Bill Text: NY S04407 | 2019-2020 | General Assembly | Introduced
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 5-0)
Status: (Passed) 2019-12-06 - approval memo.27 [S04407 Detail]
Download: New_York-2019-S04407-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 4407 2019-2020 Regular Sessions IN SENATE March 11, 2019 ___________ Introduced by Sen. GOUNARDES -- 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 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 19 in any unfair or deceptive practices in connection with the marketing or 20 offering of reverse mortgage loans, and, additionally, shall not: 21 (a) use the words "public service announcement" in any commercial, 22 mailing, advertisement or writing relating thereto; or 23 (b) use the words "government insured" or other similar language 24 representing that reverse mortgage loans are insured, supported and EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00905-01-9S. 4407 2 1 sponsored by any governmental entity in any commercial, mailing, adver- 2 tisement or writing relating thereto; or 3 (c) represent that any such loan is other than a commercial product. 4 3. (a) Every authorized lender or its agent shall provide, with any 5 solicitation for reverse mortgage products mailed to a physical address 6 within the state, supplemental consumer protection materials the content 7 and form of which shall be specified by the superintendent or his or her 8 designee. 9 (b) Every authorized lender shall provide each applicant or potential 10 applicant for a reverse mortgage loan with the telephone number and 11 internet website address provided by the federal Department of Housing 12 and Urban Development for the purposes of acquiring home equity conver- 13 sion mortgage counseling. 14 (c) The superintendent is authorized to promulgate such rules and 15 regulations as he or she shall deem necessary to implement the 16 provisions of this subdivision. 17 4. (a) Reverse mortgages secured by residential real property within 18 the state shall be subject to the rules and regulations of the federal 19 Department of Housing and Urban Development relating to the home equity 20 conversion mortgage program. 21 (b) For all borrowers whose tax payments, mortgage insurance payments, 22 homeowners insurance payments, or payments stemming from any other prop- 23 erty obligation or obligations are administered by the authorized lend- 24 er, and where these payments are derived from the proceeds of the mort- 25 gage, the authorized lender shall provide on the borrower's periodic 26 account statement the current balance remaining in the borrower's line 27 of credit or lifetime expectancy set aside, the projected annual proper- 28 ty charges for that year, and a notice which reads in at least twelve 29 point type: "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY THE 30 PROCEEDS OF THIS MORTGAGE. THE FUNDS THAT HAVE BEEN SET ASIDE ARE 31 EXPECTED TO BE EXHAUSTED AFTER THE TAX AND INSURANCE PAYMENTS OF (SPECI- 32 FY EXPECTED MONTH AND YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY 33 THE TAXES AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY 34 BE LOST TO FORECLOSURE. PLEASE NOTE THAT AS TAX AND INSURANCE AMOUNTS 35 CAN VARY YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES." 36 (c) An authorized lender shall, by telephone and first class mail, 37 inform and provide notice to a mortgagor when his or her home equity 38 line of credit or life expectancy set aside is depleted to ten percent 39 or less of its value. Such notice shall inform the mortgagor of his or 40 her obligations relating to such real property including, but not limit- 41 ed to, mortgage insurance, homeowners insurance and real property taxes 42 previously paid by such line of credit or life expectancy set aside, and 43 that such obligations must continue to be paid when the home equity line 44 of credit or life expectancy set aside is depleted. Such notice shall 45 use plain language, written in a clear and coherent manner using words 46 with common and every day meanings, appropriately divided and captioned 47 by its various sections. 48 (d) Each authorized lender shall, by telephone and first class mail, 49 inform and provide notice to a mortgagor when his or her home equity 50 line of credit or life expectancy set aside is depleted. Such notice 51 shall inform the mortgagor of his or her obligations relating to the 52 mortgaged real property including, but not limited to, mortgage insur- 53 ance, homeowners insurance and real property taxes, and that the home 54 equity line of credit or life expectancy set aside will no longer pay 55 these obligations. Such notice shall use plain language, written in aS. 4407 3 1 clear and coherent manner using words with common and every day mean- 2 ings, appropriately divided and captioned by its various sections. 3 5. No authorized lender shall make an advance payment for any obli- 4 gation arising from mortgaged real property. Furthermore, in the event a 5 mortgagor defaults upon the payment of mortgage insurance premium, home- 6 owners' insurance premium or real property tax related to the mortgaged 7 property, the authorized lender may only pay those premiums and/or taxes 8 which are in arrears. 9 6. In the event that an authorized lender seeks to foreclose on a 10 reverse mortgage loan on the basis that the mortgaged real property is 11 no longer the primary residence of or occupied by the mortgagor, if 12 during the verification of the mortgagor's primary residence and/or 13 occupancy no responses are received in response to mailings relating 14 thereto, such lender shall cause a telephone call to be made to the 15 mortgagor, or if the mortgagor is unreachable by telephone, a designated 16 third-party specified by the mortgagor, and an in person visit to be 17 made to the mortgagor at the mortgaged real property to be made prior to 18 the commencement of any foreclosure proceeding. During such visit, the 19 authorized lender or its agent shall provide clear information as to who 20 they are, that the visit pertains to the reverse mortgage, the reason 21 for the home visit, and the telephone number to call for further infor- 22 mation. The authorized lender must wait at least thirty days following 23 such visit, in addition to any additional time or notice requirements 24 specified by any other provision of law, before initiating a foreclosure 25 action on the basis that the mortgaged real property is no longer the 26 primary residence of the mortgagor. If the mortgagor contacts the 27 authorized lender and provides proof of residence or occupancy after 28 such visit but before the commencement of a foreclosure action, the 29 authorized lender shall be barred from initiating such foreclosure 30 action. Furthermore, no authorized lender shall charge a mortgagor any 31 fee for any such visit and inspection. This prohibition on the imposi- 32 tion of fees shall include any and all inspections conducted by the 33 authorized lender to verify the status of the reverse mortgage, or any 34 suspected or actual default condition. 35 7. Both the authorized lender and the mortgagor shall be represented 36 by an attorney or attorneys at the time of the closing on the reverse 37 mortgage, and each such party shall have at least one attorney present 38 to conduct the closing. 39 8. Any person who has been injured by reason of any violation of this 40 section or any violation of the rules and regulations of the federal 41 Department of Housing and Urban Development relating to the home equity 42 conversion mortgage program may bring an action in his or her own name 43 to recover treble his or her actual damages, plus the prevailing 44 plaintiff's reasonable attorney's fees. 45 9. Compliance with the provisions of this section shall be conditions 46 precedent to commencing an action to foreclose upon a home equity 47 conversion mortgage which is subject to the provisions of this section, 48 and the failure to comply therewith shall be a complete defense to a 49 foreclosure action. 50 § 2. This act shall take effect on the ninetieth day after it shall 51 have become a law; provided, that, effective immediately the superinten- 52 dent of financial services is authorized and directed to amend, add 53 and/or repeal any rules and regulations necessary to implement the 54 provision of this act within 180 days after this act shall have become a 55 law.