BILL NUMBER:S2919

TITLE OF BILL:

An act to amend the banking law, in relation to refinancing of an
existing mortgage loan

PURPOSE:

To ensure that consumers are appropriately informed when refinancing a
mortgage and have the ability to compare the total monthly costs of
the previous loan with the total monthly costs of the new loan.

SUMMARY OF PROVISIONS:

Section 595-a(3) of the Banking Law is amended to require mortgage
brokers, mortgage bankers or exempt organizations to provide a special
disclosure for any mortgage refinancing where the mortgagor will no
longer be paying property tax or insurance premiums into an escrow
account. In those cases, the disclosure must compare the total monthly
payments under the previous loan with the combined monthly payments
for the new loan, real property taxes and insurance.

JUSTIFICATION:

Consumers may refinance a mortgage loan for numerous reasons. An
              

important consideration is the monthly cost of the new loan versus the
monthly cost of the previous loan.

Unfortunately, in some cases, this comparison may be misleading or
invalid because the homeowner does not realize or understand that the
new total does not include property tax or insurance payments, which
may have been included in the previous loan. There is concern that
some lenders or mortgage brokers may obscure this information, or may
actively mislead the homeowner in order to pressure them into
refinance the existing loan. As a result, the new loan may appear to
be a better deal, but in reality may be a worse deal.

This bill seeks to ensure that consumers are adequately notified if
their new loan will no longer include property tax or insurance
payments, and that they are given a clear comparison of the full
monthly costs under the previous loan and the full monthly costs under
the new loan. This will assist homeowners in making an informed
decision.

LEGISLATIVE HISTORY:

S.5619 in 2007-2008: Referred to Banks
S.4875 in 2009-2010: Referred to Banks
S.3651 in 2011-2012: Referred to Banks
S.2867 in 2013-14 Referred to Banks

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:


On the 180th day after it shall have become a law.