Section 14-B. Power of the banking board to prescribe minimum rate of interest on mortgage escrow accounts

1. The banking  board  shall  have  the  power  to prescribe, from time to time but not more often than once
  in every three month period, by a three-fifths vote of all its  members,
  by  regulation  a  minimum  rate  of,  and method or basis of computing,
  interest that a mortgage investing institution shall be required to  pay
  on each escrow account maintained with respect to a mortgage on a one to
  six family residence occupied by the owner or on any property owned by a
  cooperative  apartment  corporation, as defined in subdivision twelve of
  section three hundred sixty of the tax law, (as such subdivision was  in
  effect  on  December  thirtieth, nineteen hundred sixty), and located in
  this state, which rate shall  be  greater  than  the  rate  of  interest
  required  to  be  paid  under  section  5-601  or  5-602  of the general
  obligations law.
    2. In making such  determination  the  banking  board  shall  consider
  pertinent  economic  and cost factors including, but not limited to: (i)
  current yields on short term investments, (ii)  current  dividend  rates
  paid  on regular savings accounts throughout this state, (iii) currently
  prevailing interest rates on  conventional  and  insured  or  guaranteed
  mortgage  loans  in  this state, (iv) cost factors in maintaining escrow
  accounts and (v) such other pertinent economic or cost factors that  the
  banking  board  shall  deem  to  be  appropriate.   Prior to the banking
  board's  prescription  of  any  such  minimum  rate  of  interest,   the
  superintendent  shall make a written recommendation to the banking board
  as to such minimum rate of interest, reciting the economic and cost data
  and criteria upon which such recommendation is based.  Prior  to  making
  such  recommendation,  the  superintendent  may  invite presentation, by
  interested persons, of information and data  relating  to  economic  and
  cost factors relevant to such minimum rate of interest.
    3.  The  banking  board  may  promulgate  such regulations as it deems
  necessary and proper to implement and  define  the  provisions  of  this
  section.  The  banking  board may prescribe the minimum rate of interest
  from time to time, but not more  often  than  once  in  any  three-month
  period,  and shall provide reasonable notice to the public of any change
  in the rate of interest, of the effective date  of  such  change,  which
  shall  be not less than seven days following the adoption of such change
  by the banking board, and of any rule or regulation adopted pursuant  to
  this subdivision.
    4.  In  no  event  shall  interest  be  required  to be paid on escrow
  accounts where (i) there is a contract between  the  mortgagor  and  the
  mortgage  investing  institution,  entered  into  before  the  date this
  subdivision shall have become a law which contains an express disclaimer
  of an obligation on the part of the mortgage  investing  institution  to
  pay  interest  on  such  accounts,  or (ii) the payment of such interest
  would violate any federal law or regulation, or (iii) such accounts  are
  maintained  with  a  mortgage servicing company, neither affiliated with
  nor owned in whole or in part by  the  mortgage  investing  institution,
  under  a written contract, entered into before the date this subdivision
  shall have become a law, which contract does  not  permit  the  mortgage
  investing institution to earn or receive a return from the investment of
  such accounts.
    5.  "Mortgage  investing  institution"  as used in this section and in
  section 5-601 or 5-602 of the general obligations  law  shall  mean  and
  include  any  bank,  trust company, national bank, savings bank, savings
  and loan association, federal  savings  and  loan  association,  private
  banker,  credit  union,  investment  company, insurance company, pension
  fund, mortgage company or other entity which makes, extends or  holds  a
  mortgage on any one to six family residence occupied by the owner or any

  property  owned  by  a  cooperative apartment corporation, as defined in
  subdivision twelve of section three hundred sixty of the  tax  law,  (as
  such  subdivision  was in effect on December thirtieth, nineteen hundred
  sixty), and located in this state.
    6.  "Escrow  account"  as used in this section and in section 5-601 or
  5-602 of the general obligations law shall mean any account  established
  pursuant  to  an  agreement between a mortgagor and a mortgage investing
  institution  whereby  the  mortgagor  pays  to  the  mortgage  investing
  institution  or  his  designee  amounts  to  be  used for the payment of
  insurance premiums, water rents or any similar charges, and  shall  also
  include real property tax escrow accounts as defined in title three-A of
  article nine of the real property tax law.
    7.  "One  to  six  family  residence"  as  used in this section and in
  section 5-601 or  5-602  of  the  general  obligations  law  shall  mean
  property  used  primarily  for  residential  purposes  for  one  to  six
  families, including property held in  condominium  form,  and  which  is
  occupied in whole or in part by the owner.
    8.  If  any  provision  of  this  section,  or the application of such
  provision to any individual, company, corporation or circumstance, shall
  be held invalid, the remainder of this section, and the  application  of
  such  section  to individuals, companies, corporations, or circumstances
  other than those to which it is held  invalid,  shall  not  be  affected
  thereby.