NYDFS: Fees Paid to Register Mortgages in Default Guidance

Industry Letter Overview

Recently, the New York State Department of Financial Services (NYDFS) issued guidance to state-regulated mortgage lenders and servicers pertaining to fees paid to register mortgages in default.

The guidance (in accordance with state regulation), outlines a compliance requirement for mortgagees under the supervision of the NYDFS to remove and reverse any and all registration fees charged to the mortgagor’s account for properties registered in the State of New York.

Mortgagee Requirements

The NYDFS has ruled that a registration fee is neither an attorney fee, late or delinquency fee, property valuation fee, or fee for a service rendered to a mortgagor. Therefore, a registration fee may not be charged to or collected from a mortgagor.

1. Refund and credit the full amount of such Registration Fees to the account of the mortgagor. If the Registration Fee was charged to a mortgagor’s account but was not collected, Mortgagees are hereby directed and instructed to remove and reverse any and all Registration Fees charged to the mortgagor’s account.
   
   
2. Create a log of all mortgagors that were either charged, or paid any registration fee to any such mortgagees at any time, containing details of the full amounts of such registration fees, whether collected or charged, and the date(s) the full amounts of collected registration fees were refunded and credited to the mortgagors’ accounts, and the date(s) that any charged registration fees were removed or reversed from the mortgagors’ accounts, for inspection during the NYDFS’s next examination of the mortgagee.