Bill Text: NY A05626 | 2019-2020 | General Assembly | Introduced


Bill Title: Provides for the regulation of reverse mortgages that are issued under the federal home equity conversion mortgage program; prohibits the deceptive advertising and issuance of such mortgages; requires that independent counseling be provided to applicants for such mortgages; requires lenders to provide notice of duty of mortgagor to pay certain property related expenses when equity in the real property is low or depleted; prohibits foreclosure on mortgaged property based on the failure of the mortgagor to live on the property, until an inspection has been made at the property; establishes a proved right of action with treble damages for violations of such provisions.

Spectrum: Partisan Bill (Democrat 32-0)

Status: (Engrossed) 2019-05-21 - RETURNED TO ASSEMBLY [A05626 Detail]

Download: New_York-2019-A05626-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          5626
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    February 14, 2019
                                       ___________
        Introduced  by  M.  of A. WEINSTEIN, MOSLEY, ABBATE, COLTON, CYMBROWITZ,
          GALEF, ZEBROWSKI, JOYNER, ORTIZ,  GLICK,  DINOWITZ,  CARROLL,  D'URSO,
          STECK,  HYNDMAN,  RICHARDSON,  AUBRY,  SEAWRIGHT,  ABINANTI,  WALLACE,
          CAHILL, LUPARDO, BURKE, TAYLOR -- Multi-Sponsored by -- M. of A. COOK,
          ENGLEBRIGHT, NOLAN, SIMON, THIELE -- read once  and  referred  to  the
          Committee on Judiciary
        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:
     1    Section 1. The real property law is amended by adding  a  new  section
     2  280-b to read as follows:
     3    §  280-b.  Federal home equity conversion mortgage regulation. 1.  For
     4  the purposes of this section, the following terms shall have the follow-
     5  ing meanings:
     6    (a) Reverse mortgage loan. A  reverse  mortgage  loan  as  defined  in
     7  section  two  hundred  eighty  of  this article, which is issued in this
     8  state pursuant to  the  home  equity  conversion  mortgage  for  seniors
     9  program operated by the federal Department of Housing and Urban Develop-
    10  ment.
    11    (b)  Authorized lender. An authorized lender as defined in section two
    12  hundred eighty of this  article  authorized  to  make  reverse  mortgage
    13  loans, as defined in this section.
    14    (c)  Superintendent.  The  superintendent of financial services estab-
    15  lished pursuant to section two hundred two  of  the  financial  services
    16  law.
    17    2.  No  authorized  lender  or  any other party or entity shall in any
    18  manner, in the marketing or offering of reverse mortgage  loans,  engage
    19  in any unfair or deceptive practices in connection with the marketing or
    20  offering of reverse mortgage loans, and, additionally, shall not:
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00905-01-9

        A. 5626                             2
     1    (a)  use  the  words  "public service announcement" in any commercial,
     2  mailing, advertisement or writing relating thereto; or
     3    (b)  use  the  words  "government  insured"  or other similar language
     4  representing that reverse mortgage  loans  are  insured,  supported  and
     5  sponsored  by any governmental entity in any commercial, mailing, adver-
     6  tisement or writing relating thereto; or
     7    (c) represent that any such loan is other than a commercial product.
     8    3. (a) Every authorized lender or its agent shall  provide,  with  any
     9  solicitation  for reverse mortgage products mailed to a physical address
    10  within the state, supplemental consumer protection materials the content
    11  and form of which shall be specified by the superintendent or his or her
    12  designee.
    13    (b) Every authorized lender shall provide each applicant or  potential
    14  applicant  for  a  reverse  mortgage  loan with the telephone number and
    15  internet website address provided by the federal Department  of  Housing
    16  and  Urban Development for the purposes of acquiring home equity conver-
    17  sion mortgage counseling.
    18    (c) The superintendent is authorized  to  promulgate  such  rules  and
    19  regulations  as  he  or  she  shall  deem  necessary  to  implement  the
    20  provisions of this subdivision.
    21    4. (a) Reverse mortgages secured by residential real  property  within
    22  the  state  shall be subject to the rules and regulations of the federal
    23  Department of Housing and Urban Development relating to the home  equity
    24  conversion mortgage program.
    25    (b) For all borrowers whose tax payments, mortgage insurance payments,
    26  homeowners insurance payments, or payments stemming from any other prop-
    27  erty  obligation or obligations are administered by the authorized lend-
    28  er, and where these payments are derived from the proceeds of the  mort-
    29  gage,  the  authorized  lender  shall provide on the borrower's periodic
    30  account statement the current balance remaining in the  borrower's  line
    31  of credit or lifetime expectancy set aside, the projected annual proper-
    32  ty  charges  for  that year, and a notice which reads in at least twelve
    33  point type: "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING  PAID  BY  THE
    34  PROCEEDS  OF  THIS  MORTGAGE.  THE  FUNDS  THAT  HAVE BEEN SET ASIDE ARE
    35  EXPECTED TO BE EXHAUSTED AFTER THE TAX AND INSURANCE PAYMENTS OF (SPECI-
    36  FY EXPECTED MONTH AND YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY
    37  THE TAXES AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY
    38  BE LOST TO FORECLOSURE. PLEASE NOTE THAT AS TAX  AND  INSURANCE  AMOUNTS
    39  CAN VARY YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES."
    40    (c)  An  authorized  lender  shall, by telephone and first class mail,
    41  inform and provide notice to a mortgagor when his  or  her  home  equity
    42  line  of  credit or life expectancy set aside is depleted to ten percent
    43  or less of its value. Such notice shall inform the mortgagor of  his  or
    44  her obligations relating to such real property including, but not limit-
    45  ed  to, mortgage insurance, homeowners insurance and real property taxes
    46  previously paid by such line of credit or life expectancy set aside, and
    47  that such obligations must continue to be paid when the home equity line
    48  of credit or life expectancy set aside is depleted.   Such notice  shall
    49  use  plain  language, written in a clear and coherent manner using words
    50  with common and every day meanings, appropriately divided and  captioned
    51  by its various sections.
    52    (d)  Each  authorized lender shall, by telephone and first class mail,
    53  inform and provide notice to a mortgagor when his  or  her  home  equity
    54  line  of  credit  or  life expectancy set aside is depleted. Such notice
    55  shall inform the mortgagor of his or her  obligations  relating  to  the
    56  mortgaged  real  property including, but not limited to, mortgage insur-

        A. 5626                             3
     1  ance, homeowners insurance and real property taxes, and  that  the  home
     2  equity  line  of  credit or life expectancy set aside will no longer pay
     3  these obligations.  Such notice shall use plain language, written  in  a
     4  clear  and  coherent  manner using words with common and every day mean-
     5  ings, appropriately divided and captioned by its various sections.
     6    5. No authorized lender shall make an advance payment  for  any  obli-
     7  gation arising from mortgaged real property. Furthermore, in the event a
     8  mortgagor defaults upon the payment of mortgage insurance premium, home-
     9  owners'  insurance premium or real property tax related to the mortgaged
    10  property, the authorized lender may only pay those premiums and/or taxes
    11  which are in arrears.
    12    6. In the event that an authorized lender  seeks  to  foreclose  on  a
    13  reverse  mortgage  loan on the basis that the mortgaged real property is
    14  no longer the primary residence of or  occupied  by  the  mortgagor,  if
    15  during  the  verification  of  the  mortgagor's primary residence and/or
    16  occupancy no responses are received in  response  to  mailings  relating
    17  thereto,  such  lender  shall  cause  a telephone call to be made to the
    18  mortgagor, or if the mortgagor is unreachable by telephone, a designated
    19  third-party specified by the mortgagor, and an in  person  visit  to  be
    20  made to the mortgagor at the mortgaged real property to be made prior to
    21  the  commencement of any foreclosure proceeding.  During such visit, the
    22  authorized lender or its agent shall provide clear information as to who
    23  they are, that the visit pertains to the reverse  mortgage,  the  reason
    24  for  the home visit, and the telephone number to call for further infor-
    25  mation.  The authorized lender must wait at least thirty days  following
    26  such  visit,  in  addition to any additional time or notice requirements
    27  specified by any other provision of law, before initiating a foreclosure
    28  action on the basis that the mortgaged real property is  no  longer  the
    29  primary  residence  of  the  mortgagor.  If  the  mortgagor contacts the
    30  authorized lender and provides proof of  residence  or  occupancy  after
    31  such  visit  but  before  the  commencement of a foreclosure action, the
    32  authorized lender shall  be  barred  from  initiating  such  foreclosure
    33  action.   Furthermore, no authorized lender shall charge a mortgagor any
    34  fee for any such visit and inspection. This prohibition on  the  imposi-
    35  tion  of  fees  shall  include  any and all inspections conducted by the
    36  authorized lender to verify the status of the reverse mortgage,  or  any
    37  suspected or actual default condition.
    38    7.  Both  the authorized lender and the mortgagor shall be represented
    39  by an attorney or attorneys at the time of the closing  on  the  reverse
    40  mortgage,  and  each such party shall have at least one attorney present
    41  to conduct the closing.
    42    8. Any person who has been injured by reason of any violation of  this
    43  section  or  any  violation  of the rules and regulations of the federal
    44  Department of Housing and Urban Development relating to the home  equity
    45  conversion  mortgage  program may bring an action in his or her own name
    46  to recover treble  his  or  her  actual  damages,  plus  the  prevailing
    47  plaintiff's reasonable attorney's fees.
    48    9.  Compliance with the provisions of this section shall be conditions
    49  precedent to commencing an  action  to  foreclose  upon  a  home  equity
    50  conversion  mortgage which is subject to the provisions of this section,
    51  and the failure to comply therewith shall be a  complete  defense  to  a
    52  foreclosure action.
    53    §  2.  This  act shall take effect on the ninetieth day after it shall
    54  have become a law; provided, that, effective immediately the superinten-
    55  dent of financial services is authorized  and  directed  to  amend,  add
    56  and/or  repeal  any  rules  and  regulations  necessary to implement the

        A. 5626                             4
     1  provision of this act within 180 days after this act shall have become a
     2  law.
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