In another positive development for credit unions, the state Department of Financial Services recently issued a notice to set the minimum rate of interest to be paid by state-chartered financial institutions on escrow accounts in connection with loans secured by mortgages on one-to-six family residences.
Under the proposal, the DFS will set the rate to the lesser of 2 percent or the six-month yield on United States Treasury securities for loans secured by mortgages on one-to-six family residences that are occupied by the owner, or on any property owned by a cooperative apartment corporation during any calendar quarter.
“The New York Credit Union Association has worked closely with top officials at the DFS to improve the state charter and ease the regulatory burden on credit unions without sacrificing consumer protections,” said Association President/CEO William J. Mellin. “The Association identified the mandatory payment of 2 percent on mortgage escrow accounts as a significant burden and a serious disadvantage for state-chartered credit unions. The DFS proposal is yet another sign of the department’s commitment to improve operating conditions for its regulated financial institutions in New York and for pursuing common-sense regulatory reforms.”
The public comment period is open until Jan. 16, after which a final order will be issued.
Last year, the DFS implemented two other Association-backed regulatory reforms: one authorizes state-chartered credit unions to operate in-school branches in the same manner as their federally chartered counterparts, and the other mirrors the federal criteria for “low income” designations.