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 2-0)

Status: (Introduced) 2019-03-11 - REFERRED TO AGING [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.
                                                                   LBD00905-01-9

        S. 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 a

        S. 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.
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