N.Y. Department of Financial Services Amends Terms Governing Subprime Loans

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The New York Department of Financial Services (DFS) has amended certain terms governing subprime loans under Part 43 of the General Regulations of the Superintendent. The amendment was adopted on March 19, 2014, and is effective immediately.

Specifically, the DFS amended the definition of the terms “week” and “commitment” in relation to the Real Estate Settlement Procedures Act (RESPA) Good Faith estimate disclosures. Under the new rule, the term “week” now refers to the seven-day period from Friday through Thursday, the day on which the Federal Home Loan Mortgage Corporation publishes its Primary Mortgage Market Survey. The term “commitment” referred to in Section 6-m(1)(b) signifies the good faith estimate in all cases where the commitment is not issued by the lender.

The amendment is the latest in a series of DFS regulations intended to further clarify when a loan is subprime under Section 6-M of the New York Banking Law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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