Prohibits certain financial institutions from charging a fee for making monthly, semi-monthly, and biweekly payments or for changing the frequency of mortgage payments.
Summary
This bill would add a new section to the Banking Law prohibiting certain mortgage payment servicers from charging borrowers fees or other charges for making mortgage payments on a monthly, semi-monthly, or biweekly schedule. It also bars servicers from charging extra costs to switch among those payment frequencies, or from requiring an extra principal or interest payment as a condition of changing schedules except to the extent needed to align the loan with the new schedule.
The bill further requires servicers, upon request, to provide borrowers with an amortization schedule, an estimate of potential interest savings, and information on how to change payment frequency. It directs the superintendent of financial services to create a standardized notice explaining these rights, which must be given at origination or when the loan is first serviced and again upon request. The measure applies to mortgage loans serviced on or after its effective date, and violations would be treated as violations of the Banking Law subject to existing enforcement penalties and remedies.
Impact
The bill would expand state regulation of mortgage servicing by limiting fee practices tied to payment frequency and by creating affirmative disclosure obligations for mortgage payment servicers. It would affect banks, licensed mortgage bankers, mortgage loan servicers, and other entities that service or process mortgage payments in New York, while expressly excluding certain federally chartered or federally regulated institutions from the definition of covered mortgage payment servicer. The bill also preserves federal preemption by stating that it cannot be construed to require conduct inconsistent with federal law.
Sentiment
The available voting history suggests generally favorable sentiment toward the bill. It received favorable votes in the Assembly Banks Committee and later in the Assembly Codes Committee, indicating support for advancing the measure through committee. No committee transcript is available, so the record does not show detailed debate, but the votes suggest the bill was viewed positively by a majority of members in those committees.
Contention
The main policy issue is whether mortgage servicers should be allowed to charge borrowers for changing payment frequency or for using non-monthly payment schedules. Supporters appear to favor borrower protections, transparency, and the ability to make extra payments more flexibly without added cost. Potential concerns likely center on operational burdens for servicers, the scope of the prohibition, and the bill’s interaction with federal law and federally chartered institutions, which are expressly carved out or protected by the federal-law savings clause.
Same As
Prohibits certain financial institutions from charging a fee for making monthly, semi-monthly, and biweekly payments or for changing the frequency of mortgage payments.