WE’RE HEARING about new rules in the works for mortgage and real estate professionals in New York. Think you have had enough red tape and procedures to keep you busy? Can’t take it anymore? Well get ready for the Bill of Rights pamphlet on residential mortgages, and advertising prohibitions for Realtors.
Two bills are in the New York Legislature, A03815 and S00254, to amend the Banking Law to provide for an information pamphlet to be given to all prospective mortgage loan applicants. Known as the “Mortgage Loan Applicant’s Bill of Rights” the pamphlet must be given out to a prospective loan borrower before you take in the loan application. The pamphlet must also be printed in one of the eight most common spoken languages in New York, specifically in the same language your customer can read and understand.
Not only will a lender or mortgage broker have to give out the pamphlet but you must keep a signed receipt from the customer in your closed file. The actual contents of the “Bill of Rights” have not yet been finalized. So far there are 21 paragraphs telling consumers they should shop around and compare services. The Superintendent of Banks will have the authority to add more provisions to the Bill of Rights.
Some of the other 21 rights that the pamphlet calls to the attention of a prospective borrower include a suggestion to ask the mortgage broker to explain his or her responsibilities within the mortgage lending process. Good luck with that. So far there is no elaboration on that required process. Are you simply supposed to tell the prospective customer that you will get them a mortgage loan or are you required to teach a course explaining all the rules you have to follow?
Other rights called to the attention of a prospective customer are the right to file a complaint against the mortgage broker or lender or for that matter the real estate broker in case the mortgage loan was on a purchase. Fortunately at this moment there is no suggested complaint form in the pamphlet, or phone numbers to call, or a requirement that you help the consumer fill out the complaint form against you.
In other news there is a proposed change in the New York Code of Rules and Regulations (NYCRR 175.25) relating to advertising by real estate brokers. One of the changes is a prohibition on the use of the words “associate” “realty” or “group” in advertisements. The rule is a blanket rule covering all types of advertising such as print, business cards, radio, TV and Internet. Many businesses that are known as a “group” like the Smith Group are probably going to be upset since the use of the word “team” is permitted.
Finally just when you thought you had enough aggravation we are hearing about real estate agents being fined by the New York City Department of Buildings for advertising and showing illegal apartments for rent. I saw this posted on the NAR website which quoted a New York Times article. Apparently the real estate agent is now supposed to know whether or not an apartment is illegal. Don’t laugh because the fines start at $3,600.
Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at firstname.lastname@example.org.