§ 589. Declaration of policy. The origination, funding and servicing
of residential mortgage loans and the types of entities involved in
residential mortgage lending has undergone significant changes in recent
years, due in part to developments in the general economy, specifically
interest rate volatility, the sophistication of the national secondary
market for mortgage loans and the market for mortgage-backed securities.
The recent trend toward deregulation in the financial services industry
has accelerated the evolution of residential mortgage lending,
dramatically increasing the types of mortgage loans offered and the
manner in which they are advertised and marketed to consumers.
Depository institutions, traditionally the major source of residential
mortgage financing for individuals, now compete for capital and
customers with mortgage bankers and other financial service
organizations. Residential mortgage lenders of every type have
increasingly relied on non-financial intermediaries, such as mortgage
brokers, to make loans available to consumers. These developments have
raised questions as to whether all entities engaging in this banking
function operate under appropriate regulatory scrutiny and as to whether
all residential mortgage lenders are conducting their business in the
best interests of New York homeowners and potential homeowners.

The activities of lenders and their agents offering financing for
residential real property have a direct and immediate impact upon the
housing industry, the neighborhoods and communities of this state, its
homeowners and potential homeowners. The legislature finds that it is
essential for the protection of the citizens of this state and the
stability of the state's economy that reasonable standards governing the
business practices of mortgage lenders and their agents be imposed. The
legislature further finds that the obligations of lenders and their
agents to consumers in connection with making, soliciting, processing,
placing or negotiating of mortgage loans are such as to warrant the
uniform regulation of the residential mortgage lending process,
including the application, solicitation, making and servicing of
mortgage loans. Consistent with the purposes of promoting mortgage
lending for the benefit of our citizens by responsible providers of
mortgage loans and services and avoiding requirements inconsistent with
legitimate and responsible business practices in the mortgage lending
industry, the purpose of this article is to protect New York consumers
seeking a residential mortgage loan and to ensure that the mortgage
lending industry is operating fairly, honestly and efficiently, free
from deceptive and anti-competitive practices.