1. (a) The credit for servicing mortgages is the sum of the amounts determined in subdivisions (b) and (c) of this section.

2. (b) In the case of a mortgage described in section 20-3.1 of this Subpart on a residence of four or less families, the credit for servicing mortgages is 2.93 percent of the total principal and interest, exclusive of curtailments or payments in discharge of mortgage, on each such mortgage collected by the bank during the taxable year. The term curtailment means amounts paid by mortgagors:

   1. (1) in excess of the monthly constant due during the month of collection; and
   2. (2) in reduction of the unpaid principal balance of the mortgage. In the absence of clear evidence to the contrary, amounts paid in excess of the monthly constant due during the month of collection is deemed to be in reduction of the unpaid principal balance of the mortgage. The term monthly constant means the amount of principal and interest which is due and payable according to the mortgage document on each periodic payment date.

3. (c) In the case of a mortgage described in section 20-3.1 of this Subpart on a residence of five or more families living independently of each other, the credit for servicing mortgages is the interest on each such mortgage collected by the bank during the taxable year, multiplied by a fraction the denominator of which is the interest rate payable on the mortgage (computed to five decimal places) and the numerator of which is:

   1. (1) 0.00125 in the case of a mortgage acquired by the agency for less than $1,000,000; or
   2. (2) 0.00100 in the case of a mortgage acquired by the agency for $1,000,000 or more.

Tax Law, § 1456 (a)