S T A T E O F N E W Y O R K
________________________________________________________________________
5877
2023-2024 Regular Sessions
I N A S S E M B L Y
March 23, 2023
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Banks
AN ACT to amend the real property law, the banking law, the insurance
law, the public authorities law, the tax law, and the social services
law, in relation to reverse mortgage loans; and to repeal section
280-a of the real property law relating thereto
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 280 of the real property law, as added by chapter
613 of the laws of 1993, paragraph (f) of subdivision 1 as amended by
chapter 155 of the laws of 2012, subdivision 5 as amended by chapter 33
of the laws of 1996, and paragraph (d) of subdivision 1, paragraphs (a),
(b), and (i), and the opening paragraph and subparagraph (v) of para-
graph (e) of subdivision 2, paragraph (b) of subdivision 3, and subdivi-
sions 4, 8, and 9 as further amended by section 104 of part A of chapter
62 of the laws of 2011, is amended to read as follows:
§ 280. Reverse mortgage loans for persons [sixty] SIXTY-TWO years of
age or older. 1. For purposes of this section the following terms shall
have the following meanings:
(a) Reverse mortgage loans. A loan which is secured by a first mort-
gage on real property improved by a one- to four-family residence, COOP-
ERATIVE APARTMENT, LIFE ESTATE, TRUST, LEASEHOLD or condominium that is
the residence of the [mortgagor(s)] BORROWER OR BORROWERS the proceeds
of which are advanced to the [mortgagor(s)] BORROWER OR BORROWERS during
the term of the loan USING ANY ONE OR MORE METHOD OF PAYMENTS in equal
MONTHLY installments USING TENURE OR TERM PAYMENTS, in advances through
a line of credit or otherwise, in lump sums, or through a combination
thereof USING A MODIFIED TENURE OR MODIFIED TERM PAYMENTS. A REVERSE
MORTGAGE LOAN MAY BE FHA INSURED (HECM) PURSUANT TO SUBDIVISION FOUR OF
THIS SECTION OR A NON FHA INSURED LOAN (PROPRIETARY).
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02974-01-3
A. 5877 2
(b) [Term reverse mortgage loan. Any reverse mortgage loan that has a
fixed term to maturity.
(c) Tenure reverse mortgage loan. Any reverse mortgage loan that does
not have a fixed term to maturity, but rather] REVERSE MORTGAGE MATURI-
TY. A REVERSE MORTGAGE matures solely upon contingent events, such as
events including but not limited to death [or] OF THE SURVIVING BORROW-
ER, the real property securing the loan no longer being the [mortga-
gors'] BORROWERS' principal residence OR THE SUBJECT PROPERTY BEING
SOLD.
[(d)] (C) Authorized lender. Any bank, trust company, national banking
association, savings bank, savings and loan association, federal savings
bank, federal savings and loan association, credit union, or federal
credit union or any licensed mortgage banker approved for the making of
reverse mortgage loans by the superintendent of financial services or
any entity exempted from licensing pursuant to section five hundred
ninety of the banking law and approved for the making of reverse mort-
gage loans by the superintendent of financial services.
[(e) Mortgagor.] (D) BORROWER. A tenant in severalty who is [sixty]
SIXTY-TWO years of age or older, or if the real property is held by
tenants by the entirety or by joint tenancy, the youngest of which is
[sixty] SIXTY-TWO years of age or older AND SIGNS THE LOAN APPLICATION.
HOWEVER, A PARTY WITH A REMAINDER INTEREST WHO HAS NOT SIGNED THE APPLI-
CATION BUT SIGNS THE MORTGAGE, SIGNS THE MORTGAGE AS AN ACCOMMODATION
AND NOT AS A BORROWER AS DEFINED IN THIS SECTION.
[(f)] (E) Superintendent of financial services. The superintendent
established pursuant to section two hundred two of the financial
services law.
(F) MORTGAGOR. MORTGAGOR IS ONE WHO SIGNS THE MORTGAGE AS A BORROWER
OR AS A NON-BORROWER WHEN ONE HOLDS A REMAINDER INTEREST, OR SIGNS AS A
TRUSTEE.
(G) HOME EQUITY CONVERSION MORTGAGE (HECM). THE FHA REVERSE MORTGAGE
LOAN UNDER THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.
(H) TENURE PAYMENT. EQUAL MONTHLY PAYMENTS ARE MADE BY THE LENDER TO
THE BORROWER OR BORROWERS AS LONG AS PROPERTY REMAINS THE PRINCIPAL
RESIDENCE UNLESS THE LOAN BECOMES DUE PURSUANT TO PARAGRAPH (C) OF THIS
SUBDIVISION.
(I) TERM PAYMENT. EQUAL MONTHLY PAYMENTS ARE MADE BY THE LENDER TO THE
BORROWER OR BORROWERS FOR A FIXED TERM OF MONTHS CHOSEN BY THE BORROWER,
UNLESS THE LOAN BECOMES DUE PURSUANT TO PARAGRAPH (C) OF THIS SUBDIVI-
SION.
(J) LINE OF CREDIT. PAYMENTS ARE MADE BY THE LENDER TO THE BORROWER AT
TIMES AND IN AMOUNTS DETERMINED BY THE BORROWER OR BORROWERS, AS LONG AS
THE PROPERTY REMAINS PRINCIPAL RESIDENCE, UNLESS THE LOAN BECOMES DUE
PURSUANT TO PARAGRAPH (C) OF THIS SUBDIVISION.
(K) MODIFIED TENURE. A TENURE PLAN COMBINED WITH A LINE OF CREDIT
FEATURE.
(L) MODIFIED TERM. A TERM PLAN COMBINED WITH A LINE OF CREDIT FEATURE.
(M) FULL DRAW. ALL AVAILABLE FUNDS ARE TAKEN IN A ONE-TIME SINGLE
PAYMENT.
(N) PARTIAL DRAW. A PORTION OF THE AVAILABLE FUNDS ARE TAKEN IN A
SINGLE PAYMENT.
(O) PRINCIPAL RESIDENCE. THE DWELLING WHERE THE BORROWER MAINTAINS A
PERMANENT PLACE OF ABODE AND TYPICALLY SPENDS A MAJORITY OF CALENDAR
YEAR. THE PROPERTY SHALL BE CONSIDERED TO BE THE PRINCIPAL RESIDENCE OF
ANY BORROWER WHO IS TEMPORARILY OR PERMANENTLY IN A HEALTH CARE INSTITU-
A. 5877 3
TION AS LONG AS THE PROPERTY IS THE PRINCIPAL RESIDENCE OF AT LEAST ONE
OTHER BORROWER WHO IS NOT IN A HEALTH CARE INSTITUTION.
(P) PROPRIETARY REVERSE MORTGAGE. A NON FHA INSURED LOAN.
(Q) COUNSELOR. SHALL BE AN INDIVIDUAL WHO HAS MET ALL TESTING AND
EDUCATION REQUIREMENTS OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOP-
MENT AND IS INCLUDED IN THE HUD APPROVED ROSTER, AS LONG AS SAID ROSTER
SHALL BE MAINTAINED.
(R) COUNSELING PROTOCOL. EACH COUNSELOR SHALL FOLLOW HUD'S DETAILED
COUNSELING PROTOCOL, AS UPDATED AND AMENDED FROM TIME TO TIME. THE COUN-
SELING PROTOCOL FOR ALL REVERSE MORTGAGE LOANS, SHALL INCLUDE AMONG
OTHER THINGS A DISCUSSION OF: CLIENT NEEDS AND CIRCUMSTANCES; FEATURES
OF A REVERSE MORTGAGE LOAN; BORROWER RESPONSIBILITY UNDER A REVERSE
MORTGAGE LOAN; COSTS TO OBTAIN A REVERSE MORTGAGE; FINANCIAL AND TAX
IMPLICATIONS; ALTERNATIVES TO A REVERSE MORTGAGE LOAN; ELDER ABUSE
ISSUES AND WARNINGS ABOUT POTENTIAL REVERSE MORTGAGE INSURANCE FRAUD
SCHEMES. AS LONG AS REQUIRED BY HUD, THE CERTIFICATE CAN BE WITHHELD IF
THE BORROWER IS UNABLE TO ANSWER FIVE OUT OF TEN QUESTIONS ABOUT REVERSE
MORTGAGE BASICS, AFTER AN EXPLANATION OF THE CONCEPT HAS BEEN STATED BY
THE COUNSELOR. THE COUNSELING PROTOCOL CAN BE DELIVERED FACE TO FACE OR
OVER THE PHONE, AT THE SOLE OPTION OF THE BORROWER.
(S) COUNSELING CERTIFICATE. THE COUNSELOR SHALL ISSUE A COUNSELING
CERTIFICATE UPON THE COMPLETION OF THE SESSION BY EITHER HAND DELIVERY
OR THROUGH THE POSTAL SERVICE. AMONG OTHER THINGS, THE CERTIFICATE SHALL
CONTAIN THE ORIGINAL SIGNATURE OF THE COUNSELOR; COUNSELOR'S ID NUMBER,
AND THE LENGTH OF TIME OF THE SESSION.
2. A reverse mortgage loan pursuant to this section shall be subject
to the following:
(a) [the loan to value ratio shall be determined by the superintendent
of financial services; and
(b) subject to] such rules or regulations as the superintendent of
financial services shall adopt, any authorized lender or any successor
or assign of such authorized lender which suspends, ceases or makes late
payments to a [mortgagor] BORROWER under a reverse mortgage loan shall
be subject to forfeiture (as liquidated damages to such [mortgagor]
BORROWER and not as a penalty) of twice the interest which would other-
wise have been earned during the period in which payments were
suspended, ceased or made late, provided that said authorized lender or
any successor or assign of such authorized lender shall have the right
to make payments pursuant to said loan agreement within fifteen days of
each payment date, without penalty; and
[(c)] (B) the outstanding balance may be prepaid [in full] by the
[mortgagor] BORROWER without penalty at any time [during the term and/or
tenure of the loan]; PROVIDED, HOWEVER, IF SAID OUTSTANDING BALANCE IS
PAID IN FULL, THE LOAN WILL BE DEEMED SATISFIED AND NO LONGER BE IN
EFFECT; and
[(d)] (C) an authorized lender is prohibited from using or attaching
any property or asset of the [mortgagor] BORROWER except the real prop-
erty, INCLUDING A COOPERATIVE APARTMENT, securing the reverse mortgage
loan in settlement of a reverse mortgage obligation; and
[(e)] (D) the authorized lender must deliver to [an applicant] A
BORROWER such disclosures as may be required by the superintendent of
financial services which shall describe the relevant portions of the
reverse mortgage being offered, and shall include but not be limited to
the following items:
(i) [except for a tenure reverse mortgage loan, a schedule of payments
to and from the mortgagor and the total payments in dollars over the
A. 5877 4
term of the reverse mortgage loan for both the mortgagor and mortgagee
depending on the type of reverse mortgage loan being offered;
(ii)] a statement prominently displayed advising [applicants] BORROW-
ERS to consult with appropriate authorities regarding tax and estate
planning consequences of a reverse mortgage;
[(iii)] (II) where applicable a description of prepayment and refi-
nancing features;
[(iv)] (III) the interest rate and, except for a tenure reverse mort-
gage loan, the total interest payable on the loan;
[(v)] (IV) a statement concerning the compliance of the lender with
the criteria established by the superintendent of financial services
that an authorized lender must meet before it may make reverse mortgage
loans pursuant to this section; and
[(vi)] (V) a statement setting forth those events which would termi-
nate the reverse mortgage loan; and
[(f)] (E) in the event that an authorized lender or holder of the
reverse mortgage loan intends to initiate foreclosure proceedings the
[mortgagor] BORROWER shall have the right to designate a third party who
shall be notified. In the event that the mortgagor has not designated a
third party to receive such notice of foreclosure, then the authorized
lender or the holder of said reverse mortgage loan shall notify the
local or county office for the aging of its intent to commence foreclo-
sure proceedings. Such entity shall take appropriate action to protect
the interests of the [mortgagor] BORROWER; and
[(g)] (F) FOR ALL REVERSE MORTGAGE LOANS an authorized lender must
deliver to the [applicant] BORROWER, upon application, if available, a
statement prepared by the local or county office for the aging on the
[advisability and] availability of independent counseling [and informa-
tion services]. Further, no reverse mortgage [commitment shall be issued
by an authorized lender] PROCESSING OF THIS LOAN SHALL BEGIN until the
[applicant presents, in writing, a statement that the terms of the
reverse mortgage loan have been explained by an attorney, a housing and
urban development certified counselor or any other counseling service as
indicated on the statement supplied by the county or local office for
the aging or a signed affidavit indicating that the applicant, although
made aware of the importance of counseling and its local availability
through the provision of such information by the authorized lender,
chooses not to utilize any of the aforementioned available services. The
form of such statement and affidavit shall be developed by the New York
state office for the aging] BORROWER PROVIDES TO AN AUTHORIZED LENDER OR
BROKER THE ORIGINAL COUNSELING CERTIFICATE ALLOWED UNDER THE FEDERAL
HOUSING ADMINISTRATION (FHA) OR OTHER PROGRAMS APPROVED BY THE SUPER-
INTENDENT OF FINANCIAL SERVICES IN CONSULTATION WITH THE STATE OFFICE
FOR THE AGING; and
[(h)] (G) any such reverse mortgage shall expressly and conspicuously
bear a legend identifying it as such; and
[(i)] (H) subject to such rules or regulations as the superintendent
of financial services may adopt, a reverse mortgage loan shall be made
at either a fixed or variable rate of interest.
(I) THE PROCESSING OF A REVERSE MORTGAGE SHALL INCLUDE THE ORDERING OF
AN APPRAISAL, A TITLE SEARCH AND A CREDIT REPORT OR AN FHA CASE NUMBER,
WHEN APPLICABLE. A REVERSE MORTGAGE LOAN CANNOT BE PROCESSED, NOR SHALL
A BORROWER INCUR ANY PROCESSING EXPENSE UNTIL THE BORROWER COMPLETES THE
REQUIRED COUNSELING. THE PROCESSING OF A REVERSE MORTGAGE LOAN MAY ONLY
PROCEED ONCE THE COUNSELING IS COMPLETE, AS EVIDENCED BY THE SIGNED AND
DATED COUNSELING CERTIFICATE.
A. 5877 5
3. A reverse mortgage loan pursuant to this section may:
(a) provide that the [mortgagor's] BORROWER'S closing costs, including
but not limited to loan or commitment fees, if any, insurance premiums,
house repairs, legal fees, [the cost of annuities,] the costs of third-
party counseling, the costs of existing mortgages or liens, and other
appropriate costs be included in the principal of the reverse mortgage
loan and disbursed out of the loan proceeds at closing;
(b) provide for the maintenance of an escrow account by the authorized
lender for purposes of payment of real property taxes, insurance on the
property securing the loan, or any other fees and expenses as may be
permitted by superintendent of financial services regulation;
(c) provide that an authorized lender may, consistent with federal
laws and regulations, include a due-on-sale clause in its reverse mort-
gage loan agreement and at its option exercise and enforce such clause
in accordance with its terms.
(D) THE BORROWER SHALL NOT BE REQUIRED BY AN AUTHORIZED LENDER OR
BROKER TO PURCHASE AN INSURANCE OR ANNUITY PRODUCT AS A REQUIREMENT OR
CONDITION OF ELIGIBILITY EXCEPT FOR TITLE INSURANCE, HAZARD INSURANCE,
FLOOD OR OTHER PERIL INSURANCE OR OTHER SUCH PRODUCT THAT ARE CUSTOMARY
AND NORMAL TO THE TRANSACTION.
4. The superintendent of financial services shall adopt those rules or
regulations as it considers appropriate to govern reverse mortgage loans
made pursuant to this section. No reverse mortgage loan shall be made
unless it conforms to the requirements of this section and such rules
and regulations as the superintendent of financial services may adopt
[except those reverse mortgage loans made pursuant to section two
hundred eighty-a of this article]. A reverse mortgage loan made by any
authorized lender, national banking association, federal savings and
loan association or federal credit union in conformity with applicable
federal laws and regulations specifically regulating reverse mortgage
loans shall be deemed to conform to the requirements of this section
unless such reverse mortgage loan fails to conform to such rules and
regulations as the superintendent of financial services has expressly
declared to be neither preempted by, nor otherwise inconsistent with
such federal laws or regulations. Those rules or regulations shall
include, but are not limited to, the form and contents of any disclosure
statement, with the exception of the counseling statement prepared by
the New York state office for the aging pursuant to paragraph [(g)] (F)
of subdivision two of this section, that authorized lenders must provide
to [mortgagors] BORROWERS.
5. Notwithstanding any inconsistent provision of law, the priority of
the lien of a reverse mortgage, including the lien for all principal,
interest, fees, costs, shared appreciation and other charges assessed in
connection with the reverse mortgage, shall date from the recording of
the reverse mortgage irrespective of the date of any advance of reverse
mortgage loan proceeds or the date by which an authorized lender shall
be entitled to shared appreciation or accrued but unpaid interest, fees,
costs or other charges.
6. Nothing in this section shall be construed to limit, impair or
otherwise affect the priority under applicable law of any other mort-
gage, deed of trust, encumbrance or lien which was recorded or filed
prior to the effective date of this section.
7. The sale or transfer of the real property securing the reverse
mortgage loan [to a person other than an original mortgagor or mortga-
gors] shall result in the termination of the loan.
A. 5877 6
8. [In a term reverse mortgage loan, the real property securing the
reverse mortgage loan may be reappraised by an independent appraiser at
the end of the loan term. If the value of the real property has appreci-
ated, the term of the reverse mortgage may be extended or refinanced,
however, the total reverse mortgage loan amount may not exceed such
amount or ratio as may be determined by the superintendent of financial
services. The refinancing of the reverse mortgage loan shall be provided
by the original authorized lender or by any other authorized lender
designated by the mortgagee.
9. The principal, including any accrued but unpaid interest, of a
reverse mortgage loan agreement entered into pursuant to this section
may be insured by the mortgagor. If such insurance is purchased from or
otherwise provided by any agency of the state of New York the mortgagor
shall be granted the right, for a term reverse mortgage loan, to refi-
nance or extend the reverse mortgage loan at the end of the term,
subject to such rules or regulations as the superintendent of financial
services may adopt. The authorized lender shall have the option to
choose between refinancing or extending the reverse mortgage loan.
Subject to obtaining an adequate increase in the insurance and subject
to such rules and regulations as the superintendent of financial
services may adopt, the total reverse mortgage loan amount shall not
exceed such amount or loan to value ratio as may be determined by the
superintendent of financial services. The refinancing of the reverse
mortgage loan shall be provided by the original authorized lender or by
any other authorized lender designated by the mortgagee.
10. Any authorized lender offering reverse mortgage loans pursuant to
this section shall also offer reverse mortgage loans pursuant to section
two hundred eighty-a of this article. Subject to this section in the
event that an authorized lender makes reverse mortgage loans under this
section then that lender must make an equal number of reverse mortgage
loans pursuant to section two hundred eighty-a of this article. Such
loans shall be made to individuals who meet the requirements promulgated
in section two hundred eighty-a of this article provided that such indi-
vidual seeking the loan would otherwise qualify and be approved for that
loan. In the event that no or insufficient applications for reverse
mortgage loans pursuant to section two hundred eighty-a of this article
are made to a lender who has previously made reverse mortgage loans
pursuant to this section then there shall be no requirement for that
lender to make a reverse mortgage loan pursuant to section two hundred
eighty-a of this article. It shall also not be a requirement that an
authorized lender make any reverse mortgage loan to any individual who
would not qualify for such loan and/or would not otherwise be approved
for such loan.
11.] Nothing contained in this section, section six-h of the banking
law or any other provision of law shall be construed to prohibit a bank-
ing organization or licensed mortgage banker from providing reverse
mortgages to homeowners in this state under the federal housing adminis-
tration's home equity conversion mortgage insurance demonstration
program.
§ 2. Section 280-a of the real property law is REPEALED.
§ 3. Subdivision 1 of section 281 of the real property law, as amended
by chapter 613 of the laws of 1993, paragraph (a) as amended by chapter
183 of the laws of 1999, paragraph (b) as further amended by section 104
of part A of chapter 62 of the laws of 2011, is amended to read as
follows:
A. 5877 7
1. (a) For the purposes of this section, a "credit line mortgage"
shall mean any mortgage or deed of trust, other than a mortgage or deed
of trust made pursuant to a building loan contract as defined in subdi-
vision thirteen of section two of the lien law, which states that it
secures indebtedness under a note, credit agreement or other financing
agreement that reflects the fact that the parties reasonably contemplate
entering into a series of advances, payments and readvances, and that
limits the aggregate amount at any time outstanding to a maximum amount
specified in such mortgage or deed of trust. For purposes of this
section, "credit line mortgage" shall include a reverse mortgage loan as
defined in [sections] SECTION two hundred eighty [and two hundred eight-
y-a] of this article except that such a credit line mortgage of the
reverse mortgage loan type shall not be subject to the twenty year limi-
tation set forth in subdivision two of this section.
(b) Payments made by an authorized lender pursuant to any credit line
reverse mortgage made in accordance with section two hundred [eighty-a]
EIGHTY of this article during any one year shall be limited to such
amount or ratio as may be determined by the superintendent of financial
services. [In the event that a borrower does not take payment under
such credit line during the course of any year then that borrower shall
have the ability to increase the yearly payments by that amount avail-
able but not borrowed during previous years.]
§ 4. The opening paragraph of section 6-h of the banking law, as
amended by chapter 613 of the laws of 1993, and as further amended by
section 104 of part A of chapter 62 of the laws of 2011, is amended to
read as follows:
Notwithstanding any inconsistent provision of law, in addition to any
other power exercised by it, every authorized lender, as defined by
section two hundred eighty [or two hundred eighty-a] of the real proper-
ty law, shall have the power to offer reverse mortgage loans (1) which
conform to the provisions of section two hundred eighty [or two hundred
eighty-a] of the real property law and the rules and regulations promul-
gated by the superintendent of financial services; or (2) which conform
to the requirements of the federal housing administration's home equity
conversion mortgage insurance [demonstration] program for as long as
such program exists as provided for in section 1715Z-20 of title 12 of
the United States Code. "Reverse mortgage" shall mean the mortgage,
deed of trust or other security instrument relating to a particular
reverse mortgage loan transaction.
§ 5. Paragraph (s) of subdivision 1 of section 14 of the banking law,
as amended by section 90 of part A of chapter 62 of the laws of 2011, is
amended to read as follows:
(s) To permit authorized lenders, as defined by section two hundred
eighty [or two hundred eighty-a] of the real property law, to offer
reverse mortgage loans which shall conform to the provisions of section
two hundred eighty [or two hundred eighty-a] of the real property law.
§ 6. The opening paragraph of paragraph 1 of subsection (c) of section
6501 of the insurance law, as amended by chapter 555 of the laws of
2003, is amended to read as follows:
an amortized instrument of indebtedness evidencing a loan secured by a
first lien on real estate which at the time the loan is made is not less
than eighty percent but not more than one hundred three percent of the
fair market value of the real estate with any percentage in excess of
one hundred percent being used to finance the fees and closing costs on
such indebtedness, except, however, for reverse mortgage loans made
A. 5877 8
pursuant to [sections] SECTION two hundred eighty [and two hundred
eighty-a] of the real property law; provided that:
§ 7. Subdivision 16 of section 2426 of the public authorities law, as
added by chapter 613 of the laws of 1993, is amended to read as follows:
16. Reverse mortgage. A reverse mortgage loan pursuant to section two
hundred eighty [or two hundred eighty-a] of the real property law shall
mean a loan which is secured by a first mortgage on real property
improved by a one to four-family residence or condominium OR COOPERATIVE
APARTMENT that is the residence of the [mortgagor] BORROWER, the
proceeds of which are advanced to the mortgagor during the loan term in
equal installments, in advances through a line of credit or otherwise,
in lump sums, or through a combination thereof. A reverse mortgage may
be structured to provide for the addition of accrued but unpaid interest
to principal, AND MORTGAGE INSURANCE PREMIUM IN THE AMOUNT OF ONE AND
ONE-QUARTER PERCENT OF THE OUTSTANDING BALANCE REMAINING OR SUCH OTHER
AMOUNT AS MAY BE REQUIRED BY THE FEDERAL DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT. Such reverse mortgage loan may provide for an initial lump-
sum advance wherein the mortgagor may receive an amount necessary to pay
closing costs, including but not limited to loan or commitment fees, if
any, insurance premiums, the cost of house repairs, legal fees, [the
cost of annuities,] the costs of third party counseling, the amount
necessary to pay off existing mortgages or liens, and other appropriate
costs.
§ 8. Paragraph (b) of subdivision 3-b of section 2428 of the public
authorities law, as added by chapter 613 of the laws of 1993, and as
further amended by section 104 of part A of chapter 62 of the laws of
2011, is amended to read as follows:
(b) the reverse mortgage loan is issued pursuant to section two
hundred eighty [or two hundred eighty-a] of the real property law;
§ 9. Subdivision 2 of section 252-a of the tax law, as amended by
chapter 613 of the laws of 1993, is amended to read as follows:
2. Reverse mortgages conforming to the provisions of section two
hundred eighty [or two hundred eighty-a] of the real property law secur-
ing obligations of mortgagors or exempted therefrom pursuant to subdivi-
sion four of section two hundred eighty [or subdivision four of section
two hundred eighty-a] of the real property law shall be exempt from any
tax or fee imposed by this article. In each case where an exemption is
claimed under this subdivision, the lender shall provide documentation
in a format approved by the commissioner [of taxation and finance] to
enable recording officers to affirmatively determine when a mortgage
being presented for recording is a reverse mortgage conforming to such
provisions of the real property law and entitled to an exemption under
this subdivision. Where such documentation is not furnished, the maximum
principal debt or obligation which shall be the measure of the tax
imposed by and pursuant to the authority of this article in the case of
a reverse mortgage shall be the proceeds of the loan which the author-
ized lender is obligated to lend the borrower at the execution of such
mortgage or at any time thereafter but determined without regard to any
contingency relating to the addition of any unpaid interest to principal
or relating to any percentage of the future appreciation of the property
securing the loan as consideration or additional consideration for the
making of the loan. Provided, however, if subsequent to the recording of
such mortgage, the proceeds which the authorized lender is obligated to
lend the borrower are increased at any time, such new or further indebt-
edness or obligation shall be the measure of the tax at such time unless
A. 5877 9
at that time an exemption is applicable under the first sentence of this
subdivision or otherwise.
§ 10. Section 131-x of the social services law, as amended by section
73 of part B of chapter 436 of the laws of 1997, is amended to read as
follows:
§ 131-x. Reverse mortgage loans. Notwithstanding any other incon-
sistent provisions of law and to the extent permissible under federal
law, regulation or waiver, the proceeds of a reverse mortgage loan made
in conformity with the requirements of section two hundred eighty [or
two hundred eighty-a] of the real property law or exempted therefrom
pursuant to subdivision four of section two hundred eighty [or subdivi-
sion four of section two hundred eighty-a] of the real property law
shall not be considered as income or resources of the mortgagor for any
purpose under any law relating to food stamps, public assistance, veter-
an assistance, safety net assistance, low-income home energy assistance,
federal supplemental security income benefits and/or additional state
payments, medical assistance, any prescription drug plan or other
payments, allowances, benefits or services available pursuant to this
chapter; provided, however, that for applicants or for recipients of
safety net assistance, any such reverse mortgage loan proceeds shall be
disregarded as income and/or resources only in the event that, and for
so long as, federal laws and regulations exempt loan proceeds in the
determination of eligibility for both the aid to families with dependent
children and supplemental security income programs.
§ 11. This act shall take effect immediately.