NY State Senate Bill 2021-S3793

Senate Bill S3793

2021-2022 Legislative Session

Provides for the establishment of the New York state home equity conversion information summary

download bill text pdf

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
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to aging
Jan 30, 2021	referred to aging

2021-S3793 (ACTIVE) - Details

Current Committee:: Senate Aging
Law Section:: Real Property Law
Laws Affected:: Add §280-c, RP L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S4494
2019-2020: S2373
2023-2024: S1541

2021-S3793 (ACTIVE) - Summary

Provides for the establishment of the New York state home equity conversion information summary to provide notice of mortgagor's right and responsibilities under reverse mortgage loans issued under the home equity conversion mortgage program of the federal Department of Housing and Urban Development; provides that every authorized lender must provide copies of such summary not less than 5 days prior to closing on a reverse mortgage loan; establishes a private right of action for violations of such provisions.

2021-S3793 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S3793

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the real property law, in relation to the provision of
certain information to mortgagors of reverse mortgages issued under the
federal home equity conversion mortgage for seniors program

 
PURPOSE OF BILL:

This bill requires that the Department of Financial Services issue a
reverse mortgage information summary sheet to mortgage originators.
These summary sheets will provide consumer rights information to seniors
to help them better understand these financial products.

 
SUMMARY OF PROVISIONS OF BILL:

Section 1: Amends the real property law concerning reverse mortgages to
provide that for all reverse mortgages issued under HUD's home equity
conversion mortgage program in New York State, the Department of Finan-

cial Services must issue a summary sheet to be provided to seniors prior
to the execution of a reverse mortgage loan.

The summary sheet will contain information useful to seniors, including
the real costs of reverse mortgage loans, information about fees, finan-
cial alternatives to reverse mortgages, responsibilities regarding mort-
gage insurance and tax payments, conditions that will trigger a default,
information about New York State-based organizations which provide HUD-
certified reverse mortgage counseling, how to contact legal services
organizations in the event of foreclosure, etc.

Lenders must provide the summary sheet to seniors not less than five
days prior to closing on a reverse mortgage.

This section also makes the information summary sheet an essential
component of future reverse mortgages, and requires that the senior sign
the sheet confirming receipt and that the originator maintain a copy.

The section will be enforceable via treble damages and attorney's fees
for prevailing plaintiffs.

Section 2: The act will take effect on the one hundred twentieth day
after it becomes law, but the Department of Financial Services is
authorized to immediately take any actions necessary for its implementa-
tion.

 
EXISTING LAW:

Under current law, home equity conversion mortgage lenders under the HUD
program are not mandated to provide an extensive reverse mortgage infor-
mation summary sheet to seniors.

 
JUSTIFICATION:

Reverse mortgages are complicated and expensive financial products.
Many seniors do not understand how they work or what their true longterm
costs are. Exacerbating this problem are unscrupulous lenders who market
reverse mortgages as public services or government-sponsored products.
Inadequate regulation of this industry resulted in a sharp uptick in
defaults in 2016, as more seniors fell into foreclosure on these
products, losing not only their homes, but also their most significant
financial assets.

Foreclosures in the reverse mortgage industry have taken place against
seniors for making payments mere cents short of their tax or mortgage
insurance bills. Lenders eager to tap the equity in these homes are
sometimes aggressive to foreclose and see a return on their investment.
Seniors must be provided with comprehensive information about these
products, their true long-term costs, conditions that will result in a
default, methods to reduce their tax liability, available services to
help them in the event of a default and/or foreclosure, etc.

This required summary sheet is one step toward ensuring seniors have all
of the information they need to make an educated and fully informed
decision about whether a reverse mortgage is the right financial product
to address their economic situation.

 
LEGISLATIVE HISTORY:

2017-18: S4494/A5822 - JUDICIARY/ 01/03/18 ordered to third reading
cal.416

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
120th day after it shall have become law

2021-S3793 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3793
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 30, 2021
                                ___________
 
 Introduced  by  Sen.  COMRIE -- 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 the  provision  of
   certain  information  to  mortgagors 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-c to read as follows:
   § 280-C. FEDERAL HOME EQUITY CONVERSION MORTGAGE  INFORMATION  SUMMARY
 SHEET.  1.  FOR  THE  PURPOSES OF THIS SECTION THE FOLLOWING TERMS SHALL
 HAVE THE FOLLOWING 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) MORTGAGOR. A MORTGAGOR AS DEFINED IN SECTION TWO HUNDRED EIGHTY OF
 THIS ARTICLE.
   (D)  DEPARTMENT.  THE  DEPARTMENT  OF  FINANCIAL  SERVICES ESTABLISHED
 PURSUANT TO SECTION ONE HUNDRED TWO OF THE FINANCIAL SERVICES LAW.
   2. THE DEPARTMENT SHALL ESTABLISH AND DISTRIBUTE TO  AUTHORIZED  LEND-
 ERS,  AND  PERIODICALLY  UPDATE, A NEW YORK STATE HOME EQUITY CONVERSION
 INFORMATION SUMMARY. SUCH SUMMARY SHALL INCLUDE, BUT NOT BE LIMITED TO:
   (A) NOTICE THAT REVERSE MORTGAGE LOANS ARE NOT FREE OR COST FREE,  AND
 SUCH  LOANS  HAVE  ASSOCIATED  COSTS  THAT ARE INCLUDED IN THE FINANCING
 THEREOF;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00028-01-1

 S. 3793                             2
 
   (B) A SCHEDULE OF PAYMENTS TO BE MADE TO AND FROM THE  MORTGAGOR,  AND
 THE  TOTAL PAYMENT FOR BOTH THE MORTGAGEE AND THE AUTHORIZED LENDER OVER
 THE TERM OF THE REVERSE MORTGAGE LOAN CONTINGENT UPON THE TYPE  OF  SUCH
 LOAN BEING OFFERED;
   (C)  A  STATEMENT ADVISING MORTGAGORS TO CONSULT WITH LICENSED PROFES-
 SIONALS REGARDING THE TAX AND ESTATE PLANNING  CONSEQUENCES  OF  REVERSE
 MORTGAGE LOANS;
   (D)  WHERE APPLICABLE, A DESCRIPTION OF THE PREPAYMENT AND REFINANCING
 PROVISIONS OF THE REVERSE MORTGAGE LOAN;
   (E) AN EXPLANATION AND ITEMIZATION OF THE POTENTIAL COSTS  OF  REVERSE
 MORTGAGE  LOANS, INCLUDING THE RATE OF INTEREST AND TOTAL INTEREST PAYA-
 BLE ON SUCH LOAN;
   (F) A SUMMARY OF ACTIONS OR CONDITIONS THAT WILL CONSTITUTE A  DEFAULT
 OF THE REVERSE MORTGAGE LOAN;
   (G)  A  SUMMARY  AND  EXPLANATION  OF  ALTERNATIVES TO ENTERING INTO A
 REVERSE MORTGAGE LOAN ON THE BASIS OF ECONOMIC HARDSHIP  INCLUDING,  BUT
 NOT  LIMITED  TO,  DIRECT  SALE  OF  THE  RESIDENCE,  SOCIAL  SAFETY NET
 PROGRAMS, DEBT CONSOLIDATION OR ECONOMIC COUNSELING;
   (H) INFORMATION ON A MORTGAGOR'S BASIC RIGHTS IN THE FORECLOSURE PROC-
 ESS;
   (I) A SUMMARY OF THE REAL PROPERTY TAX EXEMPTIONS WHICH ARE  AVAILABLE
 TO THE MORTGAGOR IN ORDER TO REDUCE HIS OR HER COST OF LIVING;
   (J)  INFORMATION ABOUT NEW YORK STATE-BASED ORGANIZATIONS THAT PROVIDE
 FEDERAL DEPARTMENT OF HOUSING AND URBAN  DEVELOPMENT  CERTIFIED  REVERSE
 MORTGAGE COUNSELING;
   (K)  INFORMATION  ON  LEGAL  ASSISTANCE AND ADVOCACY ORGANIZATIONS AND
 SERVICES WHICH PROVIDE  ASSISTANCE  TO  MORTGAGORS  IN  THE  EVENT  THAT
 COMPLICATIONS OR ISSUES ARISE RELATING TO THE REVERSE MORTGAGE LOAN; AND
   (L)  SUCH  OTHER INFORMATION AS THE DEPARTMENT SHALL DEEM NECESSARY TO
 FULLY INFORM MORTGAGORS OF THEIR RIGHTS  AND  RESPONSIBILITIES  UNDER  A
 REVERSE MORTGAGE LOAN.
   3.  NOT  LESS THAN FIVE DAYS PRIOR TO THE CLOSING UPON A REVERSE MORT-
 GAGE LOAN, THE AUTHORIZED LENDER SHALL  PROVIDE  THE  MORTGAGOR  WITH  A
 COMPLETED  NEW  YORK STATE HOME EQUITY CONVERSION INFORMATION SUMMARY IN
 DUPLICATE.   EACH MORTGAGOR SHALL SIGN  BOTH  COPIES  OF  SUCH  SUMMARY,
 ATTESTING THAT HE OR SHE HAS READ AND FULLY UNDERSTANDS THE SUMMARY. ONE
 COPY  THEREOF  SHALL  BE RETAINED BY THE AUTHORIZED LENDER AND THE OTHER
 SHALL BE RETAINED BY THE MORTGAGOR'S ATTORNEY.
   4. THE PROVISION  OF  THE  INFORMATION  SUMMARY  ESTABLISHED  BY  THIS
 SECTION IS INTEGRAL TO THE EXECUTION OF A REVERSE MORTGAGE LOAN, THUS IN
 THE ABSENCE OF SUCH A SUMMARY THE RELATED REVERSE MORTGAGE LOAN SHALL BE
 NULL AND VOID.
   5.  ANY PERSON WHO HAS BEEN INJURED BY REASON OF ANY VIOLATION OF THIS
 SECTION OR THE RULES AND REGULATIONS RELATED THERETO MAY BRING AN ACTION
 IN HIS OR HER OWN NAME TO RECOVER TREBLE HIS OR HER ACTUAL DAMAGES, PLUS
 THE PREVAILING PLAINTIFF'S REASONABLE ATTORNEYS FEE.
   6. THE SUPERINTENDENT OF FINANCIAL SERVICES IS AUTHORIZED  TO  PROMUL-
 GATE ANY RULES OR REGULATIONS HE OR SHE DEEMS NECESSARY TO IMPLEMENT THE
 PROVISIONS OF THIS SECTION.
   § 2. This act shall take effect on the one hundred twentieth day after
 it  shall have become a law. Effective immediately, the addition, amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation of this act on its effective date are authorized to be  made  and
 completed on or before such effective date.

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