N.Y. Comp. Codes R. & Regs. tit. 3 § 82.6

Current through Register Vol. 46, No. 45, November 2, 2024

Section 82.6 - Disclosure

(a) Prior to accepting an application for a loan, a lender must disclose in writing or via electronic media to each loan applicant, in one or more documents, and in plain language, the terms of the type(s) of loan(s) available to the applicant. The disclosure material provided to an applicant shall include at least such of the following information as is relevant to the type of loan being offered:

(1) the term to maturity;

(2) the initial interest rate, if known, or the manner in which the initial interest rate will be established;

(3) the amount of the initial payment, if known, and an explanation of the lending institution's amortization schedule for the loan, including how the lending institution determines both the amount of each payment and what proportion of each payment will be credited to interest;

(4) a full explanation of how the interest rate, the payment, the loan balance or the term to maturity may be adjusted (including identification of the index/indices to be used and how index values may be obtained by the borrower), and how the adjustment of one item may affect the others;

(5) what information will be contained in each notice of an adjustment and, in the case of a non- or partially amortized loan, in the notice of maturity, and how far in advance of an adjustment or maturity each notice will be provided;

(6) where a valid prepayment penalty will be provided for in the loan contract, a description of such penalty;

(7) if the loan contract will provide for escrow payments, a statement of that fact and an explanation of the purpose of requiring escrow payments and how the amount of such payments is established;

(8) a hypothetical example, illustrative of the type of credit being offered, of the effect or the combination of effects that an increase in the rate on the loan may have on the amount of the monthly payment, or the number of monthly payments or the amount of the final payment; and

(9) the history of the movements in the index chosen for the loan, including the highest and lowest interest rates reached by the index, and the dates at which these levels were reached, for each of the three calendar years preceding the year in which the loan is made, provided further that if a loan is made after August 31st of any calendar year, the disclosures shall include the high and low figures for the index's performance through June 30th of that year and such disclosure may be used as the disclosure of the high and low in index performance for the calendar year next preceding the calendar year in which the loan is made for any loan made prior to March 1st of a calendar year.

If an application is accepted by telephone, the lender shall mail, deliver or transmit by electronic media the required disclosure statement within three business days.

(b) In the case of a balloon-payment mortgage loan, the disclosure required to be given pursuant to subdivision (a) of this section shall include the following notice, or a notice to like effect, as applicable, which notice may be given in writing or via electronic media and which shall also be included in the loan contract:

THE TERM OF THE LOAN IS ________ YEARS. AS A RESULT, YOU WILL BE REQUIRED TO REPAY THE ENTIRE PRINCIPAL BALANCE AND ANY ACCRUED INTEREST THEN OWING ________ YEARS FROM THE DATE ON WHICH THE LOAN IS MADE.

THE LENDER HAS NO OBLIGATION TO REFINANCE THIS LOAN AT THE END OF ITS TERM. THEREFORE, YOU MAY BE REQUIRED TO REPAY THE LOAN OUT OF ASSETS YOU OWN OR YOU MAY HAVE TO FIND ANOTHER LENDER WILLING TO REFINANCE THE LOAN.

ASSUMING THIS LENDER OR ANOTHER LENDER REFINANCES THIS LOAN AT MATURITY, YOU WILL PROBABLY BE CHARGED INTEREST AT MARKET RATES PREVAILING AT THAT TIME AND SUCH RATES MAY BE HIGHER THAN THE INTEREST RATE PAID ON THIS LOAN. YOU MAY ALSO HAVE TO PAY SOME FOR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW MORTGAGE LOAN.

If the lender guarantees refinancing of the loan for additional terms until the principal balance has been repaid but does not provide for the recalculation of the interest rate at the time of each refinancing according to a pre-specified index, the disclosures and the loan contract shall include the following notice or a notice to like effect, as applicable, which notice may be given in writing or via electronic media:

THE TERM OF THE LOAN IS ________ YEARS. AT MATURITY, ________YEARS FROM THE DATE ON WHICH THE LOAN IS MADE, AND AT TIME OF EACH FURTHER REFINANCING, THE LOAN WILL BE REFINANCED AT AN INTEREST RATE ESTABLISHED BY THE LENDER WITH REFERENCE TO MARKET RATES. SUCH INTEREST RATE(S) MAY BE HIGHER THAN THE INTEREST RATE PAID ON THIS LOAN.

In addition, at the time it commits itself to make the loan, the lender must inform the applicant in writing or via electronic media of the principal balance which will be due at maturity of the loan or the initial term of the loan (assuming all scheduled principal payments, if any, are made in accordance with the loan contract and the fact that the borrower will receive notice of maturity in writing or, where the borrower has consented in advance, via electronic media from the lender and the time periods within which such notice will be sent).

(c) In the case of a graduated payment mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include a disclosure that the interest costs for the loan will be higher than the interest costs for a fixed-rate amortizing loan of the same term and for the same amount, together with an explanation for this result.

(d) In the case of a pledged-account mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include an example of the difference in interest cost between a loan secured by property and a savings account and a loan secured by property alone.

(e) In the case of a step mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include the initial interest rate and dollar amount of the monthly payment in addition to a table which indicates the monthly payments at identified interest rates for the entire term.

(f) In the case of a preferred rate mortgage loan, the disclosures required pursuant to subdivision (a) of this section shall include the event that would allow the creditor to increase the interest rate, the rules relating to the termination of the preferred rate, any fees that may be charged when the rate is changed and how the new rate will be determined.

(g) With regard to the electronic transmission of disclosures, a hard-copy of such disclosure shall be mailed to each applicant who indicates that he or she does not have the computer capacity to down-load and print such disclosure. In those instances in which a hard-copy of the disclosure is not mailed to the applicant, the lender must be able to demonstrate that information was obtained as to the applicant's computer capacity to down-load and print such disclosure.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 82.6