N.Y. Comp. Codes R. & Regs. tit. 3 § 419.11 : BANKING — SUPERINTENDENT'S REGULATIONS — NON-BANKING ORGANIZATIONS — SERVICING MORTGAGE LOANS: BUSINESS CONDUCT RULES — Oversight of third-party providers

A servicer shall adopt and maintain policies and procedures to oversee and manage third-party providers, including:

(a) A servicer shall perform appropriate due diligence of third-party providers' qualifications, expertise, capacity, reputation, complaints, information systems, document custody practices, quality assurance plans, financial viability, and compliance with licensing requirements and applicable rules and regulations.

(b) A servicer shall require third-party providers to comply with a servicer's applicable policies and procedures and applicable New York and Federal laws and rules.

(c) A servicer utilizing third-party providers shall remain responsible for all actions taken by the third-party providers.

(d) A servicer shall clearly and conspicuously disclose to borrowers if it utilizes a third-party provider and shall clearly and conspicuously disclose to borrowers that the servicer remains responsible for all actions taken by third-party providers.

(e) A servicer shall conduct periodic reviews, not less than annually, of each third-party provider the servicer retains. The review shall be conducted by servicer employees who are separate and independent of employees who prepare foreclosure or bankruptcy affidavits, sworn documents, declarations, or other foreclosure or bankruptcy documents. The review shall include:

(1) a review of a sample of the foreclosure and bankruptcy documents prepared by the third-party provider for compliance with applicable New York and Federal laws and rules and the accuracy of the facts contained in such documents;

(2) a review of the fees and costs assessed by the third-party provider to provide that only fees and costs that are lawful, reasonable, and actually incurred are charged to borrowers and that no portion of any fees or charges incurred by any third-party provider for technology usage, connectivity, or electronic invoice submission is charged as a cost to the borrower;

(3) a review of the third-party provider's processes to provide for compliance with the servicer's policies and procedures;

(4) a review of the security of original loan documents maintained by the third-party provider;

(5) a review of customer complaints concerning third-party providers; and

(6) a requirement that the third-party provider disclose to the servicer:

(i) any instance where any party requests the imposition of sanctions or that professional disciplinary action be taken against the third-party provider for misconduct related to the services the third-party provider provides to the servicer; and

(ii) any imposition of sanctions or professional disciplinary action taken against the third-party provider for misconduct related to the services the third-party provider provides to the servicer.

(f) A servicer shall ensure that all third-party providers have appropriate and reliable contact information for servicer employees who possess information relevant to the services provided by the third-party provider. A servicer shall ensure that foreclosure and bankruptcy counsel have an appropriate servicer contact to assist in legal proceedings and to facilitate loss mitigation questions on behalf of a borrower.

(g) A servicer shall take appropriate remedial steps if a servicer identifies any problems through the review required by subdivision (e) of this section or otherwise, including terminating its relationship with a third-party provider.

(h) A servicer shall develop and implement policies and procedures detailing how the servicer will oversee and communicate with counsel and those with the authority to fully dispose of the case concerning foreclosure proceedings. Such policies shall, at a minimum:

(1) detail how notice will be provided to foreclosure attorneys and trustees regarding a borrower's status for consideration of a loss mitigation option and whether the borrower is being evaluated for, or is currently in, a trial or permanent modification;

(2) ensure that its foreclosure attorneys comply with the requirements of New York Civil Practice Law and Rules section 3408 with regard to mandatory settlement conferences in residential foreclosure actions; and

(3) a servicer shall develop and implement policies and procedures to ensure that its foreclosure attorneys comply with all applicable legal requirements including all relevant Administrative Orders of the Chief Administrative Judge of the Courts of New York.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 419.11

Amended New York State Register December 18, 2019/Volume XLI, Issue 51, eff. 12/18/2019