Bill Text: NY A05820 | 2017-2018 | General Assembly | Amended
Bill Title: 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; prohibits foreclosure on mortgaged property based on the failure of the mortgagor to live on the property, until an inspection has been made at the property; establishes a proved right of action with treble damages for violations of such provisions.
Spectrum: Partisan Bill (Democrat 30-0)
Status: (Engrossed - Dead) 2018-06-05 - delivered to senate [A05820 Detail]
Download: New_York-2017-A05820-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 5820--A Cal. No. 414 2017-2018 Regular Sessions IN ASSEMBLY February 16, 2017 ___________ Introduced by M. of A. WEINSTEIN, MOSLEY, ABBATE, COLTON, CYMBROWITZ, GALEF, ZEBROWSKI, JOYNER, ORTIZ, RIVERA, BLAKE, GLICK, DINOWITZ, CARROLL, D'URSO, STECK, HYNDMAN, RICHARDSON, DAVILA, AUBRY, SEAWRIGHT, ABINANTI, WALLACE, CAHILL -- Multi-Sponsored by -- M. of A. COOK, ENGLEBRIGHT, NOLAN, SIMON, THIELE -- read once and referred to the Committee on Judiciary -- ordered to a third reading, amended and ordered reprinted, retaining its place on the order of third reading 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: 1 Section 1. The real property law is amended by adding a new section 2 280-b to read as follows: 3 § 280-b. Federal home equity conversion mortgage regulation. 1. For 4 the purposes of this section, the following terms shall have the follow- 5 ing meanings: 6 (a) Reverse mortgage loan. A reverse mortgage loan as defined in 7 section two hundred eighty of this article, which is issued in this 8 state pursuant to the home equity conversion mortgage for seniors 9 program operated by the federal Department of Housing and Urban Develop- 10 ment. 11 (b) Authorized lender. An authorized lender as defined in section two 12 hundred eighty of this article authorized to make reverse mortgage 13 loans, as defined in this section. 14 (c) Superintendent. The superintendent of financial services estab- 15 lished pursuant to section two hundred two of the financial services 16 law. 17 2. No authorized lender or any other party or entity shall in any 18 manner, in the marketing or offering of reverse mortgage loans, engage EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD07787-08-8A. 5820--A 2 1 in any unfair or deceptive practices in connection with the marketing or 2 offering of reverse mortgage loans, and, additionally, shall not: 3 (a) use the words "public service announcement" in any commercial, 4 mailing, advertisement or writing relating thereto; or 5 (b) use the words "government insured" or other similar language 6 representing that reverse mortgage loans are insured, supported and 7 sponsored by any governmental entity in any commercial, mailing, adver- 8 tisement or writing relating thereto; or 9 (c) represent that any such loan is other than a commercial product. 10 3. (a) Every authorized lender or its agent shall provide, with any 11 solicitation for reverse mortgage products mailed to a physical address 12 within the state, supplemental consumer protection materials the content 13 and form of which shall be specified by the superintendent or his or her 14 designee. 15 (b) Every authorized lender shall provide each applicant or potential 16 applicant for a reverse mortgage loan with the telephone number and 17 internet website address provided by the federal Department of Housing 18 and Urban Development for the purposes of acquiring home equity conver- 19 sion mortgage counseling. 20 (c) The superintendent is authorized to promulgate such rules and 21 regulations as he or she shall deem necessary to implement the 22 provisions of this subdivision. 23 4. (a) Reverse mortgages secured by residential real property within 24 the state shall be subject to the rules and regulations of the federal 25 Department of Housing and Urban Development relating to the home equity 26 conversion mortgage program. 27 (b) For all borrowers whose tax payments, mortgage insurance payments, 28 homeowners insurance payments, or payments stemming from any other prop- 29 erty obligation or obligations are administered by the authorized lend- 30 er, and where these payments are derived from the proceeds of the mort- 31 gage, the authorized lender shall provide on the borrower's periodic 32 account statement the current balance remaining in the borrower's line 33 of credit or lifetime expectancy set aside, the projected annual proper- 34 ty charges for that year, and a notice which reads in at least twelve 35 point type: "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY THE 36 PROCEEDS OF THIS MORTGAGE. THE FUNDS THAT HAVE BEEN SET ASIDE ARE 37 EXPECTED TO BE EXHAUSTED AFTER THE TAX AND INSURANCE PAYMENTS OF (SPECI- 38 FY EXPECTED MONTH AND YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY 39 THE TAXES AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY 40 BE LOST TO FORECLOSURE. PLEASE NOTE THAT AS TAX AND INSURANCE AMOUNTS 41 CAN VARY YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES." 42 (c) An authorized lender shall, by telephone and first class mail, 43 inform and provide notice to a mortgagor when his or her home equity 44 line of credit or life expectancy set aside is depleted to ten percent 45 or less of its value. Such notice shall inform the mortgagor of his or 46 her obligations relating to such real property including, but not limit- 47 ed to, mortgage insurance, homeowners insurance and real property taxes 48 previously paid by such line of credit or life expectancy set aside, and 49 that such obligations must continue to be paid when the home equity line 50 of credit or life expectancy set aside is depleted. Such notice shall 51 use plain language, written in a clear and coherent manner using words 52 with common and every day meanings, appropriately divided and captioned 53 by its various sections. 54 (d) Each authorized lender shall, by telephone and first class mail, 55 inform and provide notice to a mortgagor when his or her home equity 56 line of credit or life expectancy set aside is depleted. Such noticeA. 5820--A 3 1 shall inform the mortgagor of his or her obligations relating to the 2 mortgaged real property including, but not limited to, mortgage insur- 3 ance, homeowners insurance and real property taxes, and that the home 4 equity line of credit or life expectancy set aside will no longer pay 5 these obligations. Such notice shall use plain language, written in a 6 clear and coherent manner using words with common and every day mean- 7 ings, appropriately divided and captioned by its various sections. 8 5. No authorized lender shall make an advance payment for any obli- 9 gation arising from mortgaged real property. Furthermore, in the event a 10 mortgagor defaults upon the payment of mortgage insurance premium, home- 11 owners' insurance premium or real property tax related to the mortgaged 12 property, the authorized lender may only pay those premiums and/or taxes 13 which are in arrears. 14 6. In the event that an authorized lender seeks to foreclose on a 15 reverse mortgage loan on the basis that the mortgaged real property is 16 no longer the primary residence of or occupied by the mortgagor, if 17 during the verification of the mortgagor's primary residence and/or 18 occupancy no responses are received in response to mailings relating 19 thereto, such lender shall cause a telephone call to be made to the 20 mortgagor, or if the mortgagor is unreachable by telephone, a designated 21 third-party specified by the mortgagor, and an in person visit to be 22 made to the mortgagor at the mortgaged real property to be made prior to 23 the commencement of any foreclosure proceeding. During such visit, the 24 authorized lender or its agent shall provide clear information as to who 25 they are, that the visit pertains to the reverse mortgage, the reason 26 for the home visit, and the telephone number to call for further infor- 27 mation. The authorized lender must wait at least thirty days following 28 such visit, in addition to any additional time or notice requirements 29 specified by any other provision of law, before initiating a foreclosure 30 action on the basis that the mortgaged real property is no longer the 31 primary residence of the mortgagor. If the mortgagor contacts the 32 authorized lender and provides proof of residence or occupancy after 33 such visit but before the commencement of a foreclosure action, the 34 authorized lender shall be barred from initiating such foreclosure 35 action. Furthermore, no authorized lender shall charge a mortgagor any 36 fee for any such visit and inspection. This prohibition on the imposi- 37 tion of fees shall include any and all inspections conducted by the 38 authorized lender to verify the status of the reverse mortgage, or any 39 suspected or actual default condition. 40 7. Both the authorized lender and the mortgagor shall be represented 41 by an attorney or attorneys at the time of the closing on the reverse 42 mortgage, and each such party shall have at least one attorney present 43 to conduct the closing. 44 8. Any person who has been injured by reason of any violation of this 45 section or any violation of the rules and regulations of the federal 46 Department of Housing and Urban Development relating to the home equity 47 conversion mortgage program may bring an action in his or her own name 48 to recover treble his or her actual damages, plus the prevailing 49 plaintiff's reasonable attorney's fees. 50 9. Compliance with the provisions of this section shall be conditions 51 precedent to commencing an action to foreclose upon a home equity 52 conversion mortgage which is subject to the provisions of this section, 53 and the failure to comply therewith shall be a complete defense to a 54 foreclosure action. 55 § 2. This act shall take effect on the ninetieth day after it shall 56 have become a law; provided, that, effective immediately the superinten-A. 5820--A 4 1 dent of financial services is authorized and directed to amend, add 2 and/or repeal any rules and regulations necessary to implement the 3 provision of this act within 180 days after this act shall have become a 4 law.
