2006 New York Code - 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  banks  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 banks.
    (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) Banking board. The board established pursuant to section  thirteen
  of the banking law.
    (g)  Superintendent  of  banks.  The  position established pursuant to
  section twelve of the banking law as the head of the banking  department
  and  pursuant to section thirteen of the banking law as the chairman and
  executive head of the banking board.
    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 banking board;
  and
    (b) subject to such rules or regulations as the  banking  board  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 banking board 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 banking board 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 banking board 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 banking board 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  banking  board  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  banking  board  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 banking board
  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 banking board.
  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 banking board 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  banking  board  may  adopt,  the total reverse mortgage loan amount
  shall not exceed such amount or loan to value ratio as may be determined
  by the banking board. 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.