senate Bill S2867

Relates to refinancing of an existing mortgage loan

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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

  • 24 / Jan / 2013
    • REFERRED TO BANKS
  • 08 / Jan / 2014
    • REFERRED TO BANKS

Summary

Relates to refinancing of an existing mortgage loan; provides for a separate disclosure which compares monthly payments under the previous mortgage with the combined monthly payments for the new mortgage loan, property tax and insurance.

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Bill Details

Versions:
S2867
Legislative Cycle:
2013-2014
Current Committee:
Senate Banks
Law Section:
Banking Law
Laws Affected:
Amd ยง595-a, Bank L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S3651
2009-2010: S4875

Sponsor Memo

BILL NUMBER:S2867

TITLE OF BILL: An act to amend the banking law, in relation to refi-
nancing of an existing mortgage loan

PURPOSE: To ensure that consumers are appropriately informed when refi-
nancing a mortgage and have the ability to compare the total monthly
costs of the previous loan with the total monthly costs of the new loan.

SUMMARY OF PROVISIONS:

Section 595-a(3) of the Banking Law is amended to require mortgage
brokers, mortgage bankers or exempt organizations to provide a special
disclosure for any mortgage refinancing where the mortgagor will no
longer be paying property tax or insurance premiums into an escrow
account. In those cases, the disclosure must compare the total monthly
payments under the previous loan with the combined monthly payments for
the new loan, real property taxes and insurance.

JUSTIFICATION: Consumers may refinance a mortgage loan for numerous
reasons. An important consideration is the monthly cost of the new loan
versus the monthly cost of the previous loan.

Unfortunately, in some cases, this comparison may be misleading or
invalid because the homeowner does not realize or understand that the
new total does not include property tax or insurance payments, which may
have been included in the previous loan. There is concern that some
lenders or mortgage brokers may obscure this information, or may active-
ly mislead the homeowner in order to pressure them into refinance the
existing loan. As a result, the new loan may appear to be a better deal,
but in reality may be a worse deal.

This bill seeks to ensure that consumers are adequately notified if
their new loan will no longer include property tax or insurance
payments, and that they are given a clear comparison of the full monthly
costs under the previous loan and the full monthly costs under the new
loan. This will assist homeowners in making an informed decision.

LEGISLATIVE HISTORY: S.5619 in 2007-2008: Referred to Banks S.4875 in
2009-2010: Referred to Banks S.3651 in 2011-2012: Referred to Banks

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: On the 180th 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
________________________________________________________________________

                                  2867

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 24, 2013
                               ___________

Introduced  by  Sen.  SMITH  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Banks

AN ACT to amend the banking law, in relation to refinancing of an exist-
  ing mortgage loan

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

  Section  1.  Subdivision  3  of  section  595-a  of the banking law is
amended by adding a new paragraph (e) to read as follows:
  (E) FOR ANY REFINANCING OF AN EXISTING MORTGAGE LOAN, WHERE THE  MORT-
GAGOR  WILL  NO LONGER BE PAYING PROPERTY TAX OR INSURANCE PAYMENTS INTO
AN ESCROW ACCOUNT, EACH MORTGAGE  BROKER,  MORTGAGE  BANKER  AND  EXEMPT
ORGANIZATION  SHALL,  PRIOR  TO  CLOSING,  PROVIDE A SEPARATE DISCLOSURE
WHICH COMPARES THE TOTAL MONTHLY PAYMENTS UNDER  THE  PREVIOUS  MORTGAGE
WITH THE COMBINED MONTHLY PAYMENTS FOR THE NEW MORTGAGE LOAN, REAL PROP-
ERTY  TAXES  AND  INSURANCE.  THE  BANKING  BOARD  MAY SPECIFY THE FORM,
CONTENT AND TIMING OF SUCH DISCLOSURE.
  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.
                                                           LBD07213-01-3

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