§ 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\nolder. 1. For purposes of this section, the following terms shall have\nthe following meanings:\n (a) Reverse mortgage loan. A loan which is secured by a first mortgage\non real property improved by a one to four-family residence or\ncondominium that is the residence of the mortgagor(s) the proceeds of\nwhich are advanced to the mortgagor(s) during the term of the loan in\nequal installments, or in advances through a line of credit or\notherwise, in lump sums, or through a combination thereof.\n (b) Term reverse mortgage loan. As used in this section, any reverse\nmortgage loan that has a fixed term for payments to the mortgagor(s).\n (c) Tenure reverse mortgage loan. As used in this section, any reverse\nmortgage loan that does not have a fixed term for payments to the\nmortgagor(s).\n (d) Authorized lender. Any bank, trust company, national banking\nassociation, savings bank, savings and loan association, federal savings\nbank, federal savings and loan association, credit union, or federal\ncredit union or any licensed mortgage banker approved for the making of\nreverse mortgage loans by the superintendent of financial services or\nany entity exempted from licensing pursuant to section five hundred\nninety of the banking law and approved for the making of reverse\nmortgage loans by the superintendent of financial services.\n (e) Mortgagor. A tenant in severalty who is seventy years of age or\nolder, or if the real property is held by tenants by the entirety or by\njoint tenancy, the youngest of which is seventy years of age or older\nand whose income does not exceed eighty percent of the median income of\nthe county in which he or she resides.\n (f) Superintendent of financial services. The superintendent\nestablished pursuant to section two hundred two of the financial\nservices law.\n 2. A reverse mortgage loan pursuant to this section shall be subject\nto the following:\n (a) the mortgagor shall be granted lifetime possession of the subject\npremises of the real property which is the security for the reverse\nmortgage loan, as long as such real property remains the mortgagors'\nprincipal residence and subject to a limited waiver of the right of\nforeclosure as determined by the superintendent of financial services;\nand\n (b) the term of the reverse mortgage, except for a tenure reverse\nmortgage loan, shall be for a period of ten years or less; and\n (c) the loan to value ratio shall be determined by the superintendent\nof financial services; and\n (d) subject to such rules or regulations as the superintendent of\nfinancial services shall adopt, for that period of time commencing at\nthe end of the loan term or ten years after the reverse mortgage loan\ncommences, whichever occurs first, and ending at such time as the\nreverse mortgage loan is paid in full, the authorized lender, at its\noption, may receive no more than twenty percent of the future\nappreciation of the property securing the reverse mortgage loan as full\nor partial consideration for the making of a reverse mortgage loan;\nprovided, however, that such future appreciation shall be limited by\nsuch rules and regulations as the superintendent of financial services\nmay adopt or the authorized lender may charge a fixed rate of interest\non the outstanding balance of monies advanced under the reverse mortgage\nagreement or any combination thereof. Said reverse mortgage loan shall\nnot come due and shall be extended until the voluntary relinquishment by\nthe mortgagors of possessory interest in such real property, the real\nproperty no longer being the mortgagors' principal residence, the death\nof the mortgagors, or such other events as may be determined by the\nsuperintendent of financial services. Any such appreciation shall not be\nconsidered interest for the purposes of any law regulating the maximum\nrate of interest which may be charged, taken or received including\nsections 190.40 and 190.42 of the penal law; and\n (e) the authorized lender shall maintain an escrow account for the\npurposes of paying real property taxes, insurance premiums of the\nproperty securing the reverse mortgage loan, or for the payment of any\nother fees and expenses as may be permitted by the superintendent of\nfinancial services regulation; and\n (f) subject to such rules or regulations as the superintendent of\nfinancial services may adopt, an authorized lender or any successor or\nassign of such authorized lender which may suspends, ceases or makes\nlate payments to a mortgagor under a reverse mortgage loan shall be\nsubject to forfeiture (as liquidated damages to such mortgagor and not\nas a penalty) of twice the interest which would otherwise have been\nearned during the period in which payments were suspended, ceased, or\nmade late, provided that said authorized lender or any successor or\nassign of such authorized lender shall have the right to make payments\npursuant to said loan agreement within fifteen days of each payment date\nwithout penalty; and\n (g) an authorized lender must deliver to an applicant such disclosures\nas may be required by the superintendent of financial services which\nshall describe the relevant portions of the reverse mortgage being\noffered, and shall include but not be limited to the following items:\n (i) except for a tenure reverse mortgage loan, a schedule of payments\nto and from the mortgagor and the total payments in dollars over the\nterm of the reverse mortgage loan for both the mortgagor and mortgagee,\ndepending on the type of reverse mortgage loan being offered;\n (ii) a statement prominently displayed advising applicants to consult\nwith appropriate authorities regarding tax and estate planning\nconsequences of a reverse mortgage;\n (iii) where applicable a description of prepayment and refinancing\nfeatures;\n (iv) to the extent determinable at or prior to the inception of the\nreverse mortgage loan, the interest rate and, except for a tenure\nreverse mortgage loan, the total interest payable on the reverse\nmortgage loan;\n (v) a statement concerning the compliance of the lender with the\ncriteria established by the superintendent of financial services that an\nauthorized lender must meet before it may make reverse mortgage loans\npursuant to this section; and\n (vi) a statement setting forth those events which would terminate the\nreverse mortgage loan; and\n (h) the outstanding balance may be prepaid in full by the mortgagor\nwithout penalty at any time during the reverse mortgage loan term; and\n (i) an authorized lender is prohibited from using or attaching any\nproperty or asset of the mortgagor except the real property securing the\nreverse mortgage loan in settlement of a reverse mortgage obligation;\nand\n (j) an authorized lender must deliver to the applicant upon\napplication, if available, a statement prepared by the local or county\noffice for the aging on the advisability and availability of independent\ncounseling and information services. Further, no reverse mortgage\ncommitment shall be issued by the authorized lender until the applicant\npresents, in writing, a statement that the terms of the reverse mortgage\nloan have been explained to them by an attorney, a housing and urban\ndevelopment certified counselor or any other counseling service as\nindicated on the statement supplied by the county or local office for\nthe aging or a signed affidavit indicating that the applicant, although\nmade aware of the importance of counseling and its local availability\nthrough the provision of such information by the authorized lender,\nchooses not to utilize any of the aforementioned available services. The\nform of such statement and affidavit shall be developed by the New York\nstate office for the aging; and\n (k) a reverse mortgage pursuant to this section shall expressly and\nconspicuously bear a legend identifying it as such; and\n (l) subject to such rules or regulations as the superintendent of\nfinancial services may adopt, a reverse mortgage loan shall be made at\neither a fixed or variable rate of interest; and\n (m) in the event that an authorized lender or holder of the reverse\nmortgage loan intends to initiate foreclosure proceedings the mortgagor\nshall have the right to designate a third party who shall be notified.\nIn the event that the mortgagor has not designated a third party to\nreceive such notice of foreclosure, then the authorized lender or the\nholder of said reverse mortgage loan shall notify the local or county\noffice for the aging of its intent to commence foreclosure proceedings.\nSuch entity shall take appropriate action to protect the interests of\nthe mortgagor.\n 3. A reverse mortgage loan pursuant to this section may:\n (a) provide that an authorized lender may, consistent with federal\nlaws and regulations, include a due-on-sale clause in its reverse\nmortgage loan agreement and at its option exercise and enforce such\nclause in accordance with its terms;\n (b) provide that the mortgagor's closing costs, including but not\nlimited to loan or commitment fees if any, insurance premiums, house\nrepairs, legal fees, the costs of annuities, the costs of third party\ncounseling, the costs of existing mortgages or liens, and other\nappropriate costs be included in the principal of the reverse mortgage\nloan and disbursed out of the loan proceeds at closing.\n 4. The superintendent of financial services shall adopt those rules or\nregulations as it considers appropriate to govern reverse mortgage loans\nmade pursuant to this section. No reverse mortgage loan shall be made\nunless it conforms to the requirements of this section and such rules\nand regulations as the superintendent of financial services may adopt\nexcept those reverse mortgage loans made pursuant to section two hundred\neighty of this article. A reverse mortgage loan made by any authorized\nlender, national banking association, federal savings and loan\nassociation or federal credit union in conformity with applicable\nfederal laws and regulations specifically regulating reverse mortgage\nloans shall be deemed to conform to the requirements of this section\nunless such reverse mortgage loan fails to conform to such rules and\nregulations as the superintendent of financial services has expressly\ndeclared to be neither preempted by, nor otherwise inconsistent with\nsuch federal laws or regulations. Those rules or regulations shall\ninclude, but are not limited to:\n (a) any limitations on the taking of a percentage of the future\nappreciation of the real property securing the reverse mortgage loan as\nconsideration for making the reverse mortgage loan;\n (b) the execution by an authorized lender of a limited waiver of the\nright of foreclosure;\n (c) with the exception of the counseling statement prepared by the New\nYork state office for the aging pursuant to paragraph (j) of subdivision\ntwo of this section, the form and contents of any disclosure statement\nthat authorized lenders must provide to mortgagors.\n 5. Notwithstanding any inconsistent provision of law, the priority of\nthe lien of a reverse mortgage, including the lien for all principal,\ninterest, fees, costs, shared appreciation and other charges assessed in\nconnection with the reverse mortgage, shall date from the recording of\nthe mortgage irrespective of the date of any advance of reverse mortgage\nloan proceeds or the date by which an authorized lender shall be\nentitled to shared appreciation or accrued but unpaid interest, fees,\ncosts or other charges.\n 6. Nothing in this section shall be construed to limit, impair or\notherwise affect the priority, under applicable law, of any other\nmortgage, deed of trust, encumbrance or lien which was recorded or filed\nprior to the effective date of this section.\n 7. The sale or transfer of the real estate securing the reverse\nmortgage loan to a person other than an original mortgagor or mortgagors\nshall result in the termination of the reverse mortgage loan.\n 8. In a term reverse mortgage loan, the real property securing the\nreverse mortgage may be reappraised by an independent appraiser at the\nend of the loan term. If the value of the property has appreciated, the\nterm of the reverse mortgage may be extended or refinanced; however the\ntotal reverse mortgage loan amount may not exceed such amount or loan to\nvalue ratio as may be determined by the superintendent of financial\nservices. The refinancing of the reverse mortgage loan shall be provided\nby the original authorized lender or by any other authorized lender\ndesignated by the mortgagee.\n 9. The principal, including any accrued but unpaid interest, of a\nreverse mortgage loan agreement entered into pursuant to this section\nmust be insured by the mortgagor. If such insurance is purchased from or\notherwise provided by any agency of the state of New York, the mortgagor\nshall be granted the right, for a term reverse mortgage loan, to\nrefinance or extend the reverse mortgage loan at the end of the term,\nsubject to such rules and regulations as the superintendent of financial\nservices may adopt. The authorized lender shall have the option to\nchoose between refinancing or extending the reverse mortgage loan.\nSubject to obtaining an adequate increase in the insurance and subject\nto such rules and regulations as the superintendent of financial\nservices may adopt, the total reverse mortgage loan amount shall not\nexceed such amount or ratio as may be determined by the superintendent\nof financial services. The refinancing of the reverse mortgage loan\nshall be provided by the original authorized lender or by any other\nauthorized lender designated by the mortgagee.\n