors; exempts from provisions relating to payment of mortgage proceeds to a borrower or third party, rather than directly to a home improvement contractor, those home improvement loans insured by the FHA under the National Housing Act or the Energy Policy Act of 1992.

Sponsor: SAVINO
Law Section: Banking Law / Law: Amd S595-c, Bank L

S6124-2011 Actions

Jan 18, 2012: SUBSTITUTED BY A8909
Jan 9, 2012: ORDERED TO THIRD READING CAL.17
Jan 9, 2012: REPORTED AND COMMITTED TO RULES
Jan 4, 2012: REFERRED TO BANKS

S6124-2011 Meetings

Banks: Jan 9, 2012, Rules: Jan 9, 2012

S6124-2011 Calendars

Active List: Jan 18, 2012 , Floor Calendar: Jan 9, 2012 , Floor Calendar: Jan 10, 2012 , Floor Calendar: Jan 18, 2012

S6124-2011 Votes

VOTE: COMMITTEE VOTE: - Rules - Jan 9, 2012

Ayes (23): Skelos, Alesi, Farley, Hannon, Johnson, Larkin, LaValle, Libous, Marcellino, Maziarz, Nozzolio, Saland, Seward, Sampson, Breslin, Dilan, Hassell-Thompson, Krueger, Montgomery, Parker, Perkins, Smith, Stewart-Cousins
Nays (1): Duane

S6124-2011 Memo

BILL NUMBER:S6124

TITLE OF BILL:

An act
to amend the banking law, in relation to the dealings of mortgage
brokers and home improvement contractors

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to clarify that certain Federal Housing
Administration (FHA) loans will not be subject to payment
restrictions when dealing with home improvement contractors.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:

This bill would amend Subdivision 2 of section 595-c of the Banking
Law, as added by Chapter 593 of the Laws of 2011 to exclude home
improvement loans insured by the FHA under section 203(k) of the
National Housing Act, 12 U.S.C. 1709(k) (Rehabilitation Mortgage
Insurance) and section 106 of the Energy Policy Act of 1992 (Energy
Efficient Mortgage Pilot Program).
Current law prohibits mortgage brokers from directly paying home
improvement contractors.

JUSTIFICATION:

FHA loans are subject to particular requirements that conflict with
what is required under current State law. FHA guidelines provide a
different payment structure that allows a home improvement contractor
to be directly paid by a mortgage broker. This chapter amendment
would exclude FHA loans from the provisions of state law that would
otherwise prohibit mortgage brokers from directly paying home
improvement contractors.

PRIOR LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

EFFECTIVE DATE:

This act shall take effect on the same date and in the same manner as
Chapter 593 of the Laws of 2011.

S6124-2011 Text

 S T A T E   O F   N E W   Y O R K
 
                                          6124
 I N  SENATE
 (PREFILED)
 January 4, 2012
 
 Introduced  by  Sen.  SAVINO -- 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 the dealings of mortgage
 brokers and home improvement contractors
 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. Subdivision 2 of section 595-c of the banking law, as added
 by chapter 593 of the laws of 2011, is amended to read as follows:

 2. Where a mortgage broker has solicited, processed, placed or negoti
 ated  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 accord
 ance with the terms established in a written  agreement  signed  by  the
 borrower,  the  lender and the contractor prior to disbursement. A mort
 gage broker shall not offer a homeowner different loan terms  contingent
 on the homeowner executing an agreement for payment through an independ
 ent  third party as described in the preceding sentence. Any such agree
 ment 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 HOUS
 ING 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.
 

S  2.  This  act  shall  take  effect on the same date and in the same
 manner as section 1 of chapter 593 of the laws of 2011, takes effect.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD12084-02-2

S6124-2011: Relates to the dealings of mortgage brokers and home improvement contractors