N.Y. Comp. Codes R. & Regs. tit. 3 § 410.8

Current through Register Vol. 46, No. 25, June 18, 2024

Section 410.8 - Corporate surety bonds for mortgage bankers

(a) Every mortgage banker licensed pursuant to Banking Law, section 591 shall file with the superintendent a corporate surety bond in a principal amount of not less than $50,000 or more than $500,000 based on its volume of business. The amount of the bond required shall be as follows:

Aggregate $ amount of NY loans closed	Required amount of surety bond
$300,000,000+	$500,000
$200,000,000 - $299,999,999	$350,000
$100,000,000 - $199,999,999	$250,000
$30,000,000 - $99,999,999	$150,000
$10,000,000 - $29,999,999	$100,000
$0 - $9,999,999	$50,000

The amount of the surety bond shall be determined from information submitted in the annual Volume of Operations Report (VOOR). The 2004 bond will be based upon the 2002 VOOR figures reported to the department. Thereafter, adjustments to the amount of the bond shall be made within 30 days after filing the applicable VOOR. Moreover, a licensed mortgage banker may submit a sworn statement indicating the aggregate dollar amount of NY loans closed during the first half of the calendar year if such amount, on an annualized basis, would change the required amount of the surety bond. Such corporate surety bond shall be issued by a bonding company or insurance company authorized to do business in this State. If the superintendent determines, in his or her sole discretion, that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct, the superintendent may require such licensee to post a surety bond, or keep on deposit, twice the amount of such bond or deposit as is required consistent with this subdivision.

(b) Such bond shall be in favor of the superintendent for the protection of the superintendent and residential mortgage consumers located in New York State and it shall contain substantially the following language:

"In the event of the insolvency, liquidation or bankruptcy of such licensee, or the expiration, surrender or revocation of such mortgage banker's license, or where the Superintendent takes possession of such licensee, the proceeds of this bond shall constitute a trust fund to be used exclusively by the Superintendent to reimburse consumer fees or other charges determined by the Superintendent to be improperly charged or collected and to pay past due Department examination costs and assessments charged to the licensee, unpaid penalties, or other obligations of the licensee. In the event of the insolvency, liquidation or bankruptcy of the mortgage banker, or the expiration, surrender or revocation of such mortgage banker's license, or where the Superintendent takes possession of such licensee, the proceeds of the bond shall be paid to the Superintendent forthwith for disposition in accordance with the applicable provisions of the Banking Law."

(c) In lieu of a corporate surety bond, the mortgage banker may elect to deposit assets pursuant to section 410.10 of this Part.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 410.8