NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6358A
SPONSOR: Weprin (MS) TITLE OF BILL:
An act to amend the banking law and the real property law, in relation
to credit line mortgages
PURPOSE OR GENERAL IDEA OF BILL:
This bill will ensure mortgage lenders to not revoke or otherwise block
credit lines taken out against a consumer's home equity should the value
of the home decrease subsequent to the consumer opening the credit line.
SUMMARY OF SPECIFIC PROVISIONS:
Section 380-g of the banking law and section 291 of the real property
law are amended to prevent lenders from revoking or otherwise blocking
access to credit lines taken out against a borrower's home equity if the
value of the home decreases subsequent to the borrower opening the cred-
it line, provided that the borrower is current on payments related to
such credit line.
JUSTIFICATION:
It is not uncommon for lenders who offer lines of credit based-on home
equity to cancel of freeze such lines of credit When the value of the
home drops. This may or may not have been a result of the actual
assessed value of the home. So long as a person 0 current on their
payments, the original agreement should stand, a* there is no better
demonstration of the viability of a borrower then his or her demon-
strated ability to make payments. Altering of, or freezing lines of
credit for any other reason when the borrower is current, is tantamount
to redlining and should be prohibited.
PRIOR LEGISLATIVE HISTORY:
02/08/17 referred to banks
01/03/18 referred to banks
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
6358--A
2023-2024 Regular Sessions
IN ASSEMBLY
April 5, 2023
___________
Introduced by M. of A. WEPRIN -- Multi-Sponsored by -- M. of A. COOK,
McDONOUGH, ZEBROWSKI -- 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 and the real property law, in relation
to credit line mortgages
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 380-g of the banking law, as added by chapter 625
2 of the laws of 1976, is amended to read as follows:
3 § 380-g. Power to engage in line of credit financing of residential
4 real estate. 1. A savings and loan association is authorized to invest
5 an amount, not exceeding the lesser of (a) ten per centum of the sum of
6 its surplus, undivided profits, and reserves or (b) one per centum of
7 its assets, in loans or in interests therein the principal purpose of
8 which is to provide financing with respect to what is or is expected to
9 become primarily residential real estate within this state, where (i)
10 the association relies substantially for repayment on the borrower's
11 general credit standing, with or without other security, or (ii) the
12 association relies on other assurances for repayment, including but not
13 limited to a guaranty or similar obligation of a third party, and, in
14 either case described in clause (i) or (ii), regardless of whether or
15 not the association takes security.
16 2. A savings and loan association shall not revoke, or otherwise
17 block, a borrower's access to credit financing of residential real
18 estate authorized pursuant to subdivision one of this section if such
19 borrower is current on repayment related to such credit financing of
20 residential real estate.
21 § 2. Section 281 of the real property law is amended by adding a new
22 subdivision 2-a to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10424-02-3
A. 6358--A 2
1 2-a. An authorized lender shall not revoke, or otherwise block, a
2 borrower's access to credit line mortgages authorized pursuant to this
3 section if such borrower is current on repayment related to such credit
4 line mortgage.
5 § 3. This act shall take effect immediately.
