2023 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.