§ 275. Certificate of discharge of mortgage required. 1. Whenever a
mortgage upon real property is due and payable, and the full amount of
principal and interest due on the mortgage is paid, a certificate of
discharge of mortgage shall be given to the mortgagor or person
designated by him or her, signed by the person or persons specified in
section three hundred twenty-one of this chapter. The person signing the
certificate shall, within thirty days thereafter, arrange to have the
certificate presented for recording to the recording officer of the
county where the mortgage is recorded. Failure by a mortgagee to present
a certificate of discharge for recording shall result in the mortgagee
being liable to the mortgagor in the amount of five hundred dollars if
he or she fails to present such certificate within thirty days, shall
result in the mortgagee being liable to the mortgagor in the amount of
one thousand dollars if he or she fails to present a certificate of
discharge for recording within sixty days and shall result in the
mortgagee being liable to the mortgagor in the amount of one thousand
five hundred dollars if he or she fails to present a certificate of
discharge for recording within ninety days. For the purposes of such
liability under this subdivision, the term "mortgagee" shall not include
a person, partnership, association, corporation or other entity which
makes less than five mortgage loans in any calendar year. The provisions
of this section shall not apply to any mortgage granted to or made by
the state of New York, or any agency or instrumentality thereof or any
political subdivision of the state or any agency or instrumentality
thereof.

2. For purposes of this section, the full amount of principal and
interest due on a mortgage shall not be considered to be paid whenever
such mortgage continues to secure a bona fide debt and an enforceable
lien continues to exist, such as may occur in the following situations:

(a) the commercial practice of lenders trading or selling mortgages on
the secondary market;

(b) the replacement of a construction loan with permanent financing;

(c) the refinancing of an existing loan with a new lender, such as
where the original lender assigns a note and the mortgage securing its
payment to another lender in return for consideration and such mortgage
is consolidated with another mortgage which secures any funds advanced
by the new lender to the mortgagor;

(d) the modification of the terms of a loan by a mortgagor and
mortgagee in order to avoid foreclosure; and

(e) a refinancing that occurs in conjunction with the sale of property
such that the seller conveys property to the purchaser subject to the
lien of the mortgage and the original lender assigns its note and
mortgage on the property to the purchaser's lender.

3. Except with respect to the assignment of a mortgage in connection
with a transaction described in paragraph (a) of subdivision two of this
section, in order to record an assignment of a mortgage there must be
set forth in the assignment document or attached thereto and recorded as
part thereof a statement under oath signed by the mortgagor or any other
party to the transaction having knowledge of the facts (provided such
other party asserts such knowledge), that the assignee is not acting as
a nominee of the mortgagor and that the mortgage continues to secure a
bona fide obligation. With respect to the assignment of a mortgage in
connection with a transaction described in paragraph (a) of subdivision
two of this section, such assignment shall contain the following
statement: "This assignment is not subject to the requirements of
section two hundred seventy-five of the Real Property Law because it is
an assignment within the secondary mortgage market."