NY State Senate Bill 2017-S4453

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to judiciary
Feb 15, 2017	referred to judiciary

co-Sponsors

2017-S4453 (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: Real Property Law
Laws Affected:: Add §280-b, RP L

2017-S4453 (ACTIVE) - Summary

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

2017-S4453 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4453

 TITLE OF BILL :  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

 PURPOSE :

This bill places new regulations on reverse mortgage products
pertaining to the marketing, origination, and management of these
products issued in New York State under the federal home equity
conversion mortgage program for seniors.

 SUMMARY OF PROVISIONS :

Section 1: Prevents any party from marketing reverse mortgage products
as a public service, a government-sponsored program, or anything other
than a commercial product.

Lenders or their agents must provide a consumer protection information
sheet to be created by DFS in conjunction with any solicitation
materials they send to a New York address.

Lenders must provide a notice to seniors on their periodic account
statements if financial obligations related to the mortgage are being
paid through proceeds of the mortgage. This notice will provide the

senior with the expected month and year of the full depletion of the
funds.

Lenders must notify seniors in plain language when their Life
Expectancy Set Aside (LESA) or home equity line of credit is depleted
to ten percent or less of its value, and must notify them when it has
been entirely depleted. The senior must also be informed at this point
that they must continue to pay obligations such as mortgage insurance,
homeowners insurance, and tax obligations in order to avoid default,
and that the LESA or home equity line of credit will no longer pay
these obligations.

Reverse mortgage lenders send out annual letters to seniors to verify
that they're still using the home as a primary residence (a
requirement of these financial products), but sometimes do not receive
a response and then initiate foreclosure proceedings. Under the new
law, lenders will be required to follow up with the senior and a
primary contact via a phone call and a visit to the borrower's home
before initiating foreclosure proceedings. They will be required to
leave contact information upon visiting the home if a senior does not
respond to the annual letter. Lenders will have to wait at least 30
days for a response from the senior, in addition to any time period
required by any other section of law, before initiating a foreclosure
action.

Lenders will be barred from charging seniors any fees for visiting
their home in order to verify their residence status.

The bill's provisions will be conditions precedent to a lender
bringing a foreclosure action on a HUD reverse mortgage. The bill's
provisions will be enforceable via treble damages and attorney's fees
for prevailing plaintiffs.

Section 2: The act will take effect on the ninetieth day after it
becomes a law, but the Department of Financial Services is authorized
to immediately begin promulgating regulations necessary to implement
the provisions of the act, and shall have one-hundred and eighty days
to do so.

 EXISTING LAW :
Under current law, home equity conversion mortgages under the HUD
program are not subject to these regulations.

 JUSTIFICATION :

Reverse mortgages are complicated and expensive financial products.
Many seniors do not understand how they work or what their true
long-term costs are. Exacerbating this problem are unscrupulous
lenders who market reverse mortgages as public services or
government-sponsored products. Inadequate regulation of this industry
resulted in a sharp uptick in defaults in 2016, as more seniors fell
into foreclosure on these products, losing not only their homes, but
also their most significant financial assets.

Foreclosures in the reverse mortgage industry have taken place against
seniors for making payments mere cents short of their tax, homeowners
insurance, or mortgage insurance bills. Lenders eager to tap the
equity in these homes are sometimes aggressive to foreclose and see a
return on their investment. Seniors must be better protected by
clearer information and stricter regulations on the way that lenders
market and manage these complicated products.

This comprehensive new set of regulations will regulate the marketing,
origination, and management of reverse mortgage products that fall
under HUD's home equity conversion mortgage program for seniors, in
the hope of preventing defaults and foreclosures.

 LEGISLATIVE HISTORY :

This is a new bill.

 FISCAL IMPLICATIONS :

To be determined.

 LOCAL FISCAL IMPLICATIONS :

None.

2017-S4453 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4453
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 15, 2017
                                ___________
 
 Introduced  by  Sen.  KLEIN  -- 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  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:
 
   Section  1.  The  real property law is amended by adding a new section
 280-b to read as follows:
   § 280-B. FEDERAL HOME EQUITY CONVERSION MORTGAGE REGULATION. 1.    FOR
 THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOW-
 ING MEANINGS:
   (A)  REVERSE  MORTGAGE  LOAN.  A  REVERSE  MORTGAGE LOAN AS DEFINED IN
 SECTION TWO HUNDRED EIGHTY OF THIS ARTICLE,  WHICH  IS  ISSUED  IN  THIS
 STATE  PURSUANT  TO  THE  HOME  EQUITY  CONVERSION  MORTGAGE FOR SENIORS
 PROGRAM OPERATED BY THE FEDERAL DEPARTMENT OF HOUSING AND URBAN DEVELOP-
 MENT.
   (B) AUTHORIZED LENDER. AN AUTHORIZED LENDER AS DEFINED IN SECTION  TWO
 HUNDRED  EIGHTY  OF  THIS  ARTICLE  AUTHORIZED  TO MAKE REVERSE MORTGAGE
 LOANS, AS DEFINED IN THIS SECTION.
   (C) SUPERINTENDENT. THE SUPERINTENDENT OF  FINANCIAL  SERVICES  ESTAB-
 LISHED  PURSUANT  TO  SECTION  TWO HUNDRED TWO OF THE FINANCIAL SERVICES
 LAW.
   2. NO AUTHORIZED LENDER OR ANY OTHER PARTY  OR  ENTITY  SHALL  IN  ANY
 MANNER, IN THE MARKETING OR OFFERING OF REVERSE MORTGAGE LOANS:
   (A)  USE  THE  WORDS  "PUBLIC SERVICE ANNOUNCEMENT" IN ANY COMMERCIAL,
 MAILING, ADVERTISEMENT OR WRITING RELATING THERETO; OR
   (B) USE THE WORDS  "GOVERNMENT  INSURED"  OR  OTHER  SIMILAR  LANGUAGE
 REPRESENTING  THAT  REVERSE  MORTGAGE  LOANS  ARE INSURED, SUPPORTED AND
 SPONSORED BY ANY GOVERNMENTAL ENTITY IN ANY COMMERCIAL, MAILING,  ADVER-
 TISEMENT OR WRITING RELATING THERETO; OR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD07787-05-7

 S. 4453                             2
 
   (C) REPRESENT THAT ANY SUCH LOAN IS OTHER THAN A COMMERCIAL PRODUCT.
   3.  (A)  EVERY  AUTHORIZED LENDER OR ITS AGENT SHALL PROVIDE, WITH ANY
 SOLICITATION FOR REVERSE MORTGAGE PRODUCTS MAILED TO A PHYSICAL  ADDRESS
 WITHIN THE STATE, SUPPLEMENTAL CONSUMER PROTECTION MATERIALS THE CONTENT
 AND FORM OF WHICH SHALL BE SPECIFIED BY THE SUPERINTENDENT OR HIS OR HER
 DESIGNEE.
   (B)  EVERY AUTHORIZED LENDER SHALL PROVIDE EACH APPLICANT OR POTENTIAL
 APPLICANT FOR A REVERSE MORTGAGE LOAN  WITH  THE  TELEPHONE  NUMBER  AND
 INTERNET  WEBSITE  ADDRESS PROVIDED BY THE FEDERAL DEPARTMENT OF HOUSING
 AND URBAN DEVELOPMENT FOR THE PURPOSES OF ACQUIRING HOME EQUITY  CONVER-
 SION MORTGAGE COUNSELING.
   (C)  THE  SUPERINTENDENT  IS  AUTHORIZED  TO PROMULGATE SUCH RULES AND
 REGULATIONS  AS  HE  OR  SHE  SHALL  DEEM  NECESSARY  TO  IMPLEMENT  THE
 PROVISIONS OF THIS SUBDIVISION.
   4.  (A)  REVERSE MORTGAGES SECURED BY RESIDENTIAL REAL PROPERTY WITHIN
 THE STATE SHALL BE SUBJECT TO THE RULES AND REGULATIONS OF  THE  FEDERAL
 DEPARTMENT  OF HOUSING AND URBAN DEVELOPMENT RELATING TO THE HOME EQUITY
 CONVERSION MORTGAGE PROGRAM.
   (B) FOR ALL BORROWERS WHOSE TAX PAYMENTS, MORTGAGE INSURANCE PAYMENTS,
 HOMEOWNERS INSURANCE PAYMENTS, OR PAYMENTS STEMMING FROM ANY OTHER PROP-
 ERTY OBLIGATION OR OBLIGATIONS ARE ADMINISTERED BY THE AUTHORIZED  LEND-
 ER,  AND WHERE THESE PAYMENTS ARE DERIVED FROM THE PROCEEDS OF THE MORT-
 GAGE, THE AUTHORIZED LENDER SHALL PROVIDE  ON  THE  BORROWER'S  PERIODIC
 ACCOUNT  STATEMENT  A  NOTICE WHICH READS IN AT LEAST TWELVE POINT TYPE:
 "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY  THE  PROCEEDS  OF
 THIS  MORTGAGE.  THE  FUNDS  THAT HAVE BEEN SET ASIDE ARE EXPECTED TO BE
 EXHAUSTED AFTER THE TAX AND  INSURANCE  PAYMENTS  OF  (SPECIFY  EXPECTED
 MONTH  AND  YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY THE TAXES
 AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY  BE  LOST
 TO  FORECLOSURE.  PLEASE NOTE THAT AS TAX AND INSURANCE AMOUNTS CAN VARY
 YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES."
   (C) AN AUTHORIZED LENDER SHALL, BY TELEPHONE  AND  FIRST  CLASS  MAIL,
 INFORM  AND  PROVIDE  NOTICE  TO A MORTGAGOR WHEN HIS OR HER HOME EQUITY
 LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE IS DEPLETED TO  TEN  PERCENT
 OR  LESS  OF ITS VALUE. SUCH NOTICE SHALL INFORM THE MORTGAGOR OF HIS OR
 HER OBLIGATIONS RELATING TO SUCH REAL PROPERTY INCLUDING, BUT NOT LIMIT-
 ED TO, MORTGAGE INSURANCE, HOMEOWNERS INSURANCE AND REAL PROPERTY  TAXES
 PREVIOUSLY PAID BY SUCH LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE, AND
 THAT SUCH OBLIGATIONS MUST CONTINUE TO BE PAID WHEN THE HOME EQUITY LINE
 OF  CREDIT  OR LIFE EXPECTANCY SET ASIDE IS DEPLETED.  SUCH NOTICE SHALL
 USE PLAIN LANGUAGE, WRITTEN IN A CLEAR AND COHERENT MANNER  USING  WORDS
 WITH  COMMON AND EVERY DAY MEANINGS, APPROPRIATELY DIVIDED AND CAPTIONED
 BY ITS VARIOUS SECTIONS.
   (D) EACH AUTHORIZED LENDER SHALL, BY TELEPHONE AND FIRST  CLASS  MAIL,
 INFORM  AND  PROVIDE  NOTICE  TO A MORTGAGOR WHEN HIS OR HER HOME EQUITY
 LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE  IS  DEPLETED.  SUCH  NOTICE
 SHALL  INFORM  THE  MORTGAGOR  OF HIS OR HER OBLIGATIONS RELATING TO THE
 MORTGAGED REAL PROPERTY INCLUDING, BUT NOT LIMITED TO,  MORTGAGE  INSUR-
 ANCE,  HOMEOWNERS  INSURANCE  AND REAL PROPERTY TAXES, AND THAT THE HOME
 EQUITY LINE OF CREDIT OR LIFE EXPECTANCY SET ASIDE WILL  NO  LONGER  PAY
 THESE  OBLIGATIONS.   SUCH NOTICE SHALL USE PLAIN LANGUAGE, WRITTEN IN A
 CLEAR AND COHERENT MANNER USING WORDS WITH COMMON AND  EVERY  DAY  MEAN-
 INGS, APPROPRIATELY DIVIDED AND CAPTIONED BY ITS VARIOUS SECTIONS.
   5.  IN  THE  EVENT  THAT  AN AUTHORIZED LENDER SEEKS TO FORECLOSE ON A
 REVERSE MORTGAGE LOAN ON THE BASIS THAT THE MORTGAGED REAL  PROPERTY  IS
 NO  LONGER THE PRIMARY RESIDENCE OF THE MORTGAGOR, IF DURING THE VERIFI-

 S. 4453                             3
 
 CATION OF THE MORTGAGOR'S PRIMARY RESIDENCE NO RESPONSES ARE RECEIVED IN
 RESPONSE TO MAILINGS RELATING THERETO, SUCH LENDER SHALL CAUSE  A  TELE-
 PHONE CALL TO BE MADE TO THE MORTGAGOR, OR IF THE MORTGAGOR IS UNREACHA-
 BLE  BY  TELEPHONE, A DESIGNATED THIRD-PARTY SPECIFIED BY THE MORTGAGOR,
 AND AN IN PERSON VISIT TO BE MADE TO THE MORTGAGOR AT THE MORTGAGED REAL
 PROPERTY TO BE  MADE  PRIOR  TO  THE  COMMENCEMENT  OF  ANY  FORECLOSURE
 PROCEEDING.  DURING SUCH VISIT, THE AUTHORIZED LENDER OR ITS AGENT SHALL
 PROVIDE CLEAR INFORMATION AS TO WHO THEY ARE, THAT THE VISIT PERTAINS TO
 THE REVERSE MORTGAGE AND THE TELEPHONE NUMBER TO CALL FOR FURTHER INFOR-
 MATION.   THE AUTHORIZED LENDER MUST WAIT AT LEAST THIRTY DAYS FOLLOWING
 SUCH VISIT, IN ADDITION TO ANY ADDITIONAL TIME  OR  NOTICE  REQUIREMENTS
 SPECIFIED BY ANY OTHER PROVISION OF LAW, BEFORE INITIATING A FORECLOSURE
 ACTION  ON  THE  BASIS THAT THE MORTGAGED REAL PROPERTY IS NO LONGER THE
 PRIMARY RESIDENCE OF  THE  MORTGAGOR.  IF  THE  MORTGAGOR  CONTACTS  THE
 AUTHORIZED  LENDER  AND PROVIDES PROOF OF RESIDENCE AFTER SUCH VISIT BUT
 BEFORE THE COMMENCEMENT OF A FORECLOSURE ACTION, THE  AUTHORIZED  LENDER
 SHALL  BE  BARRED FROM INITIATING SUCH FORECLOSURE ACTION.  FURTHERMORE,
 NO AUTHORIZED LENDER SHALL CHARGE A MORTGAGOR ANY FEE FOR ANY SUCH VISIT
 AND INSPECTION. THIS PROHIBITION ON THE IMPOSITION OF FEES SHALL INCLUDE
 ANY AND ALL INSPECTIONS CONDUCTED BY THE AUTHORIZED LENDER TO VERIFY THE
 STATUS OF THE REVERSE MORTGAGE,  OR  ANY  SUSPECTED  OR  ACTUAL  DEFAULT
 CONDITION.
   6.  BOTH  THE AUTHORIZED LENDER AND THE MORTGAGOR SHALL BE REPRESENTED
 BY AN ATTORNEY OR ATTORNEYS AT THE TIME OF THE CLOSING  ON  THE  REVERSE
 MORTGAGE,  AND  EACH SUCH PARTY SHALL HAVE AT LEAST ONE ATTORNEY PRESENT
 TO CONDUCT THE CLOSING.
   7. ANY PERSON WHO HAS BEEN INJURED BY REASON OF ANY VIOLATION OF  THIS
 SECTION  OR  ANY  VIOLATION  OF THE RULES AND REGULATIONS OF THE FEDERAL
 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT RELATING TO THE HOME  EQUITY
 CONVERSION  MORTGAGE  PROGRAM MAY BRING AN ACTION IN HIS OR HER OWN NAME
 TO RECOVER TREBLE  HIS  OR  HER  ACTUAL  DAMAGES,  PLUS  THE  PREVAILING
 PLAINTIFF'S REASONABLE ATTORNEY'S FEES.
   8.  COMPLIANCE WITH THE PROVISIONS OF THIS SECTION SHALL BE CONDITIONS
 PRECEDENT TO COMMENCING AN  ACTION  TO  FORECLOSE  UPON  A  HOME  EQUITY
 CONVERSION  MORTGAGE WHICH IS SUBJECT TO THE PROVISIONS OF THIS SECTION,
 AND THE FAILURE TO COMPLY THEREWITH SHALL BE A  COMPLETE  DEFENSE  TO  A
 FORECLOSURE ACTION.
   §  2.  This  act shall take effect on the ninetieth day after it shall
 have become a law; provided, that, effective immediately the superinten-
 dent of financial services is authorized  and  directed  to  amend,  add
 and/or  repeal  any  rules  and  regulations  necessary to implement the
 provision of this act within 180 days after this act shall have become a
 law.

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Senate Bill S4453

Sponsored By

Archive: Last Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

2017-S4453 (ACTIVE) - Details

2017-S4453 (ACTIVE) - Summary

2017-S4453 (ACTIVE) - Sponsor Memo

2017-S4453 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S4453

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Sponsored By

Jeffrey D. Klein

Archive: Last Bill Status - In Senate Committee Judiciary Committee

co-Sponsors

Tony Avella

Luis R. Sepúlveda

2017-S4453 (ACTIVE) - Details

2017-S4453 (ACTIVE) - Summary

2017-S4453 (ACTIVE) - Sponsor Memo

2017-S4453 (ACTIVE) - Bill Text download pdf

Comments