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Mortgage Loan Servicer Change of Control Application

Submitting a Complete Application

To ensure that your application is received, acknowledged as complete, and processed, please follow the instructions below.  No application shall be deemed to be complete until the Department has received all required information, documents, and fees.  If an application is determined to be incomplete, the applicant will receive a written notice identifying the items and matters that must be addressed for the Department to continue the application review process.

If a complete response fully addressing all such items and matters to the satisfaction of the Department is not received within 30 days of sending such notice, the application will be considered withdrawn.  Any applicant seeking a license following the withdrawal of an application must submit a new application that must include all required information, documents, and fees.

Fees

Applicants for a change of control are required to pay the following non-refundable fees:

Notice of Receipt of Application

After all required components of the application, including the hard-copy and jurisdiction-specific documents, are received by the Department, a notification confirming receipt will be mailed to the applicant.

Please note that the notice of receipt is based on an initial review and additional materials may be requested during the processing of the application.

Weekly Bulletin Publication

Applications deemed complete are published in the Department’s Weekly Bulletin every Friday.  The Weekly Bulletin can be accessed via the following link:  http://www.dfs.ny.gov/reportpub/wb.htm.

Approval or Denial

After the application has been processed, the applicant will receive written notification of the approval or denial of the application.

General Instructions

  1. An application for change of control must be submitted by the entity acquiring control of the registrant.
  2. Section 594-b of the New York Banking Law makes it unlawful, except with the prior approval of the Superintendent, for any action to be taken that results in the change of control of a registrant.  Control means the power, directly or indirectly, to direct the management or policies of a registrant through ownership or otherwise.

    Note:  Changes in officers and directors are not considered changes of control; however, changes in officers or directors may require formal notification and approval (see instructions for New Director, Executive Officer, Compliance Officer or Qualifier).

  3. An application for change of control cannot be filed through the Nationwide Mortgage Licensing System (NMLS).  Changes in control require the prior approval of the Superintendent.
  4. Foreign corporations must obtain authority from the Secretary of State to conduct business in the State of New York prior to submitting a change of control application.
  5. Form MU2, which can be found on NMLS, must be completed for each control person who directly or indirectly owns 10 percent or more of the voting stock of the applicant, or possesses the power to direct or cause the direction of the management and policies of the applicant, the three most senior executive officers, and all directors.

Jurisdiction-Specific Requirements

Change of control applicants must submit jurisdiction-specific documentation directly to the Department.  All submissions may be made electronically via email to MLS@dfs.ny.gov.  If originals are required, copies may be submitted electronically to help expedite the Department’s review, but the originals MUST be mailed in hard copy to the following address: or in hard copy to the following address: 

New York State Department of Financial Services
Attention:  Mortgage Banking
One State Street
New York, NY 10004

  1. FINANCIAL STATEMENT.  Applicants must provide audited financial statements for the past two years, as of the date of the application, prepared by a Certified Public Accountant in accordance with Generally Accepted Accounting Principles.  Also provide an unaudited financial statement for the most recent quarter signed and affirmed by an executive officer of the applicant.  Financials must be provided for all direct and indirect corporate owners of the applicant.  Financial statements should include a Balance Sheet, Income Statement and Statement of Cash Flows and all relevant notes thereto.
  2. SURETY BOND.  Submit a letter from the surety provider confirming that the licensee’s surety bond remains in effect after the change of control. 
  3. CREDIT REPORT.  Provide a credit report dated not more than 30 days prior to the filing of the application through NMLS for the three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer.

    Note:   If any of the individuals listed above has a credit report that includes derogatory information, the applicant will be required to provide an explanation, including, but not limited to:  (1) relevant payoff or satisfaction letters from creditors and/or collection agencies evidencing payment of outstanding obligations or an existing repayment plan, (2) relevant tax lien releases or satisfaction notices or an existing repayment plan, (3) a lender short sale approval letter or loan modification approval, (4) bankruptcy discharge documents, (5) court order(s) vacating outstanding judgments, (6) documentation supporting a medical condition and its financial impact on the individual, (7) documentation demonstrating identity theft and its financial impact on the individual, and (8) a child support enforcement balance and arrears statement or letter.

  4. FIDELITY BOND AND ERRORS & OMISSIONS COVERAGE.  Submit a letter from the insurance provider confirming that the bond and E&O coverage remains in effect after the change of control. 
  5. SECRETARY OF STATE DOCUMENTATION.

    Domestic Companies (entities incorporated or chartered in the State of New York) provide the following:

    1. An original Certificate of Good Standing, if the applicant has been incorporated for more than six months, and
    2. One of the following:

      • Certified copy of certificate of incorporation and filing receipt (if a corporation); or
      • The Articles of Organization and Operating Agreement (if a limited liability company); or
      • Partnership Agreement or Trust Agreement (if a partnership or established pursuant to a trust).

    Foreign Companies (entities incorporated or chartered outside the State of New York) provide the following:

    1. Certificate of Good Standing from the New York Secretary of State if the authority to conduct business in New York is more than six months old; and
    2. One of the following:

      • Copy of filing receipt and certified copy of Application for Authority from the New York Secretary of State; or
      • Copy of filing receipt and certified Certificate of Fictitious Name from the New York Secretary of State if you filed for a fictitious name; and
    3. One of the following: 

      • Certified copy of certificate of incorporation and filing receipt from the Secretary of State for the state in which the entity was incorporated or chartered (if a corporation); or
      • The Articles of Organization and Operating Agreement (if a limited liability company); or
      • Partnership Agreement or Trust Agreement (if a partnership or established pursuant to a trust).
  6. CHANGE IN OWNERSHIP LEGAL DOCUMENTS.  Provide certified copies of all legal documents executed and associated with the change in ownership, including any applicable purchase and sales agreements, merger agreements, or consent to change in ownership agreements.
  7. CORPORATE RESOLUTION.  For corporate entities, provide an original corporate resolution designating the officer authorized to execute the application on behalf of the entity.  The resolution must be signed by the corporate secretary and bear the seal of the corporation.  For partnership or trust entities, provide a resolution signed by a managing member, general partner, or trustee designating the officer authorized to execute the application on behalf of the entity.
  8. STATEMENT OF PROPOSED OWNERSHIPThe applicant must indicate ownership of the licensed entity by percentage that will be effective following the proposed change in control. 
  9. DESCRIPTION OF TRANSACTION.  Submit a brief description of the transaction resulting in change of control indicating the purpose, source of funds and financing terms, if applicable, and ability of the proposed owners to weather financial adversities.  Describe changes in the corporate or entity structure, as well as changes in management and staffing.
  10. Management and Organizational Charts.All applicants must submit an organizational chart showing the operating management structure, reporting lines of executive officers, and operating committees.  Also, separately identify compliance reporting and internal audit structure.  In addition, if the applicant is owned by another entity or entities or person, or has subsidiaries or affiliated entities, applicants must also submit an organizational chart for those entities.  Applicants must clearly delineate ownership structure, subsidiaries, and affiliated relationships.
  11. BUSINESS PLAN.  Provide a business plan or statement outlining the impact, if any, of the proposed change of control on the registrant’s servicing portfolio and platform, operational structure, and geographical services areas.
  12. CERTIFICATE OF COMPLIANCEAll applicants must certify that they are in compliance with Section 296-a of the Executive Law prohibiting unlawful discriminatory practices in relation to credit..
  13. BACKGROUND REPORTS AND BACKGROUND REPORT CERTIFICATION.  An investigative background report is required for the three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier.  Background investigation reports must be provided directly to the Department by the private investigation company.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer.
  14. PERSONAL QUESTIONNAIRE.  The three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier must submit a personal questionnaire.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer.
  15. PERSONAL FINANCIAL STATEMENTS.  The three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier must submit a personal financial statement as of the date of the filing of the electronic application for the most recent quarter and year end.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer. 
  16. DISCLOSURE QUESTIONS.  Provide complete details of all events or proceedings for any “Yes” answer to any of the disclosure questions found on the Personal Questionnaire or the MU2 form for the company or the three most senior executive officers, each controlling member of a partnership, each director, and all direct and indirect principal stockholders of a corporate applicant.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer. 
  17. LITIGATION AFFIDAVITThe three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier must submit a litigation affidavit.  If applicable, also provide a letter from the applicant’s attorney detailing any pending litigation and the most likely outcome.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer.
  18. FINGERPRINTSFor the three most senior executive officers, each controlling member of a partnership, each director, all direct and indirect principal stockholders of a corporate applicant, and the Qualifier, fingerprints must be submitted to the Department as instructed.  An applicant that has only two executive officers must substitute the compliance officer for the third executive officer.
  19. AFFIRMATION.  Provide an affirmation stating that the applicant will immediately notify the Superintendent of any changes to the information furnished in the application and that a designated officer has reviewed the application and certifies that the application does not contain any untrue statement or omission of material facts. 
  20. WORD APPROVAL (if applicable).  Entities that wish to engage in business involving residential mortgages on owner-occupied one-to-four family residential properties must secure the prior approval of the Superintendent of Financial Services to use certain words (Loan, Mortgage, Finance, Investment) or any derivative thereof in Business Names, Assumed (D/B/A), or Fictitious Names.

Waiver Requests:  Consistent with the New York Banking Law and the Superintendent’s Regulations, the New York State Department of Financial Services may, in its discretion and in limited circumstances, consider requests for waiver of certain informational requirements applicable to individuals, such as individual owners owning indirectly 10 percent or more of the voting stocks of an applicant or of the voting stocks of an entity that directly or indirectly owns 10 percent or more of the applicant, where it determines the waiver will not adversely impact the application process or the ability of the New York State Department of Financial Services to adequately determine the character and fitness of an applicant.  Any waiver request should be in writing and submitted to the Deputy Superintendent of Mortgage Banking.  Consideration of any waiver request will be fact specific and may require submission of substantial supporting documentation.  Waiver requests may be granted subject to conditions.

In considering a waiver request, the New York State Department of Financial Services may take into account factors such as any publicly available information that would provide the Department with sufficient insight into the background and financial status of the individual or individuals for whom the waiver is sought, lack of any direct or indirect control, influence or oversight by such individual or individuals over the management or operations of the applicant, including serving on the board of directors of the applicant or acting or functioning as a director or officer of the applicant, or any ability, whether direct or indirect, to appoint or dismiss any members of the management, the board of directors or similar officials of the applicant.  Additionally, the Department may take into account any evidence of regulatory concerns regarding the applicant, its officers and directors, as well as any supplemental information submitted to determine if existing regulatory oversight, due diligence or other available or utilized processes are comparable to the Department’s application due diligence process.  Any waiver request should address the above factors.  Furthermore, in the process of reviewing and considering the application, the Department may request additional information and supporting documents.

WHO TO CONTACT

If you require assistance in using the NMLS database or logging into the system, please contact the NMLS Call Center at (855) 665-7123.

For questions concerning New York State jurisdiction-specific requirements, please contact us via e-mail at MLS@dfs.ny.gov.

YOU ARE NOT AUTHORIZED TO ACQUIRE CONTROL OF A NEW YORK REGULATED MORTGAGE SERVICER UNTIL YOU HAVE RECEIVED APPROVAL FROM THE SUPERINTENDENT OF FINANCIAL SERVICES OF THE STATE OF NEW YORK. 

Updated 06/03/2014

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