The State of New York has amended their predatory lending law, effective October 14, 2007.  Senate Bill Number 5618 raises the principal loan amount threshold above which the predatory lending law would not apply from $300,000 to $417,000, increasing the number of loans potentially covered by the law's provisions.

Currently, New York's predatory lending law applies to virtually all consumer purpose closed-end and open-end loans secured by a borrower's principal dwelling.  However, loans above the lesser of (a) the Fannie Mae conforming loan limit (the 2007 Fannie Mae conforming loan limit for a single family dwelling is $417,000), or (b) $300,000 are excluded from the predatory lending law's coverage.  This provision, in effect, excludes loans above $300,000 from the law's coverage.  The amended law establishes the Fannie Mae conforming loan limit as the sole threshold.

As the memorandum in support of the amendment notes, the current loan size limit was incorporated into New York's original anti-predatory lending regulations in 2000, at a time when the conforming Fannie Mae loan limit was $252,700.  Given the large increase in the Fannie Mae conforming loan limits over the years, when coupled with rising home prices, the legislature believed that the $300,000 threshold was no longer adequate to protect New York homeowners.

Please note the amended law applies only to loan applications made on or after October 14, 2007.  The New York high cost memo posted on our website will be updated to reflect this change.