N.Y. BNK Law § 393

§ 393. Repayment of mortgage loans; application of pledged shares. 1.\nFor the purpose of making payment on his mortgage loan a member may at\nany time, without forfeiture of dividends, transfer from the amount\ncredited upon the shares pledged by him as security, a sum equal to the\nmatured value of one or more instalment shares.\n 2. Any mortgage loan made by a savings and loan association to a\nmember may be repaid in whole or in part at any time, but the loan\ncontract may expressly provide for a period during which prepayment may\nnot be made without incurring prepayment penalties. When such provision\nis contained therein, the loan contract must also expressly provide for\nprepayment penalties or no prepayment penalties may be collected when\nthe loan is prepaid. However, where a loan is secured by mortgage on a\none to six family residence, or is extended to finance the purchase of a\ncooperative under subdivision two-a of section three hundred eighty of\nthis chapter which residence or cooperative is or will be occupied in\nwhole or in part by the member, prepayment penalties may be imposed only\nduring the first twelve months from the date the mortgage or cooperative\nloan was made and may not exceed:\n (a) Interest for a period of three months on the principal so prepaid;\nor\n (b) Interest for the remaining months of the first year on the\nprincipal so prepaid if the prepayment is made at any time within one\nyear from the date the loan is made.\n The book value of instalment shares pledged as security for any such\nloan shall be deducted from the amount of the loan in determining the\namount of principal upon which such interest may be charged.\n 3. Whenever any mortgage is foreclosed, the withdrawal value of the\nshares transferred and pledged to any such association as security for\nthe loan shall be applied toward the payment of the indebtedness of the\nmember and his rights under such shares shall terminate.\n 4. In event of the voluntary or involuntary liquidation of any\nassociation, the holder of shares pledged as security for a mortgage\nloan pursuant to the provisions of subdivision one of section three\nhundred eighty of this article shall be entitled to have the payments on\nsuch shares and the dividends credited or entitled to be credited\nthereon applied in reduction of such mortgage loan.\n 5. No shares pledged as security for a mortgage loan may be withdrawn\nwhile the mortgage loan against which they are pledged is outstanding.\n