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A07589 Summary:

BILL NOA07589
 
SAME ASSAME AS S02758-A
 
SPONSORLupardo
 
COSPNSR
 
MLTSPNSR
 
Amd 280 & 280-a, RP L
 
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.
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A07589 Actions:

BILL NOA07589
 
05/03/2017referred to judiciary
01/03/2018referred to judiciary
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A07589 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7589
 
SPONSOR: Lupardo
  TITLE OF BILL: 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   PURPOSE: To enhance protections for persons over sixty and seventy years old who are considering entering into contracts for reverse mortgages.   SUMMARY OF PROVISIONS: Section 1: Amends paragraphs (g), (h) and (i) of subdivision 2 of section 280 of the Real Property Law to require statements be prepared in plain language for persons sixty years of age or older by the Depart- ment of Financial Services, who may consult with the Office for the Aging, on the advisability and availability of counseling and informa- tion services for persons considering entering into a reverse mortgage contract. Also requires lenders provide prospective borrowers with a reverse mortgage guide prepared by the Department of Financial Services before such a loan application can be approved. Additionally, prohibits lenders from accepting completed applications for reverse mortgage loans from a prospective applicant or assessing fees upon a prospective appli- cant until at least seven days from the date of counseling or receipt of a signed affidavit waiving such counseling. Section 2: Amends paragraphs (j), (k), (I) and (m) of subdivision 2 of section 280-a of the Real Property Law to add the same provisions as section 1 of this legislation for persons seventy years of age or older. Section 3: Establishes the effective date.   JUSTIFICATION: Reverse mortgages can be an attractive option for older adults living on a fixed income to help cover the costs of basic living expenses, health care or even reducing additional debt. However, the risks associated with reverse mortgages are not always clear, including continuing obli- gations and legal responsibilities that the mortgagor assumes. As such, defaults on reverse mortgages hit a high of 10% in 2013. Although the Department of Housing and Urban Development has enacted policy changes to address the high default rates, there is still more to be done to protect seniors. In 2016, the Department of Financial Services opened an investigation into the operations of several agencies that provide reverse mortgage contracts after a dramatic increase in foreclosure cases involving reverse mortgages in New York and allegations that vulnerable seniors were being targeted. Because of the long-term impacts that a reverse mortgage can have on a senior's financial security, it is imperative that the State ensures that there are appropriate safeguards during the contracting process. This legislation will help to ensure seniors are aware of the risks associated with reverse mortgages by providing for a seven day cooling off period prior to the final contract. During this time, the senior will be given a worksheet intended to facilitate consideration of the current state of the mortgagor's finances, provide for an appropriate time to review the contract, as well as consider the impacts of the reverse mortgage long-term. To that end, the senior will be required to obtain financial counseling during this period unless they specifically opt-out of such counseling through a signed affidavit. At every stage in life, financial decisions can determine your standard of living as well as your independence and security. For our seniors, these decisions are arguably even more important because they are often on a fixed income and the loss of housing can be devastating. As a result, the transparency of the reverse mortgage contract process should be proportionate to the impact that it will have on the mortgagor.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect on the one hundred twentieth day after it shall have become law.
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A07589 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7589
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                       May 3, 2017
                                       ___________
 
        Introduced  by M. of A. LUPARDO -- read once and referred to the Commit-
          tee on Judiciary
 
        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 [local
     7  or 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 local
    21  office 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.
                                                                   LBD07906-04-7

        A. 7589                             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 [local
    32  or 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  or
    46  local 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 impacts

        A. 7589                             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.
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