Prohibits certain financial institutions from charging a fee for changing the frequency of mortgage payments between monthly, semi-monthly, and biweekly payments.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9588
SPONSOR: Torres TITLE OF BILL:
An act to amend the banking law, in relation to prohibiting certain
financial institutions from charging a fee for changing the frequency of
mortgage payments
PURPOSE OR GENERAL IDEA OF BILL:
To prohibit financial institutions from charging fees to borrowers who
choose to change the frequency of their mortgage payments, and to
require lenders to provide borrowers with clear information about
payment options and potential interest savings. This legislation will
protect homeowners from unnecessary and predatory fees while promoting
transparency and consumer choice.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends the Banking Law by adding a new section
9-aa to prohibit any financial institution subject to regulation by the
Department of Financial Services from charging a fee to a borrower for
paying their mortgage on a monthly, semi-monthly, or biweekly basis.
Prohibited fees include, but are not limited to, charges for switching
between payment schedules or requiring additional mortgage payments as a
condition of changing payment frequency.
This bill further requires covered financial institutions to provide
borrowers with amortization schedule and information regarding potential
interest savings associated with different mortgage payment frequencies,
as well as clear instructions on how to change payment schedules.
Section 2 provides that the act shall take effect one hundred eighty
days after becoming law.
JUSTIFICATION:
Many homeowners seek to change the frequency of their mortgage payments,
such as moving from monthly to biweekly payments, to better align with
their pay schedules or to reduce the total interest paid over the life
of the loan. Despite the potential benefits to borrowers, some financial
institutions impose fees or additional requirements that effectively
penalize consumers for choosing these options.
These fees serve no legitimate purpose and function as junk fees that
increase housing costs for families already facing affordability chal-
lenges. Requiring additional payments or charging administrative fees
for payment frequency changes creates unnecessary financial barriers and
undermines consumer financial stability.
This bill ensures that homeowners can choose the payment schedule that
works best for their financial circumstances without incurring punitive
or arbitrary charges. By also requiring lender to provide clear amorti-
zation and interest- savings information, the bill empowers consumers
to' make informed decisions about their mortgagees and promotes trans-
parency in mortgage servicing practices.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None to the State.
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.
STATE OF NEW YORK
________________________________________________________________________
9588
IN ASSEMBLY
January 21, 2026
___________
Introduced by M. of A. TORRES -- read once and referred to the Committee
on Banks
AN ACT to amend the banking law, in relation to prohibiting certain
financial institutions from charging a fee for changing the frequency
of mortgage payments
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 9-aa to
2 read as follows:
3 § 9-aa. Fees for certain mortgage payments prohibited. 1. Notwith-
4 standing any other provision of law or rule or regulation to the contra-
5 ry, no financial institution subject to the provisions of this chapter,
6 including any banking organization, mortgage broker or mortgage banker,
7 interstate branch established pursuant to article five-C of this chap-
8 ter, or other investment entity subject to regulation by the department,
9 which provides an account, mortgage, or mortgage loan services to a
10 customer shall charge a fee for such accountholder to pay their mortgage
11 monthly, semi-monthly, or biweekly. Such prohibited fees shall include,
12 but not be limited to:
13 (a) additional costs, payments, fees, penalties, or premiums for
14 changing between monthly, semi-monthly, and biweekly mortgage payments.
15 (b) payment of an additional mortgage payment, or any part thereof,
16 before being permitted to change between monthly, semi-monthly, and
17 biweekly mortgage payments.
18 2. Notwithstanding any other provision of law or rule or regulation to
19 the contrary, each financial institution subject to the provisions of
20 this chapter, including any banking organization, mortgage broker or
21 mortgage banker, interstate branch established pursuant to article
22 five-C of this chapter, or other investment entity subject to regulation
23 by the department, which provides a mortgage or mortgage loan services
24 to a customer shall provide such customer with an amortization schedule
25 and potential interest savings if such customer were to choose a month-
26 ly, semi-monthly, or biweekly mortgage payment schedule and information
27 on how to change to a different payment schedule.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13935-01-5
A. 9588 2
1 3. If any provision of this section or its application to any person
2 or circumstance is held invalid, the invalidity does not affect other
3 provisions or application of this section which can be given effect
4 without the invalid provision or application, and to this end the
5 provisions of this section are severable.
6 § 2. This act shall take effect on the one hundred eightieth day after
7 it shall have become a law.
