NY State Senate Bill 2019-S1246

Archive: Last Bill Status - In Senate Committee Aging Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
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Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to aging
Jan 11, 2019	referred to aging

2019-S1246 (ACTIVE) - Details

See Assembly Version of this Bill:: A6883
Current Committee:: Senate Aging
Law Section:: Real Property Law
Laws Affected:: Amd §§280 & 280-a, RP L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S2758, A7589
2021-2022: S2944

2019-S1246 (ACTIVE) - Summary

Adds new conditions on authorized lenders of reverse mortgages including: delivery of a plain language notice, providing the borrower with a reverse mortgage worksheet guide and counseling, and a lapse of seven days between the reverse mortgage counseling and acceptance of the borrower's final application.

2019-S1246 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1246

SPONSOR: SERINO
 
TITLE OF BILL:

An act to amend the real property law, in relation to conditions on
lenders who extend reverse mortgages to persons over sixty and seventy
years old

 
PURPOSE:

To enhance protections for persons over sixty and seventy years old who
are considering entering into contracts for reverse mortgages.

 
SUMMARY OF PROVISIONS:

Section 1: Amends paragraphs (g), (h) and (i) of subdivision 2 of
section 280 of the Real Property Law to require statements be prepared
in plain language for persons sixty years of age or older by the Depart-
ment of Financial Services, who may consult with the Office for the
Aging, on the advisability and availability of counseling and informa-

tion services for persons considering entering into a reverse mortgage
contract. Also requires lenders provide prospective borrowers with a
reverse mortgage guide prepared by the Department of Financial Services
before such a loan application can be approved.  Additionally, prohibits
lenders from accepting completed applications for reverse mortgage loans
from a prospective applicant or assessing fees upon a prospective appli-
cant until at least seven days from the date of counseling or receipt of
a signed affidavit waiving such counseling.

Section 2: Amends paragraphs (j), (k), (l) and (m) of subdivision 2 of
section 280-a of the Real Property Law to add the same provisions as
section 1 of this legislation for persons seventy years of age or older.

Section 3: Establishes the effective date.

 
JUSTIFICATION:

Reverse mortgages can be an attractive option for older adults living on
a fixed income to help cover the costs of basic living expenses, health
care or even reducing additional debt. However, the risks associated
with reverse mortgages are not always clear, including continuing obli-
gations and legal responsibilities that the mortgagor assumes. As such,
defaults on reverse mortgages hit a high of 10% in 2013.  Although the
Department of Housing and Urban Development has enacted policy changes
to address the high default rates, there is still more to be done to
protect seniors.

In 2016, the Department of Financial Services opened an investigation
into the operations of several agencies that provide reverse mortgage
contracts after a dramatic increase in foreclosure cases involving
reverse mortgages in New York and allegations that vulnerable seniors
were being targeted. Because of the long-term impacts that a reverse
mortgage can have on a senior's financial security, it is imperative
that the State ensures that there are appropriate safeguards during the
contracting process. This legislation will help to ensure seniors are
aware of the risks associated with reverse mortgages by providing for a
seven day cooling off period prior to the final contract.  During this
time, the senior will be given a worksheet intended to facilitate
consideration of the current state of the mortgagor's finances, provide
for an appropriate time to review the contract, as well as consider the
impacts of the reverse mortgage long-term. To that end, the senior will
be required to obtain financial counseling during this period unless
they specifically opt-out of such counseling through a signed affidavit.
At every stage in life, financial decisions can determine your standard
of living as well as your independence and security. For our seniors,
these decisions are arguably even more important because they are often
on a fixed income and the loss of housing can be devastating. As a
result, the transparency of the reverse mortgage contract process should
be proportionate to the impact that it will have on the mortgagor.

 
LEGISLATIVE HISTORY:

2017-18: S.2758A Advanced to Third Reading

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect on the one hundred twentieth day after it
shall have become law.

2019-S1246 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1246
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 11, 2019
                                ___________
 
 Introduced  by  Sen.  SERINO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Aging
 
 AN ACT to amend the real property law,  in  relation  to  conditions  on
   lenders who extend reverse mortgages to persons over sixty and seventy
   years old

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraphs (g), (h) and (i) of subdivision 2 of section 280
 of the real property law, as added by chapter 613 of the laws  of  1993,
 paragraph  (i) as further amended by section 104 of part A of chapter 62
 of the laws of 2011, are amended to read as follows:
   (g) an authorized lender must deliver to the applicant, upon  applica-
 tion[,  if available,] a PLAIN LANGUAGE statement prepared by the [local
 or county] DEPARTMENT OF FINANCIAL SERVICES WHO MAY CONSULT WITH THE NEW
 YORK STATE office for the aging, WHERE APPROPRIATE, on the  advisability
 and  availability of independent counseling and information services. IN
 ADDITION TO THE PLAIN LANGUAGE NOTICE, NO REVERSE MORTGAGE LOAN APPLICA-
 TION SHALL BE TAKEN BY A LENDER UNLESS THE LENDER PROVIDES THE  PROSPEC-
 TIVE  BORROWER,  PRIOR TO HIS OR HER MEETING WITH A COUNSELING AGENCY ON
 REVERSE MORTGAGES,  WITH  A  REVERSE  MORTGAGE  WORKSHEET  GUIDE  TO  BE
 PREPARED  BY  THE  DEPARTMENT OF FINANCIAL SERVICES WHO MAY CONSULT WITH
 THE NEW YORK STATE OFFICE FOR THE AGING WHERE APPROPRIATE.  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] DEPARTMENT OF FINANCIAL SERVICES or a signed affi-
 davit indicating that the applicant, although made aware of  the  impor-
 tance  of counseling and its local availability through the provision of
 such information by the authorized lender, chooses not to utilize any of
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD06745-01-9

 S. 1246                             2
 
 the aforementioned available services.  THE LOAN APPLICATION  SHALL  NOT
 BE  APPROVED  UNTIL  THE  SIGNED  REVERSE  MORTGAGE  WORKSHEET  GUIDE IS
 PROVIDED TO THE LENDER. A COPY OF THE REVERSE MORTGAGE  WORKSHEET  GUIDE
 SHALL BE PROVIDED TO THE BORROWER THAT SHALL HAVE INFORMATION INCLUDING,
 BUT  NOT  LIMITED  TO: HOW REVERSE MORTGAGES CAN AFFECT THE BORROWER AND
 THEIR HEIRS AND ESTATE; THE CONSEQUENCES  OF  DEFAULTING  ON  A  REVERSE
 MORTGAGE;  ALTERNATIVES  TO  A  REVERSE  MORTGAGE; AND THE IMPACT ON THE
 BORROWER'S ELIGIBILITY FOR GOVERNMENT ASSISTANCE PROGRAMS. The  form  of
 such  statement  and  affidavit  shall be developed by the DEPARTMENT OF
 FINANCIAL SERVICES, WHO MAY CONSULT WITH THE New York state  office  for
 the aging WHERE APPROPRIATE; and
   (h)  A  LENDER  SHALL  NOT ACCEPT A FINAL AND COMPLETE APPLICATION FOR
 REVERSE MORTGAGE LOAN FROM A PROSPECTIVE APPLICANT OR  ASSESS  ANY  FEES
 UPON  A  PROSPECTIVE APPLICANT UNTIL A LAPSE OF SEVEN DAYS FROM THE DATE
 OF COUNSELING, AS EVIDENCED BY THE COUNSELING CERTIFICATION, AND WITHOUT
 FIRST RECEIVING CERTIFICATION FROM  THE  APPLICANT  OR  THE  APPLICANT'S
 AUTHORIZED  REPRESENTATIVE  THAT  THE  APPLICANT HAS RECEIVED COUNSELING
 FROM AN AGENCY AS DESCRIBED IN PARAGRAPH  (G)  OF  THIS  SUBDIVISION  OR
 SEVEN  DAYS  FROM  RECEIPT  OF A SIGNED AFFIDAVIT EXPRESSLY WAIVING SUCH
 COUNSELING; AND
   (I) any such reverse mortgage shall expressly and conspicuously bear a
 legend identifying it as such; and
   [(i)] (J) subject to such rules or regulations as  the  superintendent
 of  financial  services may adopt, a reverse mortgage loan shall be made
 at either a fixed or variable rate of interest.
   § 2. Paragraphs (j), (k), (l) and (m)  of  subdivision  2  of  section
 280-a  of  the real property law, as added by chapter 613 of the laws of
 1993, paragraph (l) as further amended by section 104 of part A of chap-
 ter 62 of the laws of 2011, are amended to read as follows:
   (j) an authorized lender must deliver to the applicant  upon  applica-
 tion[,  if available,] a PLAIN LANGUAGE statement prepared by the [local
 or county] DEPARTMENT OF FINANCIAL SERVICES, WHO MAY  CONSULT  WITH  THE
 NEW  YORK  STATE  office for the aging, WHERE APPROPRIATE, on the advis-
 ability and  availability  of  independent  counseling  and  information
 services.  IN ADDITION TO THE PLAIN LANGUAGE NOTICE, NO REVERSE MORTGAGE
 LOAN APPLICATION SHALL BE TAKEN BY A LENDER UNLESS THE  LENDER  PROVIDES
 THE  PROSPECTIVE BORROWER, PRIOR TO HIS OR HER MEETING WITH A COUNSELING
 AGENCY ON REVERSE MORTGAGES, WITH A REVERSE MORTGAGE WORKSHEET GUIDE  TO
 BE  PREPARED  BY  THE  DEPARTMENT OF FINANCIAL SERVICES, WHO MAY CONSULT
 WITH THE NEW YORK STATE OFFICE FOR THE AGING WHERE APPROPRIATE. 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 coun-
 seling service as indicated on the statement supplied by the [county  or
 local office for the aging] DEPARTMENT OF FINANCIAL SERVICES 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 LOAN APPLICA-
 TION SHALL NOT BE APPROVED UNTIL THE SIGNED REVERSE  MORTGAGE  WORKSHEET
 GUIDE  IS  PROVIDED  TO THE LENDER. A COPY OF THE REVERSE MORTGAGE WORK-
 SHEET GUIDE SHALL BE PROVIDED TO THE BORROWER THAT SHALL  HAVE  INFORMA-
 TION  INCLUDING,  BUT  NOT LIMITED TO:  HOW REVERSE MORTGAGES CAN AFFECT
 THE BORROWER AND THEIR HEIRS AND ESTATE, THE CONSEQUENCES OF  DEFAULTING
 ON  A  REVERSE MORTGAGE, ALTERNATIVES TO A REVERSE MORTGAGE, AND IMPACTS

 S. 1246                             3
 
 ON THE BORROWER'S ELIGIBILITY FOR GOVERNMENTAL ASSISTANCE PROGRAMS.  The
 form  of  such statement and affidavit shall be developed by the DEPART-
 MENT OF FINANCIAL SERVICES, WHO MAY CONSULT  WITH  THE  New  York  state
 office for the aging WHERE APPROPRIATE; and
   (k)  A  LENDER SHALL NOT ACCEPT A FINAL AND COMPLETE APPLICATION FOR A
 REVERSE MORTGAGE LOAN FROM A PROSPECTIVE APPLICANT OR  ASSESS  ANY  FEES
 UPON  A  PROSPECTIVE APPLICANT UNTIL A LAPSE OF SEVEN DAYS FROM THE DATE
 OF COUNSELING, AS EVIDENCED BY THE COUNSELING CERTIFICATION, AND WITHOUT
 FIRST RECEIVING CERTIFICATION FROM  THE  APPLICANT  OR  THE  APPLICANT'S
 AUTHORIZED  REPRESENTATIVE  THAT  THE  APPLICANT HAS RECEIVED COUNSELING
 FROM AN AGENCY AS DESCRIBED IN PARAGRAPH  (J)  OF  THIS  SUBDIVISION  OR
 SEVEN  DAYS  FROM  RECEIPT  OF A SIGNED AFFIDAVIT EXPRESSLY WAIVING SUCH
 COUNSELING; AND
   (L) a reverse mortgage pursuant to this section  shall  expressly  and
 conspicuously bear a legend identifying it as such; and
   [(l)]  (M)  subject to such rules or regulations as the superintendent
 of financial services may adopt, a reverse mortgage loan shall  be  made
 at either a fixed or variable rate of interest; and
   [(m)]  (N)  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. This act shall take effect on the one hundred twentieth day after
 it shall have become a law.

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Senate Bill S1246

Sponsored By

Archive: Last Bill Status - In Senate Committee Aging Committee

2019-S1246 (ACTIVE) - Details

2019-S1246 (ACTIVE) - Summary

2019-S1246 (ACTIVE) - Sponsor Memo

2019-S1246 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S1246

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Sponsored By

Susan Serino

Archive: Last Bill Status - In Senate Committee Aging Committee

2019-S1246 (ACTIVE) - Details

2019-S1246 (ACTIVE) - Summary

2019-S1246 (ACTIVE) - Sponsor Memo

2019-S1246 (ACTIVE) - Bill Text download pdf

Comments