What’s Next for New York’s Abandoned Property Requirements?

December 19, 2016 at 8:54 am Leave a comment

abandoned-propertyIt may be the week before Christmas but it’s shaping up as a busy time in the state.

Tomorrow, NY’s abandoned property regulations take effect.  This blog is intended as a guide to help you  understand your credit union’s  obligations. It is  not intended  as a substitute for reading the regulation.

3 NYCRR 422 has two components that are of major concern to you if your credit union does mortgages. First, there is the requirement to maintain abandoned property upon which you hold a mortgage lien even if you have not yet foreclosed on it.  As finalized ,  the vast majority of credit unions will be exempt from the maintenance requirements BUT

Your credit union must apply for the exemption based on numbers provided by the state. The state will tell everyone the  total number of residential real property mortgages originated in the State during  2014.  Take a look at the exact formula, but the basic idea is you will divide that number by the number of mortgages issued in the state by your  credit union during that calendar year.  Only credit unions and banks   that originated serviced and\or maintained or serviced more than three-tenths of one percent of the mortgages originated in the state must comply with the maintenance requirements. It is up to your credit union to submit a form-to be provided by DFS-explaining why your credit union is exempt.  The final regulations pushed back the deadline until Feb 28 which is a good thing because the exemption numbers haven’t been released yet.

There is a second mandate that applies to all credit unions. The new 3 NYCRR 422.4 requires that, effective tomorrow,  Within twenty-one business days of when a mortgagee or mortgage loan servicer of a property learns, or should have learned, that a property is vacant and abandoned, the mortgagee or mortgage loan servicer shall submit information including the location of abandoned property to the DFS.  The information will be used to update the State’s abandoned property registry.  No one is exempt from this  reporting  requirement  BUT only credit unions and banks that have to maintain  abandoned property must provide a quarterly report to the DFS.

If you are not exempt from the maintenance requirements than get ready to report to DFS on a quarterly basis the number of loans you hold that are 90 days or more delinquent and the steps you have taken to identify the  property as vacant or abandoned. Hopefully the state will provide a little more guidance and clarify that institutions only have to report on houses that  are  or could be abandoned as opposed to report on all loans  that are ninety days delinquent .  The two are not synonymous.

On that note enjoy your day.

Entry filed under: New York State, Regulatory. Tags: .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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