NYDFS issues guidance on mortgage registration fees

State Issues NYDFS State Regulators Mortgages Default

On September 1, NYDFS issued guidance to regulated mortgage lenders and servicers clarifying that mortgagees cannot charge registration fees imposed by municipalities when a mortgage defaults to mortgagors’ accounts. The guidance reminds mortgagees that the state’s mortgage servicing regulation, 3 NYCRR Part 419, allows mortgagees to collect only certain types of fees from a mortgagor, consisting of “attorney’s fees, late and delinquency fees, property valuation fees, and fees for services actually rendered to a mortgagor when such fees are reasonably related to the cost of rendering the service to the borrower.” NYDFS asserts that municipality-required default registration fees do not fall under the specified list and therefore cannot be charged to a mortgagor. The guidance instructs mortgagees to refund any such fees that have been collected, or to reverse any such fees that have been charged to accounts. Moreover, the guidance directs mortgagees to create a log of any registration fee charges and their subsequent corrections for inspection during their next NYDFS examination.