2023 New York Laws › RPP - Real Property › Article 8 - Conveyances and Mortgages › 275 - Certificate of Discharge of Mortgage Required.

§  275.  Certificate  of discharge of mortgage required. 1. Whenever a
mortgage upon real property is due and payable, and the full  amount  of
principal  and  interest  due  on the mortgage is paid, a certificate of
discharge of  mortgage  shall  be  given  to  the  mortgagor  or  person
designated  by  him or her, signed by the person or persons specified in
section three hundred twenty-one of this chapter. The person signing the
certificate shall, within thirty days thereafter, arrange  to  have  the
certificate  presented  for  recording  to  the recording officer of the
county where the mortgage is recorded. Failure by a mortgagee to present
a certificate of discharge for recording shall result in  the  mortgagee
being  liable  to the mortgagor in the amount of five hundred dollars if
he or she fails to present such certificate within  thirty  days,  shall
result  in  the mortgagee being liable to the mortgagor in the amount of
one thousand dollars if he or she fails  to  present  a  certificate  of
discharge  for  recording  within  sixty  days  and  shall result in the
mortgagee being liable to the mortgagor in the amount  of  one  thousand
five  hundred  dollars  if  he  or she fails to present a certificate of
discharge for recording within ninety days. For  the  purposes  of  such
liability under this subdivision, the term "mortgagee" shall not include
a  person,  partnership,  association, corporation or other entity which
makes less than five mortgage loans in any calendar year. The provisions
of this section shall not apply to any mortgage granted to  or  made  by
the  state  of New York, or any agency or instrumentality thereof or any
political subdivision of the state  or  any  agency  or  instrumentality
thereof.
2.  For  purposes  of  this  section, the full amount of principal and
interest due on a mortgage shall not be considered to be  paid  whenever
such  mortgage  continues  to secure a bona fide debt and an enforceable
lien continues to exist, such as may occur in the following situations:
(a) the commercial practice of lenders trading or selling mortgages on
the secondary market;
(b) the replacement of a construction loan with permanent financing;
(c) the refinancing of an existing loan with a  new  lender,  such  as
where  the  original lender assigns a note and the mortgage securing its
payment to another lender in return for consideration and such  mortgage
is  consolidated  with another mortgage which secures any funds advanced
by the new lender to the mortgagor;
(d) the modification of the  terms  of  a  loan  by  a  mortgagor  and
mortgagee in order to avoid foreclosure; and
(e) a refinancing that occurs in conjunction with the sale of property
such  that  the  seller conveys property to the purchaser subject to the
lien of the mortgage and  the  original  lender  assigns  its  note  and
mortgage on the property to the purchaser's lender.
3.  Except  with respect to the assignment of a mortgage in connection
with a transaction described in paragraph (a) of subdivision two of this
section, in order to record an assignment of a mortgage  there  must  be
set forth in the assignment document or attached thereto and recorded as
part thereof a statement under oath signed by the mortgagor or any other
party  to  the  transaction having knowledge of the facts (provided such
other party asserts such knowledge), that the assignee is not acting  as
a  nominee  of the mortgagor and that the mortgage continues to secure a
bona fide obligation. With respect to the assignment of  a  mortgage  in
connection  with a transaction described in paragraph (a) of subdivision
two of  this  section,  such  assignment  shall  contain  the  following
statement:  "This  assignment  is  not  subject  to  the requirements of
section two hundred seventy-five of the Real Property Law because it  is
an assignment within the secondary mortgage market."