Relates to unregistered and unlicensed mortgage brokers; establishes additional penalties against unlicensed or unregistered persons or entities engaging in activities after receiving a cease and desist notice.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1153A
SPONSOR: Vanel TITLE OF BILL:
An act to amend the banking law, in relation to unregistered and unli-
censed mortgage brokers
PURPOSE OR GENERAL IDEA OF BILL:
Prohibits mortgage lenders from conducting business with any individual
or entity which it knows or should have known is acting as a mortgage
banker or a mortgage broker without being licensed or registered.
SUMMARY OF PROVISIONS:
Section one: Prohibits mortgage bankers, mortgage brokers or exempt
organizations, who are not registered or licensed by DFS, from perform-
ing or executing mortgages. Entities who provide mezzanine mortgages
would be exempt from this section.
Section two: Provides that if a non-exempt unlicensed or unregistered
person or entity continues to engage in unauthorized activities after a
cease-and desist notice from DFS, then they are liable for the actual
damages equivalent to the amount of money paid to an affected person.
Section three is the effective date.
JUSTIFICATION:
No mortgage banker, mortgage broker or exempt organization shall conduct
business with any person, partnership, association, corporation or other
entity which it knows or should have known is acting as a mortgage bank-
er or a mortgage broker without being licensed or registered as required
by this article. A mortgage banker, mortgage broker or exempt organiza-
tion shall promptly notify the department of any such unlicensed or
unregistered operations.
PRIOR LEGISLATIVE HISTORY:
A08124 2019/2020: Referred to banks
A03882 2021/2022: Referred to banks
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become law.
STATE OF NEW YORK
________________________________________________________________________
1153--A
2023-2024 Regular Sessions
IN ASSEMBLY
January 13, 2023
___________
Introduced by M. of A. VANEL -- read once and referred to the Committee
on Banks -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the banking law, in relation to unregistered and unli-
censed mortgage brokers
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph (e) of subdivision 5 of section 590 of the bank-
2 ing law is relettered paragraph (f) and a new paragraph (e) is added to
3 read as follows:
4 (e) No mortgage banker, mortgage broker or exempt organization shall
5 conduct business with any person, partnership, association, corporation
6 or other entity which it knows or should have known is acting as a mort-
7 gage banker or a mortgage broker without being licensed or registered as
8 required by this article. A person, partnership, association, corpo-
9 ration or other entity who provides non-residential subordinate loans
10 shall be exempt from this paragraph. A mortgage banker, mortgage broker
11 or exempt organization shall promptly notify the department of any such
12 unlicensed or unregistered operations.
13 § 2. Subdivision 5 of section 598 of the banking law, as added by
14 chapter 571 of the laws of 1986, is amended to read as follows:
15 5. Civil penalties assessable against unlicensed or unregistered
16 persons or entities. If any non-exempt unlicensed or unregistered person
17 or entity engages in activities encompassed by this article, he shall be
18 liable to any person or entity affected by such activities for a sum of
19 money of not less than the amount of money paid to an affected person or
20 entity in connection with such activities, nor more than four times such
21 sum; provided however that where a non-exempt unlicensed or unregistered
22 person has continued to engage in such unauthorized activities after
23 receiving a cease and desist notice from the superintendent, the maximum
24 amount of liability shall be up to the amount of actual damages. Such
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03777-02-3
A. 1153--A 2
1 sum may be sued for and recovered by any person or entity for his use
2 and benefit in any court of competent jurisdiction.
3 § 3. This act shall take effect on the thirtieth day after it shall
4 have become a law.
