Bill Text: NY S02758 | 2017-2018 | General Assembly | Amended

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Bill Title: 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.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-06-20 - COMMITTED TO RULES [S02758 Detail]

Download: New_York-2017-S02758-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                         2758--A
                               2017-2018 Regular Sessions
                    IN SENATE
                                    January 17, 2017
                                       ___________
        Introduced  by  Sen.  SERINO -- read twice and ordered printed, and when
          printed to be  committed  to  the  Committee  on  Aging  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
        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:
     1    Section 1. Paragraphs (g), (h) and (i) of subdivision 2 of section 280
     2  of  the  real property law, as added by chapter 613 of the laws of 1993,
     3  paragraph (i) as further amended by section 104 of part A of chapter  62
     4  of the laws of 2011, are amended to read as follows:
     5    (g)  an authorized lender must deliver to the applicant, upon applica-
     6  tion[, if available,] a plain language statement prepared by the  [local
     7  or county] department of financial services who may consult with the New
     8  York  state office for the aging, where appropriate, on the advisability
     9  and availability of independent counseling and information services.  In
    10  addition to the plain language notice, no reverse mortgage loan applica-
    11  tion  shall be taken by a lender unless the lender provides the prospec-
    12  tive borrower, prior to his or her meeting with a counseling  agency  on
    13  reverse  mortgages,  with  a  reverse  mortgage  worksheet  guide  to be
    14  prepared by the department of financial services who  may  consult  with
    15  the  New  York state office for the aging where appropriate. Further, no
    16  reverse mortgage commitment shall be  issued  by  an  authorized  lender
    17  until  the applicant presents, in writing, a statement that the terms of
    18  the reverse mortgage loan have been explained by an attorney, a  housing
    19  and  urban  development  certified  counselor  or  any  other counseling
    20  service as indicated on the statement supplied by the [county  or  local
    21  office for the aging] department of financial services or a signed affi-
    22  davit  indicating  that the applicant, although made aware of the impor-
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07906-03-7
        S. 2758--A                          2
     1  tance of counseling and its local availability through the provision  of
     2  such information by the authorized lender, chooses not to utilize any of
     3  the  aforementioned  available services.  The loan application shall not
     4  be  approved  until  the  signed  reverse  mortgage  worksheet  guide is
     5  provided to the lender. A copy of the reverse mortgage  worksheet  guide
     6  shall be provided to the borrower that shall have information including,
     7  but  not  limited  to: how reverse mortgages can affect the borrower and
     8  their heirs and estate; the consequences  of  defaulting  on  a  reverse
     9  mortgage;  alternatives  to  a  reverse  mortgage; and the impact on the
    10  borrower's eligibility for government assistance programs. The  form  of
    11  such  statement  and  affidavit  shall be developed by the department of
    12  financial services, who may consult with the New York state  office  for
    13  the aging where appropriate; and
    14    (h)  a  lender  shall  not accept a final and complete application for
    15  reverse mortgage loan from a prospective applicant or  assess  any  fees
    16  upon  a  prospective applicant until a lapse of seven days from the date
    17  of counseling, as evidenced by the counseling certification, and without
    18  first receiving certification from  the  applicant  or  the  applicant's
    19  authorized  representative  that  the  applicant has received counseling
    20  from an agency as described in paragraph  (g)  of  this  subdivision  or
    21  seven  days  from  receipt  of a signed affidavit expressly waiving such
    22  counseling; and
    23    (i) any such reverse mortgage shall expressly and conspicuously bear a
    24  legend identifying it as such; and
    25    [(i)] (j) subject to such rules or regulations as  the  superintendent
    26  of  financial  services may adopt, a reverse mortgage loan shall be made
    27  at either a fixed or variable rate of interest.
    28    § 2. Paragraphs (j), (k), (l) and (m)  of  subdivision  2  of  section
    29  280-a  of  the real property law, as added by chapter 613 of the laws of
    30  1993, paragraph (l) as further amended by section 104 of part A of chap-
    31  ter 62 of the laws of 2011, are amended to read as follows:
    32    (j) an authorized lender must deliver to the applicant  upon  applica-
    33  tion[,  if available,] a plain language statement prepared by the [local
    34  or county] department of financial services, who may  consult  with  the
    35  New  York  state  office for the aging, where appropriate, on the advis-
    36  ability and  availability  of  independent  counseling  and  information
    37  services.  In addition to the plain language notice, no reverse mortgage
    38  loan application shall be taken by a lender unless the  lender  provides
    39  the  prospective borrower, prior to his or her meeting with a counseling
    40  agency on reverse mortgages, with a reverse mortgage worksheet guide  to
    41  be  prepared  by  the  department of financial services, who may consult
    42  with the New York state office for the aging where appropriate. Further,
    43  no reverse mortgage commitment shall be issued by the authorized  lender
    44  until  the applicant presents, in writing, a statement that the terms of
    45  the reverse mortgage loan have been explained to them by an attorney,  a
    46  housing  and  urban  development  certified counselor or any other coun-
    47  seling service as indicated on the statement supplied by the [county  or
    48  local office for the aging] department of financial services or a signed
    49  affidavit  indicating  that  the  applicant,  although made aware of the
    50  importance  of  counseling  and  its  local  availability  through   the
    51  provision  of  such information by the authorized lender, chooses not to
    52  utilize any of the aforementioned available services.  The loan applica-
    53  tion shall not be approved until the signed reverse  mortgage  worksheet
    54  guide  is  provided  to the lender. A copy of the reverse mortgage work-
    55  sheet guide shall be provided to the borrower that shall  have  informa-
    56  tion  including,  but  not limited to:  how reverse mortgages can affect
        S. 2758--A                          3
     1  the borrower and their heirs and estate, the consequences of  defaulting
     2  on  a  reverse mortgage, alternatives to a reverse mortgage, and impacts
     3  on the borrower's eligibility for governmental assistance programs.  The
     4  form  of  such statement and affidavit shall be developed by the depart-
     5  ment of financial services, who may consult  with  the  New  York  state
     6  office for the aging where appropriate; and
     7    (k)  a  lender shall not accept a final and complete application for a
     8  reverse mortgage loan from a prospective applicant or  assess  any  fees
     9  upon  a  prospective applicant until a lapse of seven days from the date
    10  of counseling, as evidenced by the counseling certification, and without
    11  first receiving certification from  the  applicant  or  the  applicant's
    12  authorized  representative  that  the  applicant has received counseling
    13  from an agency as described in paragraph  (j)  of  this  subdivision  or
    14  seven  days  from  receipt  of a signed affidavit expressly waiving such
    15  counseling; and
    16    (l) a reverse mortgage pursuant to this section  shall  expressly  and
    17  conspicuously bear a legend identifying it as such; and
    18    [(l)]  (m)  subject to such rules or regulations as the superintendent
    19  of financial services may adopt, a reverse mortgage loan shall  be  made
    20  at either a fixed or variable rate of interest; and
    21    [(m)]  (n)  in  the  event  that an authorized lender or holder of the
    22  reverse mortgage loan intends to initiate  foreclosure  proceedings  the
    23  mortgagor  shall  have the right to designate a third party who shall be
    24  notified.  In the event that the mortgagor has not  designated  a  third
    25  party  to receive such notice of foreclosure, then the authorized lender
    26  or the holder of said reverse mortgage loan shall notify  the  local  or
    27  county  office  for  the  aging  of  its  intent to commence foreclosure
    28  proceedings.  Such entity shall take appropriate action to  protect  the
    29  interests of the mortgagor.
    30    § 3. This act shall take effect on the one hundred twentieth day after
    31  it shall have become a law.