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This entry was published on 2020-04-17
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SECTION 280-B
Federal home equity conversion mortgage regulation
Real Property (RPP) CHAPTER 50, ARTICLE 8
§ 280-b. Federal home equity conversion mortgage regulation. 1. For
the purposes of this section, the following terms shall have the
following 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
Development.

(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
established 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, engage
in any unfair or deceptive practices in connection with the marketing or
offering of reverse mortgage loans, and, additionally, shall not:

(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 in a
manner that falsely represents that reverse mortgage loans are insured,
supported and sponsored by any governmental entity in any commercial,
mailing, advertisement or writing relating thereto; or

(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
conversion 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
property obligation or obligations are administered by the authorized
lender, and where these payments are derived from the proceeds of the
mortgage, the authorized lender shall provide on the borrower's periodic
account statement the current balance remaining in the borrower's line
of credit or lifetime expectancy set aside, the projected annual
property charges for that year, and 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
limited 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
insurance, 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
meanings, appropriately divided and captioned by its various sections.

5. No authorized lender shall make an advance payment for any
obligation arising from mortgaged real property. Furthermore, in the
event a mortgagor defaults upon the payment of mortgage insurance
premium, homeowners' insurance premium or real property tax related to
the mortgaged property, the authorized lender may only pay those
premiums and/or taxes which are in arrears.

6. 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 or occupied by the mortgagor, if
during the verification of the mortgagor's primary residence and/or
occupancy no responses are received in response to mailings relating
thereto, such lender shall cause a telephone call to be made to the
mortgagor, or if the mortgagor is unreachable 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, the reason
for the home visit, and the telephone number to call for further
information. 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 or occupancy 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.

7. 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.

8. 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.

9. 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.