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

§ 280. Reverse mortgage loans for persons sixty years of age or older. 1.  For  purposes  of  this  section  the following terms shall have the following meanings:  (a) Reverse mortgage loans.  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,  in advances through a line of credit or otherwise, in lump sums, or through a combination thereof.  (b) Term reverse mortgage loan. Any reverse mortgage loan that  has  a fixed term to maturity.  (c)  Tenure reverse mortgage loan. Any reverse mortgage loan that does not have a fixed term  to  maturity,  but  rather  matures  solely  upon contingent  events, such as events including but not limited to death or the real property securing the loan  no  longer  being  the  mortgagors' principal residence.  (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 sixty 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 sixty years of age or older.  (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 loan to value ratio shall be determined by the  superintendent of financial services; and  (b)  subject  to  such  rules  or regulations as the superintendent of financial services shall adopt, any authorized lender or  any  successor or assign of such authorized lender which 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  (c) the outstanding balance may be prepaid in full  by  the  mortgagor without  penalty  at any time during the term and/or tenure of the loan; and  (d) 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  (e)  the  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) the interest rate and, except for a tenure reverse mortgage loan, the total interest payable on the 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  (f)  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; and  (g)   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 an authorized lender until  the  applicant presents, in writing, a statement that the terms of the reverse mortgage loan have been explained 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  (h) any such reverse mortgage shall expressly and conspicuously bear a legend identifying it as such; and  (i) 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.   3. A reverse mortgage loan pursuant to this section may:  (a) 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 cost 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;  (b) provide for the maintenance of an escrow account by the authorized lender  for purposes of payment of real property taxes, insurance on the property securing the loan, or any other fees and  expenses  as  may  be permitted by superintendent of financial services regulation;  (c)  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.   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-a 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, the form and contents of any disclosure statement, with the exception of the counseling  statement  prepared  by the  New  York  state  office for the aging pursuant to paragraph (g) of subdivision two of this section, 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  reverse 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 property securing the reverse mortgage loan to a person other than an original mortgagor or mortgagors shall result in the termination of the loan.   8. In a term reverse mortgage loan, the  real  property  securing  the reverse  mortgage loan may be reappraised by an independent appraiser at the end of the loan  term.  If  the  value  of  the  real  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 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 may 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 or 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 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.   10.  Any authorized lender offering reverse mortgage loans pursuant to this section shall also offer reverse mortgage loans pursuant to section two hundred eighty-a of this article. Subject to  this  section  in  the event  that an authorized lender makes reverse mortgage loans under this section then that lender must make an equal number of  reverse  mortgage loans  pursuant  to  section  two hundred eighty-a of this article. Such loans shall be made to individuals who meet the requirements promulgated in section two hundred eighty-a  of  this  article  provided  that  such individual  seeking the loan would otherwise qualify and be approved for that loan. In the event that no or insufficient applications for reverse mortgage loans pursuant to section two hundred eighty-a of this  article are  made  to  a  lender  who has previously made reverse mortgage loans pursuant to this section then there shall be  no  requirement  for  that lender  to  make a reverse mortgage loan pursuant to section two hundred eighty-a of this article. It shall also not be  a  requirement  that  an authorized  lender  make any reverse mortgage loan to any individual who would not qualify for such loan and/or would not otherwise  be  approved for such loan.   11.  Nothing  contained  in this section, section six-h of the banking law or any other provision of law  shall  be  construed  to  prohibit  a banking  organization or licensed mortgage banker from providing reverse mortgages  to  homeowners  in  this  state  under  the  federal  housing administration's home equity conversion mortgage insurance demonstration program.