NY Real Prop L § 280-A (2021)
2021 New York Laws RPP - Real Property Article 8 - Conveyances and Mortgages 280-A - Reverse Mortgage Loans for Persons Seventy Years of Age or Older.

§  280-a.  Reverse  mortgage loans for persons seventy years of age or older. 1. For purposes of this section, the following terms  shall  have the following meanings:  (a) Reverse mortgage loan. A loan which is secured by a first mortgage on  real  property  improved  by  a  one  to  four-family  residence  or condominium that is the residence of the mortgagor(s)  the  proceeds  of which  are  advanced  to the mortgagor(s) during the term of the loan in equal  installments,  or  in  advances  through  a  line  of  credit  or otherwise, in lump sums, or through a combination thereof.  (b)  Term  reverse mortgage loan. As used in this section, any reverse mortgage loan that has a fixed term for payments to the mortgagor(s).  (c) Tenure reverse mortgage loan. As used in this section, any reverse mortgage loan that does not have  a  fixed  term  for  payments  to  the mortgagor(s).  (d)  Authorized  lender.  Any  bank,  trust  company, national banking association, savings bank, savings and loan association, federal savings bank, federal savings and loan association,  credit  union,  or  federal credit  union or any licensed mortgage banker approved for the making of reverse mortgage loans by the superintendent of  financial  services  or any  entity  exempted  from  licensing  pursuant to section five hundred ninety of the banking  law  and  approved  for  the  making  of  reverse mortgage loans by the superintendent of financial services.  (e)  Mortgagor.  A  tenant in severalty who is seventy years of age or older, or if the real property is held by tenants by the entirety or  by joint  tenancy,  the  youngest of which is seventy years of age or older and whose income does not exceed eighty percent of the median income  of the county in which he or she resides.  (f)   Superintendent   of   financial   services.  The  superintendent established pursuant  to  section  two  hundred  two  of  the  financial services law.   2.  A  reverse mortgage loan pursuant to this section shall be subject to the following:  (a) the mortgagor shall be granted lifetime possession of the  subject premises  of  the  real  property  which is the security for the reverse mortgage loan, as long as such real  property  remains  the  mortgagors' principal  residence  and  subject  to  a limited waiver of the right of foreclosure as determined by the superintendent of  financial  services; and  (b)  the  term  of  the  reverse mortgage, except for a tenure reverse mortgage loan, shall be for a period of ten years or less; and  (c) the loan to value ratio shall be determined by the  superintendent of financial services; and  (d)  subject  to  such  rules  or regulations as the superintendent of financial services shall adopt, for that period of  time  commencing  at the  end  of  the loan term or ten years after the reverse mortgage loan commences, whichever occurs first,  and  ending  at  such  time  as  the reverse  mortgage  loan  is  paid in full, the authorized lender, at its option,  may  receive  no  more  than  twenty  percent  of  the   future appreciation  of the property securing the reverse mortgage loan as full or partial consideration for the making  of  a  reverse  mortgage  loan; provided,  however,  that  such  future appreciation shall be limited by such rules and regulations as the superintendent of  financial  services may  adopt  or the authorized lender may charge a fixed rate of interest on the outstanding balance of monies advanced under the reverse mortgage agreement or any combination thereof. Said reverse mortgage  loan  shall not come due and shall be extended until the voluntary relinquishment by the  mortgagors  of  possessory interest in such real property, the real property no longer being the mortgagors' principal residence, the  death  of  the  mortgagors,  or  such  other events as may be determined by the superintendent of financial services. Any such appreciation shall not be considered interest for the purposes of any law regulating  the  maximum rate  of  interest  which  may  be  charged, taken or received including sections 190.40 and 190.42 of the penal law; and  (e) the authorized lender shall maintain an  escrow  account  for  the purposes  of  paying  real  property  taxes,  insurance  premiums of the property securing the reverse mortgage loan, or for the payment  of  any other  fees  and  expenses  as may be permitted by the superintendent of financial services regulation; and  (f) subject to such rules or  regulations  as  the  superintendent  of financial  services  may adopt, an authorized lender or any successor or assign of such authorized lender which may  suspends,  ceases  or  makes late  payments  to  a  mortgagor  under a reverse mortgage loan shall be subject to forfeiture (as liquidated damages to such mortgagor  and  not as  a  penalty)  of  twice  the interest which would otherwise have been earned during the period in which payments were  suspended,  ceased,  or made  late,  provided  that  said  authorized lender or any successor or assign of such authorized lender shall have the right to  make  payments pursuant to said loan agreement within fifteen days of each payment date without penalty; and  (g) an authorized lender must deliver to an applicant such disclosures as  may  be  required  by the superintendent of financial services which shall describe the relevant  portions  of  the  reverse  mortgage  being offered, and shall include but not be limited to the following items:  (i)  except for a tenure reverse mortgage loan, a schedule of payments to and from the mortgagor and the total payments  in  dollars  over  the term  of the reverse mortgage loan for both the mortgagor and mortgagee, depending on the type of reverse mortgage loan being offered;  (ii) a statement prominently displayed advising applicants to  consult with   appropriate   authorities   regarding  tax  and  estate  planning consequences of a reverse mortgage;  (iii) where applicable a description  of  prepayment  and  refinancing features;  (iv)  to  the  extent determinable at or prior to the inception of the reverse mortgage loan, the  interest  rate  and,  except  for  a  tenure reverse  mortgage  loan,  the  total  interest  payable  on  the reverse mortgage loan;  (v) a statement concerning the  compliance  of  the  lender  with  the criteria established by the superintendent of financial services that an authorized  lender  must  meet before it may make reverse mortgage loans pursuant to this section; and  (vi) a statement setting forth those events which would terminate  the reverse mortgage loan; and  (h)  the  outstanding  balance may be prepaid in full by the mortgagor without penalty at any time during the reverse mortgage loan term; and  (i) an authorized lender is prohibited from  using  or  attaching  any property or asset of the mortgagor except the real property securing the reverse  mortgage  loan  in settlement of a reverse mortgage obligation; and  (j)  an  authorized  lender  must  deliver  to  the   applicant   upon application,  if  available, a statement prepared by the local or county office for the aging on the advisability and availability of independent counseling  and  information  services.  Further,  no  reverse  mortgage commitment  shall be issued by the authorized lender until the applicant presents, in writing, a statement that the terms of the reverse mortgage loan have been explained to them by an attorney,  a  housing  and  urban development  certified  counselor  or  any  other  counseling service as  indicated on the statement supplied by the county or  local  office  for the  aging or a signed affidavit indicating that the applicant, although made aware of the importance of counseling and  its  local  availability through  the  provision  of  such  information by the authorized lender, chooses not to utilize any of the aforementioned available services. The form of such statement and affidavit shall be developed by the New  York state office for the aging; and  (k)  a  reverse  mortgage pursuant to this section shall expressly and conspicuously bear a legend identifying it as such; and  (l) subject to such rules or  regulations  as  the  superintendent  of financial  services  may adopt, a reverse mortgage loan shall be made at either a fixed or variable rate of interest; and  (m) in the event that an authorized lender or holder  of  the  reverse mortgage  loan intends to initiate foreclosure proceedings the mortgagor shall have the right to designate a third party who shall  be  notified. In  the  event  that  the  mortgagor has not designated a third party to receive such notice of foreclosure, then the authorized  lender  or  the holder  of  said  reverse mortgage loan shall notify the local or county office for the aging of its intent to commence foreclosure  proceedings. Such  entity  shall  take appropriate action to protect the interests of the mortgagor.   3. A reverse mortgage loan pursuant to this section may:  (a) provide that an authorized lender  may,  consistent  with  federal laws  and  regulations,  include  a  due-on-sale  clause  in its reverse mortgage loan agreement and at its  option  exercise  and  enforce  such clause in accordance with its terms;  (b)  provide  that  the  mortgagor's  closing costs, including but not limited to loan or commitment fees if  any,  insurance  premiums,  house repairs,  legal  fees,  the costs of annuities, the costs of third party counseling,  the  costs  of  existing  mortgages  or  liens,  and  other appropriate  costs  be included in the principal of the reverse mortgage loan and disbursed out of the loan proceeds at closing.   4. The superintendent of financial services shall adopt those rules or regulations as it considers appropriate to govern reverse mortgage loans made pursuant to this section. No reverse mortgage loan  shall  be  made unless  it  conforms  to the requirements of this section and such rules and regulations as the superintendent of financial  services  may  adopt except those reverse mortgage loans made pursuant to section two hundred eighty  of  this article. A reverse mortgage loan made by any authorized lender,  national  banking  association,  federal   savings   and   loan association  or  federal  credit  union  in  conformity  with applicable federal laws and regulations specifically  regulating  reverse  mortgage loans  shall  be  deemed  to conform to the requirements of this section unless such reverse mortgage loan fails to conform  to  such  rules  and regulations  as  the  superintendent of financial services has expressly declared to be neither preempted by,  nor  otherwise  inconsistent  with such  federal  laws  or  regulations.  Those  rules or regulations shall include, but are not limited to:  (a) any limitations on the  taking  of  a  percentage  of  the  future appreciation  of the real property securing the reverse mortgage loan as consideration for making the reverse mortgage loan;  (b) the execution by an authorized lender of a limited waiver  of  the right of foreclosure;  (c) with the exception of the counseling statement prepared by the New York state office for the aging pursuant to paragraph (j) of subdivision two  of  this section, the form and contents of any disclosure statement that authorized lenders must provide to mortgagors.    5. Notwithstanding any inconsistent provision of law, the priority  of the  lien  of  a reverse mortgage, including the lien for all principal, interest, fees, costs, shared appreciation and other charges assessed in connection with the reverse mortgage, shall date from the  recording  of the mortgage irrespective of the date of any advance of reverse mortgage loan  proceeds  or  the  date  by  which  an  authorized lender shall be entitled to shared appreciation or accrued but  unpaid  interest,  fees, costs or other charges.   6.  Nothing  in  this  section  shall be construed to limit, impair or otherwise affect the  priority,  under  applicable  law,  of  any  other mortgage, deed of trust, encumbrance or lien which was recorded or filed prior to the effective date of this section.   7.  The  sale  or  transfer  of  the  real estate securing the reverse mortgage loan to a person other than an original mortgagor or mortgagors shall result in the termination of the reverse mortgage loan.   8. In a term reverse mortgage loan, the  real  property  securing  the reverse  mortgage  may be reappraised by an independent appraiser at the end of the loan term. If the value of the property has appreciated,  the term  of the reverse mortgage may be extended or refinanced; however the total reverse mortgage loan amount may not exceed such amount or loan to value ratio as may be determined  by  the  superintendent  of  financial services. The refinancing of the reverse mortgage loan shall be provided by  the  original  authorized  lender  or by any other authorized lender designated by the mortgagee.   9. The principal, including any accrued  but  unpaid  interest,  of  a reverse  mortgage  loan  agreement entered into pursuant to this section must be insured by the mortgagor. If such insurance is purchased from or otherwise provided by any agency of the state of New York, the mortgagor shall be granted the  right,  for  a  term  reverse  mortgage  loan,  to refinance  or  extend  the reverse mortgage loan at the end of the term, subject to such rules and regulations as the superintendent of financial services may adopt. The authorized  lender  shall  have  the  option  to choose  between  refinancing  or  extending  the  reverse mortgage loan. Subject to obtaining an adequate increase in the insurance  and  subject to  such  rules  and  regulations  as  the  superintendent  of financial services may adopt, the total reverse mortgage  loan  amount  shall  not exceed  such  amount or ratio as may be determined by the superintendent of financial services. The refinancing  of  the  reverse  mortgage  loan shall  be  provided  by  the  original authorized lender or by any other authorized lender designated by the mortgagee.