New York Passes Legislation To Reduce Number of FHA Loans That Would Be Classified as Subprime

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The New York Assembly recently passed a bill that would result in fewer FHA loans being classified as “subprime” under Section 6-M of the New York Banking Law. The legislation—already passed by the Senate—would make permanent prior emergency rules issued by the Department of Financial Services (DFS), which raised the subprime threshold 75 basis points for those loans subject to the revised FHA life-of-loan mortgage insurance premium (MIP) policy.

As we wrote in October, although the emergency rules were initially set to expire on December 31, 2013, the DFS granted an extension to allow the Legislature additional time to craft a permanent solution. The bill, which passed with overwhelming bipartisan support and received strong industry backing, is expected to be signed into law by Governor Andrew Cuomo.

 


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