Provides that where a home improvement contractor is acting as a mortgage broker without being registered as required under the Banking Law, a mortgage banker, mortgage broker or exempt organization may not engage in such transaction with the contractor, and shall promptly notify the banking department that such person is acting as an unregistered broker.
STATE OF NEW YORK
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8610--A
2009-2010 Regular Sessions
IN ASSEMBLY
May 29, 2009
___________
Introduced by M. of A. HOYT -- read once and referred to the Committee
on Banks -- recommitted to the Committee on Banks in accordance with
Assembly Rule 3, sec. 2 -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the banking law and the general business law, in
relation to home improvement contractors
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 595-c to
2 read as follows:
3 § 595-c. Restrictions on relationships with home improvement contrac-
4 tors. 1. A mortgage banker, exempt organization or mortgage broker shall
5 not pay a referral fee or other compensation to a home improvement
6 contractor in connection with the making of a mortgage loan, unless (a)
7 the home improvement contractor is an agent or employee of such mortgage
8 banker, exempt organization or mortgage broker (b) such relationship has
9 been previously reported to the department (c) such relationship is
10 separately and conspicuously disclosed in writing to the consumer (d)
11 and such relationship is subject to any additional conditions or
12 requirements as provided in regulations promulgated by the banking
13 board. For purposes of this subdivision, the term compensation shall
14 not mean or include the payment of loan proceeds for work performed or
15 materials purchased.
16 2. If the superintendent determines, in his or her sole discretion,
17 that there is a pattern of bona fide complaints of abusive practices
18 involving a relationship between a mortgage banker, mortgage broker or
19 exempt organization and a home improvement contractor or contractors
20 with whom it has a formal or informal business arrangement, the super-
21 intendent may, after notice and a hearing, impose conditions on such
22 mortgage banker, mortgage broker or exempt organization, including but
23 not limited to: requiring the termination of any relationship or busi-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07654-04-0
A. 8610--A 2
1 ness arrangement with a specific contractor which has resulted in
2 abusive practices; requiring verification prior to making any loans that
3 a contractor is licensed and meeting any other requirements of any local
4 laws; obtaining a copy of the signed written agreement required under
5 section seven hundred seventy-one of the general business law and veri-
6 fying that the applicant has received such a copy; notifying the appli-
7 cant of their right to consult with the attorney general's office,
8 consumer protection board or better business bureau to determine if any
9 complaints have been filed against a contractor; requiring the disclo-
10 sure of the responsibilities of home improvement contractors and the
11 rights of consumers and options for pursuing remedies in the event of
12 problems; requiring the inspection of any work done to date; and any
13 other restrictions or conditions that the superintendent deems necessary
14 and appropriate to protect consumers.
15 3. For the purposes of this section:
16 (a) "Home improvement" means the repairing, remodeling, altering,
17 converting, or modernizing of, or adding to, residential property and
18 shall include, but not be limited to, the construction, erection,
19 replacement, or improvement of driveways, swimming pools, siding, insu-
20 lation, roofing, windows, terraces, patios, landscaping, fences, porch-
21 es, garages, solar energy systems, flooring, basements, and other
22 improvements of the residential property and all structures or land
23 adjacent to it. "Home improvement" shall also mean the installation of
24 home improvement goods or the furnishing of home improvement services.
25 "Home improvement" shall not include:
26 (1) the sale or construction of a new home;
27 (2) the sale of goods by a seller who neither arranges to perform nor
28 performs, directly or indirectly, any work or labor in connection with
29 the installation or application of the goods;
30 (3) the sale or installation of appliances, such as stoves, refrigera-
31 tors, freezers, room air conditioners, dishwashers, clothes washers or
32 dryers, which are designed to be removable from the premises without
33 material alteration thereof;
34 (4) the sale or installation of decorative goods or services, such as
35 draperies and carpets; or
36 (5) the performance of repairs, replacements, or other services pursu-
37 ant to an express or implied warranty, or a maintenance agreement.
38 (b) "Home improvement contractor" means a person, firm or corporation
39 which owns or operates a home improvement business or who undertakes,
40 offers to undertake or agrees to perform any home improvement for a fee
41 and for whom the total cash price of all of his or her home improvement
42 contracts with all his customers exceeds one thousand five hundred
43 dollars during any period of twelve consecutive months. Home improvement
44 contractor does not include a person, firm, corporation, landlord, coop-
45 erative corporation, condominium board of managers, joint tenant or
46 co-tenant that owns, in whole or in part, the property to be improved.
47 § 2. Subdivision 1 of section 771 of the general business law is
48 amended by adding a new paragraph (i) to read as follows:
49 (i) Where the contractor is referring or recommending the owner to a
50 banking institution, mortgage banker or other financing entity for a
51 loan to be secured by a mortgage on or a security interest in the real
52 property, the following notice to the owner in clear and conspicuous
53 bold face type: "If you obtain or use any type of mortgage loan to
54 finance this project, you could lose your home and any money you have
55 put into it if you do not meet your obligations under the loan."
A. 8610--A 3
1 § 3. This act shall take effect on the one hundred twentieth day after
2 it shall have become a law, provided that any such rules and regulations
3 as shall be necessary to implement the provisions of this act are
4 authorized to be promulgated prior to such effective date; and provided
5 that section two of this act shall take effect on the one hundred eight-
6 ieth day after it shall have become a law.
