Banking Interpretations

General Regulations of the Banking Board Part 82

To: [ ]
From: Steven Barras/legal/NYSBD
03/08/2007 03:25 PM
Subject Re: Reference Request

The 125% cap on negative amortization is found in Part 82.4 of the Banking Board Regulations. I am not aware of any 110% cap on negative amortization in the NY Banking Law or Regulations adopted thereunder. It is my understanding that the 110% cap that you reference is one commonly imposed by mortgage lenders in connection with loans in which negative amortization is authorized (e.g. loans subject to Part 82). It would appear that the lower cap is contractually imposed by lenders as a matter of prudence because the lower cap would protect the lender if housing values decrease. Additionally, having a "cushion" would lessen the possibility that a loan could inadvertently exceed the 125% cap.

To: [email protected]
03/05/2007 04:48 PM
Subject Reference Request


I was speaking with one of your colleagues who provided your name as a possible source for a reference to the statute or interpretation that sets New York's negative amortization cap at 110%. I have looked at various references that show the cap to be up to 125%, but can't find the New York 110% limit.