Why does the law have two different definitions of subprime mortgage – one for the foreclosure provisions and one for the underwriting standards?
A. New York’s existing predatory lending law, which is found in section 6-l of the Banking Law, defines “high-cost” mortgage loans based on a number of percentage points over U.S. Treasury securities with a maturity comparable to that of the mortgage loan. When the New York legislature passed the 2008-09 budget, in which it appropriated funds to pay for counseling for homeowners at risk of foreclosure, it also used a test based on U.S. Treasury securities. Nevertheless, as the Governor’s proposed subprime mortgage law was being discussed in the legislature and by interested persons, many people commented that rates on U.S. Treasury securities are not a good proxy for the interest on prime mortgages. Therefore, § 6-m of the Banking Law, like the Federal Reserve’s amended Regulation Z, measures what is a subprime mortgage by taking a spread over rates on prime mortgages, as reported in the weekly Freddie Mac Primary Mortgage Market Survey (“Freddie Mac PMMS”). However, since the budget b
Related Questions
- Why does the law have two different definitions of subprime mortgage – one for the foreclosure provisions and one for the underwriting standards?
- When is a home loan entitled to the foreclosure protections under the Subprime Mortgage Law?
- Is mortgage prepayment penalty law different throughout the U.S.?
