Banking Interpretations

General Regulations of the Banking Board Part 38

November 15, 2005

To: [ ]

From: Steven Barras/legal/NYSBD

cc: Cheryl Lewis/legal/NYSBD , Sara Kelsey/legal/NYSBD

Subject: Questions

Your 11/14 E-Mail to the CSBS lawyers concerning state regulation of persons or entities acting as escrow and closing agents and those providing settlement services was sent to Deputy and Counsel Kelsey of the New York Banking Department, who asked that I respond to your queries. The New York Banking Department does not regulate any such persons or entities (unless, of course, the provider of those services is subject to regulation for other services provided as well, such as banking services). However, for your information, I note that Part 38.7(a)(7 of the Banking Board’s Regulations requires that mortgage loan proceeds disbursed by licensed mortgage bankers, registered mortgage brokers and exempt organizations be disbursed by direct deposit to a customer's account, wire, bank or certified check or attorney's check drawn on a trust account. This rule is designed to ensure that an applicant for a residential mortgage loan receive all of the funds for which he/she applied and for which he/she was approved at the closing of the loan.