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On September 14, the New York Department of Financial Services
(NYDFS) published a notice of proposed rules under New York’s Commercial
Financing Disclosure Law (CFDL) (we discussed this previous
rulemaking in a blog post here). Under the CFDL, commercial finance
companies are required to give consumer-style loan disclosures to
potential recipients when a specific offering of finance is
extended for certain commercial transactions of $2.5 million or
less. We note some items in particular from the latest proposed
rule:
- An additional requirement that if the finance company is
operated out of New York, then the New York disclosure law applies
to all their transactions, across the entire country, mostly
without regard to where the borrower is located or managed
from. - Continued overlap with similar California regulations (we
discussed the California regulations in previous blog posts here and here). The NYDFS did confirm its intent to align with California where it is
possible. - An additional notice requirement for the transfer of servicing
by the servicer of a commercial financing.
Note that while financial institutions such as banks, trust
companies, industrial loan companies, federally chartered savings
and loan associations, federal savings banks, or federal credit
unions are exempt, there is no exemption for bank subsidiaries in
New York and California.
Public comments on the proposed rule are due on or before
October 29, 2022.
Putting It Into Practice: As the New York
regulations continue to come into shape, companies will need to
thoroughly review the New York and California regulations to ensure
that they prepare and timely deliver compliant disclosure forms in
each state.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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