2010 New York Code
RPP - Real Property
Article 8 - (240 - 281) CONVEYANCES AND MORTGAGES
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
  older. 1. For purposes of this section, the following terms  shall  have
  the following meanings:
    (a) Reverse mortgage loan. 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,  or  in  advances  through  a  line  of  credit  or
  otherwise, in lump sums, or through a combination thereof.
    (b)  Term  reverse mortgage loan. As used in this section, any reverse
  mortgage loan that has a fixed term for payments to the mortgagor(s).
    (c) Tenure reverse mortgage loan. As used in this section, any reverse
  mortgage loan that does not have  a  fixed  term  for  payments  to  the
  mortgagor(s).
    (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 seventy 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 seventy years of  age  or  older
  and  whose income does not exceed eighty percent of the median income of
  the county in which he or she resides.
    (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 mortgagor shall be granted lifetime possession of the subject
  premises of the real property which is  the  security  for  the  reverse
  mortgage  loan,  as  long  as such real property remains the mortgagors'
  principal residence and subject to a limited  waiver  of  the  right  of
  foreclosure as determined by the banking board; and
    (b)  the  term  of  the  reverse mortgage, except for a tenure reverse
  mortgage loan, shall be for a period of ten years or less; and
    (c) the loan to value ratio shall be determined by the banking  board;
  and
    (d)  subject  to  such rules or regulations as the banking board shall
  adopt, for that period of time commencing at the end of the loan term or
  ten years after the reverse mortgage loan  commences,  whichever  occurs
  first,  and  ending at such time as the reverse mortgage loan is paid in
  full, the authorized lender, at its option, may  receive  no  more  than
  twenty  percent  of the future appreciation of the property securing the
  reverse mortgage loan as full or partial consideration for the making of
  a  reverse  mortgage  loan;  provided,   however,   that   such   future
  appreciation  shall  be  limited  by  such  rules and regulations as the
  banking board may adopt or the authorized lender may charge a fixed rate
  of interest on the outstanding balance  of  monies  advanced  under  the
  reverse  mortgage  agreement  or  any  combination thereof. Said reverse
  mortgage loan shall not  come  due  and  shall  be  extended  until  the
  voluntary  relinquishment  by  the  mortgagors of possessory interest in

such real property, the real property no longer  being  the  mortgagors'
  principal  residence,  the death of the mortgagors, or such other events
  as may be determined by the banking board. Any such  appreciation  shall
  not  be  considered  interest for the purposes of any law regulating the
  maximum rate of  interest  which  may  be  charged,  taken  or  received
  including sections 190.40 and 190.42 of the penal law; and
    (e)  the  authorized  lender  shall maintain an escrow account for the
  purposes of paying  real  property  taxes,  insurance  premiums  of  the
  property  securing  the reverse mortgage loan, or for the payment of any
  other fees and expenses as may be permitted by banking board regulation;
  and
    (f) subject to such rules or regulations  as  the  banking  board  may
  adopt,  an  authorized  lender  or  any  successor  or  assign  of  such
  authorized lender which may 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
    (g) an 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)  to  the  extent determinable at or prior to the inception of the
  reverse mortgage loan, the  interest  rate  and,  except  for  a  tenure
  reverse  mortgage  loan,  the  total  interest  payable  on  the reverse
  mortgage 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
    (h) the outstanding balance may be prepaid in full  by  the  mortgagor
  without penalty at any time during the reverse mortgage loan term; and
    (i)  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
    (j)   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 the authorized lender until the  applicant
  presents, in writing, a statement that the terms of the reverse mortgage
  loan  have  been  explained  to them 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
    (k)  a  reverse  mortgage pursuant to this section shall expressly and
  conspicuously bear a legend identifying it as such; and
    (l) 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; and
    (m) 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.
    3. A reverse mortgage loan pursuant to this section may:
    (a) 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;
    (b)  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 costs 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.
    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  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:
    (a) any limitations on the  taking  of  a  percentage  of  the  future
  appreciation  of the real property securing the reverse mortgage loan as
  consideration for making the reverse mortgage loan;
    (b) the execution by an authorized lender of a limited waiver  of  the
  right of foreclosure;
    (c) with the exception of the counseling statement prepared by the New
  York state office for the aging pursuant to paragraph (j) of subdivision
  two  of  this section, the form and contents of any disclosure statement
  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 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 estate securing the reverse
  mortgage loan to a person other than an original mortgagor or mortgagors
  shall result in the termination of the reverse mortgage loan.
    8. In a term reverse mortgage loan, the  real  property  securing  the
  reverse  mortgage  may be reappraised by an independent appraiser at the
  end of the loan term. If the value of the 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 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.
    9.  The  principal,  including  any  accrued but unpaid interest, of a
  reverse mortgage loan agreement entered into pursuant  to  this  section
  must 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 and 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 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.