N.Y. Comp. Codes R. & Regs. tit. 3 § 10.1

Current through Register Vol. 46, No. 53, December 31, 2024

Section 10.1 - Method of computing and crediting interest

(a) The term mortgage escrow account, for the purposes of this Part, shall include any account established pursuant to an agreement between a mortgagor and a mortgage investing institution whereby the mortgagor pays to the mortgage investing institution or its designee amounts to be used for the payment of real estate taxes, school taxes, insurance premiums, water rents or any similar charges, except that the term mortgage escrow account shall not be deemed to include payments made to a mortgage investing institution for such purposes which are used to reduce the principal of the mortgage at the time they are received provided that the effective rate of interest thus accorded the mortgagor is no less than the rate of interest established from time to time pursuant to section 5-601 of the General Obligations Law and section 14-b of the Banking Law. The term insurance draft escrow account, for the purposes of this Part, shall include any account established pursuant to an agreement between a mortgagor and a mortgage investing institution whereby the mortgage investing institution receives from an insurance carrier a draft as compensation for damage done to a mortgaged residence.

(b) Interest on a mortgage escrow account as required by section 5-601 of the General Obligations Law and section 14-b of the Banking Law or an insurance draft escrow account as required by section 5-602 of the General Obligations Law and section 14-b of the Banking Law shall be computed on the daily balances in such account from the date the funds are received to the date the funds are disbursed and shall be credited to the escrow account as of the last business day of each quarter of a calendar year or of each quarter of a fiscal year. In computing the interest to be credited, debit balances resulting from advances made by the mortgage investing institution may be taken into account. At least once each year the mortgage investing institution shall render a statement to the mortgagor specifically indicating the interest on the mortgage escrow account or insurance draft escrow account which has been credited during the period covered by such statement.

(c) In the event that a mortgage escrow account or insurance draft escrow account shall be closed or discontinued before the last business day of a calendar quarter, or the last business day of a fiscal quarter, interest shall be computed and credited from the day as of which interest was last credited through the day on which the account is closed or discontinued.

(d) For the purposes of computing interest pursuant to subdivisions (b) and (c) of this section, the mortgage investing institution shall take into account the actual number of days in each quarter, as well as the actual number of days in each calendar year or, may elect to compute the interest on the basis of a 30- day month and 360-day year.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 10.1