Long Island Bank Refunds Fees To Homeowners

Attorney General Spitzer today announced a settlement with a Long Island bank that will refund more than $20,000 to dozens of homeowners who were illegally charged fees after they decided against opening or maintaining tax escrow accounts with the bank.

North Fork Bank, a commercial lender located in Melville, New York, was cited by Spitzer's office after a consumer complained of being charged a fee when he told the bank that he wished to pay his taxes directly instead of paying into an escrow account.

"The law specifically states that those homeowners who make real estate tax payments directly should not be penalized for doing so," Spitzer said.

New York State law prohibits a lender from charging a fee to a homeowner who pays real property taxes on mortgaged property directly to the taxing authority rather than making monthly payments into a real property tax escrow account. Lenders often establish tax escrow accounts to ensure that real estate taxes are paid and to protect against tax liens on the property. Homeowners who pay their taxes directly, however, cannot be charged a fee by the bank for doing so.

Under the terms of the settlement, North Fork agreed to cease and desist from charging fees that penalize consumers for exercising their right to pay taxes directly, and will make full restitution totaling $21,750 to 30 consumers who have been charged such a fee since January 1, 1997. In addition to the restitution, North Fork will pay $5,000 to cover the costs of the state's investigation.

This case was handled by Assistant Attorney General Matthew Barbaro of the Consumer Frauds and Protection Bureau.

Spitzer encourages any individual with questions regarding consumers' rights to contact his help line at (800) 771-7755.