S T A T E   O F   N E W   Y O R K
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                                   4407
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              March 11, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- 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 regulation of
   reverse mortgages issued under  the  federal  home  equity  conversion
   mortgage for seniors program

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The real property law is amended by adding  a  new  section
 280-b to read as follows:
   §  280-B.  FEDERAL HOME EQUITY CONVERSION MORTGAGE REGULATION. 1.  FOR
 THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOW-
 ING MEANINGS:
   (A) REVERSE MORTGAGE LOAN. A  REVERSE  MORTGAGE  LOAN  AS  DEFINED  IN
 SECTION  TWO  HUNDRED  EIGHTY  OF  THIS ARTICLE, WHICH IS ISSUED IN THIS
 STATE PURSUANT TO  THE  HOME  EQUITY  CONVERSION  MORTGAGE  FOR  SENIORS
 PROGRAM OPERATED BY THE FEDERAL DEPARTMENT OF HOUSING AND URBAN DEVELOP-
 MENT.
   (B)  AUTHORIZED LENDER. AN AUTHORIZED LENDER AS DEFINED IN SECTION TWO
 HUNDRED EIGHTY OF THIS  ARTICLE  AUTHORIZED  TO  MAKE  REVERSE  MORTGAGE
 LOANS, AS DEFINED IN THIS SECTION.
   (C)  SUPERINTENDENT.  THE  SUPERINTENDENT OF FINANCIAL SERVICES ESTAB-
 LISHED PURSUANT TO SECTION TWO HUNDRED TWO  OF  THE  FINANCIAL  SERVICES
 LAW.
   2.  NO  AUTHORIZED  LENDER  OR  ANY OTHER PARTY OR ENTITY SHALL IN ANY
 MANNER, IN THE MARKETING OR OFFERING OF REVERSE MORTGAGE  LOANS,  ENGAGE
 IN ANY UNFAIR OR DECEPTIVE PRACTICES IN CONNECTION WITH THE MARKETING OR
 OFFERING OF REVERSE MORTGAGE LOANS, AND, ADDITIONALLY, SHALL NOT:
   (A)  USE  THE  WORDS  "PUBLIC SERVICE ANNOUNCEMENT" IN ANY COMMERCIAL,
 MAILING, ADVERTISEMENT OR WRITING RELATING THERETO; OR
   (B) USE THE WORDS  "GOVERNMENT  INSURED"  OR  OTHER  SIMILAR  LANGUAGE
 REPRESENTING  THAT  REVERSE  MORTGAGE  LOANS  ARE INSURED, SUPPORTED AND
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00905-01-9

 S. 4407                             2
 
 SPONSORED BY ANY GOVERNMENTAL ENTITY IN ANY COMMERCIAL, MAILING,  ADVER-
 TISEMENT OR WRITING RELATING THERETO; OR
   (C) REPRESENT THAT ANY SUCH LOAN IS OTHER THAN A COMMERCIAL PRODUCT.
   3.  (A)  EVERY  AUTHORIZED LENDER OR ITS AGENT SHALL PROVIDE, WITH ANY
 SOLICITATION FOR REVERSE MORTGAGE PRODUCTS MAILED TO A PHYSICAL  ADDRESS
 WITHIN THE STATE, SUPPLEMENTAL CONSUMER PROTECTION MATERIALS THE CONTENT
 AND FORM OF WHICH SHALL BE SPECIFIED BY THE SUPERINTENDENT OR HIS OR HER
 DESIGNEE.
   (B)  EVERY AUTHORIZED LENDER SHALL PROVIDE EACH APPLICANT OR POTENTIAL
 APPLICANT FOR A REVERSE MORTGAGE LOAN  WITH  THE  TELEPHONE  NUMBER  AND
 INTERNET  WEBSITE  ADDRESS PROVIDED BY THE FEDERAL DEPARTMENT OF HOUSING
 AND URBAN DEVELOPMENT FOR THE PURPOSES OF ACQUIRING HOME EQUITY  CONVER-
 SION MORTGAGE COUNSELING.
   (C)  THE  SUPERINTENDENT  IS  AUTHORIZED  TO PROMULGATE SUCH RULES AND
 REGULATIONS  AS  HE  OR  SHE  SHALL  DEEM  NECESSARY  TO  IMPLEMENT  THE
 PROVISIONS OF THIS SUBDIVISION.
   4.  (A)  REVERSE MORTGAGES SECURED BY RESIDENTIAL REAL PROPERTY WITHIN
 THE STATE SHALL BE SUBJECT TO THE RULES AND REGULATIONS OF  THE  FEDERAL
 DEPARTMENT  OF HOUSING AND URBAN DEVELOPMENT RELATING TO THE HOME EQUITY
 CONVERSION MORTGAGE PROGRAM.
   (B) FOR ALL BORROWERS WHOSE TAX PAYMENTS, MORTGAGE INSURANCE PAYMENTS,
 HOMEOWNERS INSURANCE PAYMENTS, OR PAYMENTS STEMMING FROM ANY OTHER PROP-
 ERTY OBLIGATION OR OBLIGATIONS ARE ADMINISTERED BY THE AUTHORIZED  LEND-
 ER,  AND WHERE THESE PAYMENTS ARE DERIVED FROM THE PROCEEDS OF THE MORT-
 GAGE, THE AUTHORIZED LENDER SHALL PROVIDE  ON  THE  BORROWER'S  PERIODIC
 ACCOUNT  STATEMENT  THE CURRENT BALANCE REMAINING IN THE BORROWER'S LINE
 OF CREDIT OR LIFETIME EXPECTANCY SET ASIDE, THE PROJECTED ANNUAL PROPER-
 TY CHARGES FOR THAT YEAR, AND A NOTICE WHICH READS IN  AT  LEAST  TWELVE
 POINT  TYPE:  "YOUR  TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY THE
 PROCEEDS OF THIS MORTGAGE. THE  FUNDS  THAT  HAVE  BEEN  SET  ASIDE  ARE
 EXPECTED TO BE EXHAUSTED AFTER THE TAX AND INSURANCE PAYMENTS OF (SPECI-
 FY EXPECTED MONTH AND YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY
 THE TAXES AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY
 BE  LOST  TO  FORECLOSURE. PLEASE NOTE THAT AS TAX AND INSURANCE AMOUNTS
 CAN VARY YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES."
   (C) AN AUTHORIZED LENDER SHALL, BY TELEPHONE  AND  FIRST  CLASS  MAIL,
 INFORM  AND  PROVIDE  NOTICE  TO A MORTGAGOR WHEN HIS OR HER HOME EQUITY
 LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE IS DEPLETED TO  TEN  PERCENT
 OR  LESS  OF ITS VALUE. SUCH NOTICE SHALL INFORM THE MORTGAGOR OF HIS OR
 HER OBLIGATIONS RELATING TO SUCH REAL PROPERTY INCLUDING, BUT NOT LIMIT-
 ED TO, MORTGAGE INSURANCE, HOMEOWNERS INSURANCE AND REAL PROPERTY  TAXES
 PREVIOUSLY PAID BY SUCH LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE, AND
 THAT SUCH OBLIGATIONS MUST CONTINUE TO BE PAID WHEN THE HOME EQUITY LINE
 OF  CREDIT  OR LIFE EXPECTANCY SET ASIDE IS DEPLETED.  SUCH NOTICE SHALL
 USE PLAIN LANGUAGE, WRITTEN IN A CLEAR AND COHERENT MANNER  USING  WORDS
 WITH  COMMON AND EVERY DAY MEANINGS, APPROPRIATELY DIVIDED AND CAPTIONED
 BY ITS VARIOUS SECTIONS.
   (D) EACH AUTHORIZED LENDER SHALL, BY TELEPHONE AND FIRST  CLASS  MAIL,
 INFORM  AND  PROVIDE  NOTICE  TO A MORTGAGOR WHEN HIS OR HER HOME EQUITY
 LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE  IS  DEPLETED.  SUCH  NOTICE
 SHALL  INFORM  THE  MORTGAGOR  OF HIS OR HER OBLIGATIONS RELATING TO THE
 MORTGAGED REAL PROPERTY INCLUDING, BUT NOT LIMITED TO,  MORTGAGE  INSUR-
 ANCE,  HOMEOWNERS  INSURANCE  AND REAL PROPERTY TAXES, AND THAT THE HOME
 EQUITY LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE WILL  NO  LONGER  PAY
 THESE  OBLIGATIONS.   SUCH NOTICE SHALL USE PLAIN LANGUAGE, WRITTEN IN A

 S. 4407                             3
 
 CLEAR AND COHERENT MANNER USING WORDS WITH COMMON AND  EVERY  DAY  MEAN-
 INGS, APPROPRIATELY DIVIDED AND CAPTIONED BY ITS VARIOUS SECTIONS.
   5.  NO  AUTHORIZED  LENDER SHALL MAKE AN ADVANCE PAYMENT FOR ANY OBLI-
 GATION ARISING FROM MORTGAGED REAL PROPERTY. FURTHERMORE, IN THE EVENT A
 MORTGAGOR DEFAULTS UPON THE PAYMENT OF MORTGAGE INSURANCE PREMIUM, HOME-
 OWNERS' INSURANCE PREMIUM OR REAL PROPERTY TAX RELATED TO THE  MORTGAGED
 PROPERTY, THE AUTHORIZED LENDER MAY ONLY PAY THOSE PREMIUMS AND/OR TAXES
 WHICH ARE IN ARREARS.
   6.  IN  THE  EVENT  THAT  AN AUTHORIZED LENDER SEEKS TO FORECLOSE ON A
 REVERSE MORTGAGE LOAN ON THE BASIS THAT THE MORTGAGED REAL  PROPERTY  IS
 NO  LONGER  THE  PRIMARY  RESIDENCE  OF OR OCCUPIED BY THE MORTGAGOR, IF
 DURING THE VERIFICATION OF  THE  MORTGAGOR'S  PRIMARY  RESIDENCE  AND/OR
 OCCUPANCY  NO  RESPONSES  ARE  RECEIVED IN RESPONSE TO MAILINGS RELATING
 THERETO, SUCH LENDER SHALL CAUSE A TELEPHONE CALL  TO  BE  MADE  TO  THE
 MORTGAGOR, OR IF THE MORTGAGOR IS UNREACHABLE BY TELEPHONE, A DESIGNATED
 THIRD-PARTY  SPECIFIED  BY  THE  MORTGAGOR, AND AN IN PERSON VISIT TO BE
 MADE TO THE MORTGAGOR AT THE MORTGAGED REAL PROPERTY TO BE MADE PRIOR TO
 THE COMMENCEMENT OF ANY FORECLOSURE PROCEEDING.  DURING SUCH VISIT,  THE
 AUTHORIZED LENDER OR ITS AGENT SHALL PROVIDE CLEAR INFORMATION AS TO WHO
 THEY  ARE,  THAT  THE VISIT PERTAINS TO THE REVERSE MORTGAGE, THE REASON
 FOR THE HOME VISIT, AND THE TELEPHONE NUMBER TO CALL FOR FURTHER  INFOR-
 MATION.   THE AUTHORIZED LENDER MUST WAIT AT LEAST THIRTY DAYS FOLLOWING
 SUCH VISIT, IN ADDITION TO ANY ADDITIONAL TIME  OR  NOTICE  REQUIREMENTS
 SPECIFIED BY ANY OTHER PROVISION OF LAW, BEFORE INITIATING A FORECLOSURE
 ACTION  ON  THE  BASIS THAT THE MORTGAGED REAL PROPERTY IS NO LONGER THE
 PRIMARY RESIDENCE OF  THE  MORTGAGOR.  IF  THE  MORTGAGOR  CONTACTS  THE
 AUTHORIZED  LENDER  AND  PROVIDES  PROOF OF RESIDENCE OR OCCUPANCY AFTER
 SUCH VISIT BUT BEFORE THE COMMENCEMENT  OF  A  FORECLOSURE  ACTION,  THE
 AUTHORIZED  LENDER  SHALL  BE  BARRED  FROM  INITIATING SUCH FORECLOSURE
 ACTION.  FURTHERMORE, NO AUTHORIZED LENDER SHALL CHARGE A MORTGAGOR  ANY
 FEE  FOR  ANY SUCH VISIT AND INSPECTION. THIS PROHIBITION ON THE IMPOSI-
 TION OF FEES SHALL INCLUDE ANY AND  ALL  INSPECTIONS  CONDUCTED  BY  THE
 AUTHORIZED  LENDER  TO VERIFY THE STATUS OF THE REVERSE MORTGAGE, OR ANY
 SUSPECTED OR ACTUAL DEFAULT CONDITION.
   7. BOTH THE AUTHORIZED LENDER AND THE MORTGAGOR SHALL  BE  REPRESENTED
 BY  AN  ATTORNEY  OR ATTORNEYS AT THE TIME OF THE CLOSING ON THE REVERSE
 MORTGAGE, AND EACH SUCH PARTY SHALL HAVE AT LEAST ONE  ATTORNEY  PRESENT
 TO CONDUCT THE CLOSING.
   8.  ANY PERSON WHO HAS BEEN INJURED BY REASON OF ANY VIOLATION OF THIS
 SECTION OR ANY VIOLATION OF THE RULES AND  REGULATIONS  OF  THE  FEDERAL
 DEPARTMENT  OF HOUSING AND URBAN DEVELOPMENT RELATING TO THE HOME EQUITY
 CONVERSION MORTGAGE PROGRAM MAY BRING AN ACTION IN HIS OR HER  OWN  NAME
 TO  RECOVER  TREBLE  HIS  OR  HER  ACTUAL  DAMAGES,  PLUS THE PREVAILING
 PLAINTIFF'S REASONABLE ATTORNEY'S FEES.
   9. COMPLIANCE WITH THE PROVISIONS OF THIS SECTION SHALL BE  CONDITIONS
 PRECEDENT  TO  COMMENCING  AN  ACTION  TO  FORECLOSE  UPON A HOME EQUITY
 CONVERSION MORTGAGE WHICH IS SUBJECT TO THE PROVISIONS OF THIS  SECTION,
 AND  THE  FAILURE  TO  COMPLY THEREWITH SHALL BE A COMPLETE DEFENSE TO A
 FORECLOSURE ACTION.
   § 2. This act shall take effect on the ninetieth day  after  it  shall
 have become a law; provided, that, effective immediately the superinten-
 dent  of  financial  services  is  authorized and directed to amend, add
 and/or repeal any rules  and  regulations  necessary  to  implement  the
 provision of this act within 180 days after this act shall have become a
 law.