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A05628 Summary:

BILL NOA05628A
 
SAME ASSAME AS S02373
 
SPONSORWeinstein (MS)
 
COSPNSRMosley, Jaffee, Abbate, Colton, Cymbrowitz, Galef, Zebrowski, Joyner, Ortiz, Glick, Dinowitz, Carroll, D'Urso, Steck, Hyndman, Richardson, Aubry, Weprin, Seawright, Abinanti, Cahill, Burke, Taylor, Lavine
 
MLTSPNSRCook, Englebright, Nolan, Simon, Thiele
 
Add §280-b, RP L
 
Provides for the establishment of the New York state home equity conversion information summary to provide notice of mortgagor's rights and responsibilities under reverse mortgage loans issued under the home equity conversion mortgage program of the federal Department of Housing and Urban Development; provides that every authorized lender must provide copies of such summary not less than 5 days prior to closing on a reverse mortgage loan; establishes a private right of action for violations of such provisions.
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A05628 Actions:

BILL NOA05628A
 
02/14/2019referred to judiciary
03/28/2019amend and recommit to judiciary
03/28/2019print number 5628a
01/08/2020referred to judiciary
01/14/2020reported referred to codes
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A05628 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5628A
 
SPONSOR: Weinstein (MS)
  TITLE OF BILL: An act to amend the real property law, in relation to the provision of certain information to mortgagors of reverse mortgages issued under the federal home equity conversion mortgage for seniors program   PURPOSE OF BILL: This bill requires that the Department of Financial Services issue a reverse mortgage information summary sheet to mortgage originators. These summary sheets will provide consumer rights information to seniors to help them better understand these financial products.   SUMMARY OF PROVISIONS OF BILL: Section 1: Amends the real property law concerning reverse mortgages to provide that for all reverse mortgages issued under HUD's home equity conversion mortgage program in New York State, the Department of Finan- cial Services must issue a summary sheet to be provided to seniors prior to the execution of a reverse mortgage loan. The summary sheet will contain information useful to seniors, including the real costs of reverse mortgage loans, information about fees, financial alternatives to reverse mortgages, responsibilities regarding mortgage insurance and tax payments, conditions that will trigger a default, information about New York State-based organizations which provide HUD-certified reverse mortgage counseling, how to contact legal services organizations in the event of foreclosure, etc. Lenders must provide the summary sheet to seniors not less than five days prior to closing on a reverse mortgage. This section also makes the information summary sheet an essential component of future reverse mortgages, and requires that the senior sign the sheet confirming receipt and that the originator maintain a copy. The section will be enforceable via treble damages and attorney's fees for prevailing plaintiffs. Section 2: The act will take effect on the one hundred twentieth day after it becomes law, but the Department of Financial Services is authorized to immediately take any actions necessary for its implementa- tion.   EXISTING LAW: Under current law, home equity conversion mortgage lenders under the HUD program are not mandated to provide an extensive reverse mortgage infor- mation summary sheet to seniors.   JUSTIFICATION: Reverse mortgages are complicated and expensive financial products. Many seniors do not understand how they work or what their true longterm costs are. Exacerbating this problem are unscrupulous lenders who market reverse mortgages as public services or government-sponsored products. Inadequate regulation of this industry resulted in a sharp uptick in defaults in 2016, as more seniors fell into foreclosure on these products, losing not only their homes, but also their most significant financial assets. Foreclosures in the reverse mortgage industry have taken place against seniors for making payments mere cents short of their tax or mortgage insurance bills. Lenders eager to tap the equity in these homes are sometimes aggressive to foreclose and see a return on their investment. Seniors must be provided with comprehensive information about these products, their true long-term costs, conditions that will result in a default, methods to reduce their tax liability, available services to help them in the event of a default and/or foreclosure, etc. This required summary sheet is one step toward ensuring seniors have all of the information they need to make an educated and fully informed decision about whether a reverse mortgage is the right financial product to address their economic situation.   LEGISLATIVE HISTORY: 2017-18: A.5822/S.4494- A.Cal/S.Judi   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined.   EFFECTIVE DATE: This act shall take effect on the 120th day after it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
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A05628 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5628--A
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 14, 2019
                                       ___________
 
        Introduced  by  M.  of  A.  WEINSTEIN,  MOSLEY,  JAFFEE, ABBATE, COLTON,
          CYMBROWITZ, GALEF, ZEBROWSKI, JOYNER, ORTIZ, GLICK, DINOWITZ, CARROLL,
          D'URSO, STECK, HYNDMAN, RICHARDSON, AUBRY, WEPRIN, SEAWRIGHT,  ABINAN-
          TI,  CAHILL,  BURKE,  TAYLOR  --  Multi-Sponsored by -- M. of A. COOK,
          ENGLEBRIGHT, NOLAN, SIMON, THIELE -- read once  and  referred  to  the
          Committee  on Judiciary -- committee discharged, bill amended, ordered
          reprinted as amended and recommitted to said committee
 
        AN ACT to amend the real property law, in relation to the  provision  of
          certain  information  to  mortgagors 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  information  summary
     4  sheet.  1.  For  the  purposes of this section the following terms shall
     5  have the following 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) Mortgagor. A mortgagor as defined in section two hundred eighty of
    15  this article.
    16    (d)  Department.  The  department  of  financial  services established
    17  pursuant to section one hundred two of the financial services law.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00916-03-9

        A. 5628--A                          2
 
     1    2. The department shall establish and distribute to  authorized  lend-
     2  ers,  and  periodically  update, a New York state home equity conversion
     3  information summary. Such summary shall include, but not be limited to:
     4    (a)  notice that reverse mortgage loans are not free or cost free, and
     5  such loans have associated costs that  are  included  in  the  financing
     6  thereof;
     7    (b)  a  schedule of payments to be made to and from the mortgagor, and
     8  the total payment for both the mortgagee and the authorized lender  over
     9  the  term  of the reverse mortgage loan contingent upon the type of such
    10  loan being offered;
    11    (c) a statement advising mortgagors to consult with  licensed  profes-
    12  sionals  regarding  the  tax and estate planning consequences of reverse
    13  mortgage loans;
    14    (d) where applicable, a description of the prepayment and  refinancing
    15  provisions of the reverse mortgage loan;
    16    (e)  an  explanation and itemization of the potential costs of reverse
    17  mortgage loans, including the rate of interest and total interest  paya-
    18  ble on such loan;
    19    (f)  a summary of actions or conditions that will constitute a default
    20  of the reverse mortgage loan;
    21    (g) a summary and explanation  of  alternatives  to  entering  into  a
    22  reverse  mortgage  loan on the basis of economic hardship including, but
    23  not limited  to,  direct  sale  of  the  residence,  social  safety  net
    24  programs, debt consolidation or economic counseling;
    25    (h) information on a mortgagor's basic rights in the foreclosure proc-
    26  ess;
    27    (i)  a summary of the real property tax exemptions which are available
    28  to the mortgagor in order to reduce his or her cost of living;
    29    (j) information about New York state-based organizations that  provide
    30  federal  Department  of  Housing and Urban Development certified reverse
    31  mortgage counseling;
    32    (k) information on legal assistance  and  advocacy  organizations  and
    33  services  which  provide  assistance  to  mortgagors  in  the event that
    34  complications or issues arise relating to the reverse mortgage loan; and
    35    (l) such other information as the department shall deem  necessary  to
    36  fully  inform  mortgagors  of  their rights and responsibilities under a
    37  reverse mortgage loan.
    38    3. Not less than five days prior to the closing upon a  reverse  mort-
    39  gage  loan,  the  authorized  lender  shall provide the mortgagor with a
    40  completed New York state home equity conversion information  summary  in
    41  duplicate.    Each  mortgagor  shall  sign  both copies of such summary,
    42  attesting that he or she has read and fully understands the summary. One
    43  copy thereof shall be retained by the authorized lender  and  the  other
    44  shall be retained by the mortgagor's attorney.
    45    4.  The  provision  of  the  information  summary  established by this
    46  section is integral to the execution of a reverse mortgage loan, thus in
    47  the absence of such a summary the related reverse mortgage loan shall be
    48  null and void.
    49    5. Any person who has been injured by reason of any violation of  this
    50  section or the rules and regulations related thereto may bring an action
    51  in his or her own name to recover treble his or her actual damages, plus
    52  the prevailing plaintiff's reasonable attorneys fee.
    53    6.  The  superintendent of financial services is authorized to promul-
    54  gate any rules or regulations he or she deems necessary to implement the
    55  provisions of this section.

        A. 5628--A                          3
 
     1    § 2. This act shall take effect on the one hundred twentieth day after
     2  it shall have become a law. Effective immediately, the addition,  amend-
     3  ment and/or repeal of any rule or regulation necessary for the implemen-
     4  tation  of  this act on its effective date are authorized to be made and
     5  completed on or before such effective date.
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