senate Bill S303

2013-2014 Legislative Session

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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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to judiciary
Jan 09, 2013 referred to judiciary

S303 - Bill Details

See Assembly Version of this Bill:
A35
Current Committee:
Law Section:
Real Property Law
Laws Affected:
Amd ยง280, RP L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1078A, A7096A
2009-2010: S1339, A6763

S303 - Bill Texts

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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 NUMBER:S303

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
appreciation 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 which 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
Legislature 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
authorized 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:

S.1078A of 2011
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 on the one hundred eightieth day
after it shall have become a law.

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

                                   303

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

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

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.
                                                           LBD03099-01-3

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