§ 280-B — Federal home equity conversion mortgage regulation

§ 280-b. Federal home equity conversion mortgage regulation. 1. For\nthe purposes of this section, the following terms shall have the\nfollowing meanings:\n (a) Reverse mortgage loan. A reverse mortgage loan as defined in\nsection two hundred eighty of this article, which is issued in this\nstate pursuant to the home equity conversion mortgage for seniors\nprogram operated by the federal Department of Housing and Urban\nDevelopment.\n (b) Authorized lender. An authorized lender as defined in section two\nhundred eighty of this article authorized to make reverse mortgage\nloans, as defined in this section.\n (c) Superintendent. The superintendent of financial services\nestablished pursuant to section two hundred two of the financial\nservices law.\n 2. No authorized lender or any other party or entity shall in any\nmanner, in the marketing or offering of reverse mortgage loans, engage\nin any unfair or deceptive practices in connection with the marketing or\noffering of reverse mortgage loans, and, additionally, shall not:\n (a) use the words "public service announcement" in any commercial,\nmailing, advertisement or writing relating thereto; or\n (b) use the words "government insured" or other similar language in a\nmanner that falsely represents that reverse mortgage loans are insured,\nsupported and sponsored by any governmental entity in any commercial,\nmailing, advertisement or writing relating thereto; or\n (c) represent that any such loan is other than a commercial product.\n 3. (a) Every authorized lender or its agent shall provide, with any\nsolicitation for reverse mortgage products mailed to a physical address\nwithin the state, supplemental consumer protection materials the content\nand form of which shall be specified by the superintendent or his or her\ndesignee.\n (b) Every authorized lender shall provide each applicant or potential\napplicant for a reverse mortgage loan with the telephone number and\ninternet website address provided by the federal Department of Housing\nand Urban Development for the purposes of acquiring home equity\nconversion mortgage counseling.\n (c) The superintendent is authorized to promulgate such rules and\nregulations as he or she shall deem necessary to implement the\nprovisions of this subdivision.\n 4. (a) Reverse mortgages secured by residential real property within\nthe state shall be subject to the rules and regulations of the federal\nDepartment of Housing and Urban Development relating to the home equity\nconversion mortgage program.\n (b) For all borrowers whose tax payments, mortgage insurance payments,\nhomeowners insurance payments, or payments stemming from any other\nproperty obligation or obligations are administered by the authorized\nlender, and where these payments are derived from the proceeds of the\nmortgage, the authorized lender shall provide on the borrower's periodic\naccount statement the current balance remaining in the borrower's line\nof credit or lifetime expectancy set aside, the projected annual\nproperty charges for that year, and a notice which reads in at least\ntwelve point type: "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY\nTHE PROCEEDS OF THIS MORTGAGE. THE FUNDS THAT HAVE BEEN SET ASIDE ARE\nEXPECTED TO BE EXHAUSTED AFTER THE TAX AND INSURANCE PAYMENTS OF\n(SPECIFY EXPECTED MONTH AND YEAR). IF THE PROCEEDS OF THIS MORTGAGE\nCANNOT PAY THE TAXES AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR\nYOUR HOME MAY BE LOST TO FORECLOSURE. PLEASE NOTE THAT AS TAX AND\nINSURANCE AMOUNTS CAN VARY YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR\nCHANGES."\n (c) An authorized lender shall, by telephone and first class mail,\ninform and provide notice to a mortgagor when his or her home equity\nline of credit or life expectancy set aside is depleted to ten percent\nor less of its value. Such notice shall inform the mortgagor of his or\nher obligations relating to such real property including, but not\nlimited to, mortgage insurance, homeowners insurance and real property\ntaxes previously paid by such line of credit or life expectancy set\naside, and that such obligations must continue to be paid when the home\nequity line of credit or life expectancy set aside is depleted. Such\nnotice shall use plain language, written in a clear and coherent manner\nusing words with common and every day meanings, appropriately divided\nand captioned by its various sections.\n (d) Each authorized lender shall, by telephone and first class mail,\ninform and provide notice to a mortgagor when his or her home equity\nline of credit or life expectancy set aside is depleted. Such notice\nshall inform the mortgagor of his or her obligations relating to the\nmortgaged real property including, but not limited to, mortgage\ninsurance, homeowners insurance and real property taxes, and that the\nhome equity line of credit or life expectancy set aside will no longer\npay these obligations. Such notice shall use plain language, written in\na clear and coherent manner using words with common and every day\nmeanings, appropriately divided and captioned by its various sections.\n 5. No authorized lender shall make an advance payment for any\nobligation arising from mortgaged real property. Furthermore, in the\nevent a mortgagor defaults upon the payment of mortgage insurance\npremium, homeowners' insurance premium or real property tax related to\nthe mortgaged property, the authorized lender may only pay those\npremiums and/or taxes which are in arrears.\n 6. In the event that an authorized lender seeks to foreclose on a\nreverse mortgage loan on the basis that the mortgaged real property is\nno longer the primary residence of or occupied by the mortgagor, if\nduring the verification of the mortgagor's primary residence and/or\noccupancy no responses are received in response to mailings relating\nthereto, such lender shall cause a telephone call to be made to the\nmortgagor, or if the mortgagor is unreachable by telephone, a designated\nthird-party specified by the mortgagor, and an in person visit to be\nmade to the mortgagor at the mortgaged real property to be made prior to\nthe commencement of any foreclosure proceeding. During such visit, the\nauthorized lender or its agent shall provide clear information as to who\nthey are, that the visit pertains to the reverse mortgage, the reason\nfor the home visit, and the telephone number to call for further\ninformation. The authorized lender must wait at least thirty days\nfollowing such visit, in addition to any additional time or notice\nrequirements specified by any other provision of law, before initiating\na foreclosure action on the basis that the mortgaged real property is no\nlonger the primary residence of the mortgagor. If the mortgagor contacts\nthe authorized lender and provides proof of residence or occupancy after\nsuch visit but before the commencement of a foreclosure action, the\nauthorized lender shall be barred from initiating such foreclosure\naction. Furthermore, no authorized lender shall charge a mortgagor any\nfee for any such visit and inspection. This prohibition on the\nimposition of fees shall include any and all inspections conducted by\nthe authorized lender to verify the status of the reverse mortgage, or\nany suspected or actual default condition.\n 7. Both the authorized lender and the mortgagor shall be represented\nby an attorney or attorneys at the time of the closing on the reverse\nmortgage, and each such party shall have at least one attorney present\nto conduct the closing.\n 8. Any person who has been injured by reason of any violation of this\nsection or any violation of the rules and regulations of the federal\nDepartment of Housing and Urban Development relating to the home equity\nconversion mortgage program may bring an action in his or her own name\nto recover treble his or her actual damages, plus the prevailing\nplaintiff's reasonable attorney's fees.\n 9. Compliance with the provisions of this section shall be conditions\nprecedent to commencing an action to foreclose upon a home equity\nconversion mortgage which is subject to the provisions of this section,\nand the failure to comply therewith shall be a complete defense to a\nforeclosure action.\n