Bill Text: NY S01246 | 2019-2020 | General Assembly | Introduced
Bill Title: Adds new conditions on authorized lenders of reverse mortgages including: delivery of a plain language notice, providing the borrower with a reverse mortgage worksheet guide and counseling, and a lapse of seven days between the reverse mortgage counseling and acceptance of the borrower's final application.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO AGING [S01246 Detail]
Download: New_York-2019-S01246-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 1246 2019-2020 Regular Sessions IN SENATE January 11, 2019 ___________ Introduced by Sen. SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Aging AN ACT to amend the real property law, in relation to conditions on lenders who extend reverse mortgages to persons over sixty and seventy years old The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraphs (g), (h) and (i) of subdivision 2 of section 280 2 of the real property law, as added by chapter 613 of the laws of 1993, 3 paragraph (i) as further amended by section 104 of part A of chapter 62 4 of the laws of 2011, are amended to read as follows: 5 (g) an authorized lender must deliver to the applicant, upon applica- 6 tion[, if available,] a plain language statement prepared by the [local7or county] department of financial services who may consult with the New 8 York state office for the aging, where appropriate, on the advisability 9 and availability of independent counseling and information services. In 10 addition to the plain language notice, no reverse mortgage loan applica- 11 tion shall be taken by a lender unless the lender provides the prospec- 12 tive borrower, prior to his or her meeting with a counseling agency on 13 reverse mortgages, with a reverse mortgage worksheet guide to be 14 prepared by the department of financial services who may consult with 15 the New York state office for the aging where appropriate. Further, no 16 reverse mortgage commitment shall be issued by an authorized lender 17 until the applicant presents, in writing, a statement that the terms of 18 the reverse mortgage loan have been explained by an attorney, a housing 19 and urban development certified counselor or any other counseling 20 service as indicated on the statement supplied by the [county or local21office for the aging] department of financial services or a signed affi- 22 davit indicating that the applicant, although made aware of the impor- 23 tance of counseling and its local availability through the provision of 24 such information by the authorized lender, chooses not to utilize any of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06745-01-9S. 1246 2 1 the aforementioned available services. The loan application shall not 2 be approved until the signed reverse mortgage worksheet guide is 3 provided to the lender. A copy of the reverse mortgage worksheet guide 4 shall be provided to the borrower that shall have information including, 5 but not limited to: how reverse mortgages can affect the borrower and 6 their heirs and estate; the consequences of defaulting on a reverse 7 mortgage; alternatives to a reverse mortgage; and the impact on the 8 borrower's eligibility for government assistance programs. The form of 9 such statement and affidavit shall be developed by the department of 10 financial services, who may consult with the New York state office for 11 the aging where appropriate; and 12 (h) a lender shall not accept a final and complete application for 13 reverse mortgage loan from a prospective applicant or assess any fees 14 upon a prospective applicant until a lapse of seven days from the date 15 of counseling, as evidenced by the counseling certification, and without 16 first receiving certification from the applicant or the applicant's 17 authorized representative that the applicant has received counseling 18 from an agency as described in paragraph (g) of this subdivision or 19 seven days from receipt of a signed affidavit expressly waiving such 20 counseling; and 21 (i) any such reverse mortgage shall expressly and conspicuously bear a 22 legend identifying it as such; and 23 [(i)] (j) subject to such rules or regulations as the superintendent 24 of financial services may adopt, a reverse mortgage loan shall be made 25 at either a fixed or variable rate of interest. 26 § 2. Paragraphs (j), (k), (l) and (m) of subdivision 2 of section 27 280-a of the real property law, as added by chapter 613 of the laws of 28 1993, paragraph (l) as further amended by section 104 of part A of chap- 29 ter 62 of the laws of 2011, are amended to read as follows: 30 (j) an authorized lender must deliver to the applicant upon applica- 31 tion[, if available,] a plain language statement prepared by the [local32or county] department of financial services, who may consult with the 33 New York state office for the aging, where appropriate, on the advis- 34 ability and availability of independent counseling and information 35 services. In addition to the plain language notice, no reverse mortgage 36 loan application shall be taken by a lender unless the lender provides 37 the prospective borrower, prior to his or her meeting with a counseling 38 agency on reverse mortgages, with a reverse mortgage worksheet guide to 39 be prepared by the department of financial services, who may consult 40 with the New York state office for the aging where appropriate. Further, 41 no reverse mortgage commitment shall be issued by the authorized lender 42 until the applicant presents, in writing, a statement that the terms of 43 the reverse mortgage loan have been explained to them by an attorney, a 44 housing and urban development certified counselor or any other coun- 45 seling service as indicated on the statement supplied by the [county or46local office for the aging] department of financial services or a signed 47 affidavit indicating that the applicant, although made aware of the 48 importance of counseling and its local availability through the 49 provision of such information by the authorized lender, chooses not to 50 utilize any of the aforementioned available services. The loan applica- 51 tion shall not be approved until the signed reverse mortgage worksheet 52 guide is provided to the lender. A copy of the reverse mortgage work- 53 sheet guide shall be provided to the borrower that shall have informa- 54 tion including, but not limited to: how reverse mortgages can affect 55 the borrower and their heirs and estate, the consequences of defaulting 56 on a reverse mortgage, alternatives to a reverse mortgage, and impactsS. 1246 3 1 on the borrower's eligibility for governmental assistance programs. The 2 form of such statement and affidavit shall be developed by the depart- 3 ment of financial services, who may consult with the New York state 4 office for the aging where appropriate; and 5 (k) a lender shall not accept a final and complete application for a 6 reverse mortgage loan from a prospective applicant or assess any fees 7 upon a prospective applicant until a lapse of seven days from the date 8 of counseling, as evidenced by the counseling certification, and without 9 first receiving certification from the applicant or the applicant's 10 authorized representative that the applicant has received counseling 11 from an agency as described in paragraph (j) of this subdivision or 12 seven days from receipt of a signed affidavit expressly waiving such 13 counseling; and 14 (l) a reverse mortgage pursuant to this section shall expressly and 15 conspicuously bear a legend identifying it as such; and 16 [(l)] (m) subject to such rules or regulations as the superintendent 17 of financial services may adopt, a reverse mortgage loan shall be made 18 at either a fixed or variable rate of interest; and 19 [(m)] (n) in the event that an authorized lender or holder of the 20 reverse mortgage loan intends to initiate foreclosure proceedings the 21 mortgagor shall have the right to designate a third party who shall be 22 notified. In the event that the mortgagor has not designated a third 23 party to receive such notice of foreclosure, then the authorized lender 24 or the holder of said reverse mortgage loan shall notify the local or 25 county office for the aging of its intent to commence foreclosure 26 proceedings. Such entity shall take appropriate action to protect the 27 interests of the mortgagor. 28 § 3. This act shall take effect on the one hundred twentieth day after 29 it shall have become a law.