Needed: Clarification of NYs Abandoned property Requirements
As I explained in yesterday’s updated post the Legislature included abandoned property legislation in Part Q of this budget bill (S. 8159) There are also loads of unanswered questions that need to be clarified before this law kicks in six months after it is approved by the Governor. I could spend the next six weeks picking apart the language in this bill but I will just get my point across by analyzing its most basic provision: The carve out for financial institutions with low mortgage volume.
The legislation has two major components. An obligation to maintain abandoned property which applies to banks and credit unions above a threshold of mortgages and a second part that expands the scope of New York’s settlement conferences that applies to everyone.
Do the abandoned property provisions apply to your CU? It depends. I underlined the parts of this definition .
It applies to “state or federally chartered banks, savings banks, savings and loan associations, or credit unions which: (1) originate, own, service and maintain their mortgages or a portion thereof; and (2) have less than three-tenths of one percent of the total loans in the state which they either originate, own, service, or maintain for the calendar year ending December thirty-first of the calendar year ending two years prior to the current calendar year. For any state or federally chartered banks, savings banks, savings and loan associations, or credit unions which originate, own, service and maintain between three-tenths of one percent and five-tenths of one percent of the total loans in the state which they either originate, own, service, or maintain for the calendar year ending December thirty-first of the calendar year ending two years prior to the current calendar year, the application of this section shall be prospective only.”
First, the good news is that the Association was able to carve out most credit unions. The threshold number of mortgages that will trigger compliance with the abandoned property provision will be set be set on an ongoing basis by the DFS but based on 2014 numbers if your credit union does fewer than four hundred first lien mortgages there is a good chance it is off the hook .
Secondly, this bill does not categorically exempt state chartered credit unions. I’m pointing this out because this is exactly what the Sponsor’s memo accompanying this measure says it does.
Third for those of you who operate mortgage subsidiaries there is no exemption for those subsidiaries.
What concerns me most about the definition is that it manages to be both disjunctive and conjunctive at the same time. For a financial institution to be exempt it must “originate, own, service and maintain their mortgages or a portion thereof” and be below the threshold. In contrast any mortgage which your credit union either originates, owns, services, or maintains counts against the cap Does this mean that a credit union that quickly sells almost all of its mortgages to the secondary market isn’t exempt because it doesn’t maintain a portion of its mortgages? And precisely how many mortgages constitute a “portion” of a mortgage portfolio anyway?
Inquiring minds need to know. As those of you charged with implementing this requirement for your cu begin to analyze it please don’t hesitate to reach out to the association.
Entry filed under: General.