senate Bill S1078A

Provides that a lender may receive not more than 20% of the future appreciation of property secured by a reverse mortgage granted to a person 60 years old or older

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 05 / Jan / 2011
    • REFERRED TO FINANCE
  • 04 / Jan / 2012
    • REFERRED TO FINANCE
  • 25 / Apr / 2012
    • AMEND AND RECOMMIT TO FINANCE
  • 25 / Apr / 2012
    • PRINT NUMBER 1078A

Summary

Provides that a lender providing a reverse mortgage to a person who is 60 years of age or older may receive not more than 20% of the future appreciation of property secured by the mortgage as consideration for providing such reverse mortgage.

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Bill Details

See Assembly Version of this Bill:
A7096A
Versions:
S1078
S1078A
Legislative Cycle:
2011-2012
Current Committee:
Senate Finance
Law Section:
Real Property Law
Laws Affected:
Amd ยง280, RP L
Versions Introduced in Previous Legislative Cycles:
2009-2010: S1339, A6763
2007-2008: A6720

Sponsor Memo

BILL NUMBER:S1078A

TITLE OF BILL:

An act to amend the real property law, in relation to reverse mortgage
loans for persons sixty years of age or older

PURPOSE:

This bill will limit shared appreciation in revenue mortgage.

SUMMARY OF PROVISIONS:

This bill would amend the real property law to limit the shared appreci-
ation any authorized lender may receive no more than 20 per cent of the
appreciation during the term of the mortgage.

JUSTIFICATION:

In 1994, the Real property Law was amended to formalize the reverse
mortgage law in the state of New York. (Reverse mortgage allows senior
citizens to take equity out of their homes while they are living there
through equal installments, a line of credit or a lump sum).

Those mortgages are now being satisfied either by the mortgagor paying
off the mortgage, selling the property themselves or through their
estate.

Due to fluctuating market conditions and one side contacts, the Legisla-
ture has learned that certain mortgage lenders have, however, been
misusing this valuable financial instrument to exact enormous unmerited
profits. For example, when one individual mortgagor received a lump sum
payment of $114,000, and the mortgagor had to sell the property just
seven years later, the authorized lender issued a payout letter of
$451,000. This included $113,000 in compounded interest and $223,000 of
shared appreciation at the rate of 50%. with the real estate market
experiencing historic fluctuations, this problem is becoming ever more
of an issue.

This bill would attempt to remedy this usurious gouging by the author-
ized lender by reducing the shared appreciation from 50% to 20%. This
would accordingly be a much more equitable distribution of the shared
appreciation.

LEGISLATIVE HISTORY:
2008: S.642 - Passed Senate 61-0

FISCAL IMPLICATIONS:

This bill would increase revenue to state and local governments by
encouraging the issuance of reverse mortgages with fair returns and the
marketability and sale of real property.

EFFECTIVE DATE:
This bill would take effect One hundred eightieth day after it shall
have become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1078--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             January 5, 2011
                               ___________

Introduced  by  Sens. MARTINS, SKELOS -- read twice and ordered printed,
  and when printed to be committed to the Committee on Finance -- recom-
  mitted to the Committee on Finance in accordance with Senate  Rule  6,
  sec.  8  --  committee  discharged, bill amended, ordered reprinted as
  amended and recommitted to said committee

AN ACT to amend the real property law, in relation to  reverse  mortgage
  loans for persons sixty years of age or older

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 2 of section 280 of the real  property  law  is
amended by adding a new paragraph (d-1) to read as follows:
  (D-1)  SUCH  RULES  OR  REGULATIONS AS THE SUPERINTENDENT OF FINANCIAL
SERVICES SHALL ADOPT, THE AUTHORIZED LENDER, AT ITS OPTION, MAY  RECEIVE
NO  MORE  THAN TWENTY PERCENT OF THE FUTURE APPRECIATION OF THE PROPERTY
SECURING THE REVERSE MORTGAGE LOAN AS FULL OR PARTIAL CONSIDERATION  FOR
THE  MAKING  OF  A  REVERSE  MORTGAGE LOAN; PROVIDED, HOWEVER, THAT SUCH
FUTURE APPRECIATION SHALL BE LIMITED BY SUCH RULES  AND  REGULATIONS  AS
THE  SUPERINTENDENT  OF  FINANCIAL  SERVICES MAY ADOPT OR THE AUTHORIZED
LENDER MAY CHARGE A FIXED RATE OF INTEREST ON THE OUTSTANDING BALANCE OF
MONIES ADVANCED UNDER THE REVERSE MORTGAGE AGREEMENT OR ANY  COMBINATION
THEREOF.  ANY SUCH APPRECIATION SHALL NOT BE CONSIDERED INTEREST FOR THE
PURPOSES OF ANY LAW REGULATING THE MAXIMUM RATE OF INTEREST WHICH MAY BE
CHARGED,  TAKEN  OR RECEIVED INCLUDING SECTIONS 190.40 AND 190.42 OF THE
PENAL LAW; AND
  S 2. This act shall take effect on the one hundred eightieth day after
it shall have become a law.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06198-02-2

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