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A05822 Summary:

COSPNSRMosley, Jaffee, Abbate, Colton, Sepulveda, Cymbrowitz, Galef, Zebrowski, Joyner, Ortiz, Skoufis, Rivera, Blake, Glick, Dinowitz, Carroll, D'Urso, Steck, Hyndman, Richardson, Davila, Aubry, Weprin, Seawright, Abinanti, Cahill
MLTSPNSRCook, Englebright, Nolan, Simon, Thiele
Add 280-e, RP L
Provides for the establishment of the New York state home equity conversion information summary to provide notice of mortgagor's right and responsibilities under reverse mortgage loans issued under the home equity conversion mortgage program of the federal Department of Housing and Urban Development; every authorized lender must provide copies of such summary not less than 1 day prior to closing on a reverse mortgage loan; establishes a private right of action for violations of such provisions.
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A05822 Actions:

02/16/2017referred to judiciary
05/09/2017reported referred to codes
05/16/2017reported referred to ways and means
06/14/2017reported referred to rules
06/15/2017rules report cal.384
06/15/2017ordered to third reading rules cal.384
01/03/2018ordered to third reading cal.416
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A05822 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5822             Revised 02/21/17
SPONSOR: Weinstein
  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, finan- cial alternatives to reverse mortgages, responsibilities regarding mort- gage 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: New bill, 2017.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined.   EFFECTIVE DATE: 120th day after it shall have become
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A05822 Text:

                STATE OF NEW YORK
                               2017-2018 Regular Sessions
                   IN ASSEMBLY
                                    February 16, 2017
        Introduced  by  M.  of  A.  WEINSTEIN  --  read once and referred to the
          Committee on Judiciary
        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-e to read as follows:
     3    § 280-e. 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.
    18    2. The department shall establish and distribute to  authorized  lend-
    19  ers,  and  periodically  update, a New York state home equity conversion
    20  information summary. Such summary shall include, but not be limited to:
    21    (a) notice that reverse mortgage loans are not free or cost free,  and
    22  such  loans  have  associated  costs  that are included in the financing
    23  thereof;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 5822                             2
     1    (b) a schedule of payments to be made to and from the  mortgagor,  and
     2  the  total payment for both the mortgagee and the authorized lender over
     3  the term of the reverse mortgage loan contingent upon the type  of  such
     4  loan being offered;
     5    (c)  a  statement advising mortgagors to consult with licensed profes-
     6  sionals regarding the tax and estate planning  consequences  of  reverse
     7  mortgage loans;
     8    (d)  where applicable, a description of the prepayment and refinancing
     9  provisions of the reverse mortgage loan;
    10    (e) an explanation and itemization of the potential costs  of  reverse
    11  mortgage  loans, including the rate of interest and total interest paya-
    12  ble on such loan;
    13    (f) a summary of actions or conditions that will constitute a  default
    14  of the reverse mortgage loan;
    15    (g)  a  summary  and  explanation  of  alternatives to entering into a
    16  reverse mortgage loan on the basis of economic hardship  including,  but
    17  not  limited  to,  direct  sale  of  the  residence,  social  safety net
    18  programs, debt consolidation or economic counseling;
    19    (h) information on a mortgagor's basic rights in the foreclosure proc-
    20  ess;
    21    (i) a summary of the real property tax exemptions which are  available
    22  to the mortgagor in order to reduce his or her cost of living;
    23    (j)  information about New York state-based organizations that provide
    24  federal Department of Housing and Urban  Development  certified  reverse
    25  mortgage counseling;
    26    (k)  information  on  legal  assistance and advocacy organizations and
    27  services which provide  assistance  to  mortgagors  in  the  event  that
    28  complications or issues arise relating to the reverse mortgage loan; and
    29    (l)  such  other information as the department shall deem necessary to
    30  fully inform mortgagors of their rights  and  responsibilities  under  a
    31  reverse mortgage loan.
    32    3.  Not  less than five days prior to the closing upon a reverse mort-
    33  gage loan, the authorized lender shall  provide  the  mortgagor  with  a
    34  completed  New  York state home equity conversion information summary in
    35  duplicate.   Each mortgagor shall sign  both  copies  of  such  summary,
    36  attesting that he or she has read and fully understands the summary. One
    37  copy  thereof  shall  be retained by the authorized lender and the other
    38  shall be retained by the mortgagor's attorney.
    39    4. The provision  of  the  information  summary  established  by  this
    40  section is integral to the execution of a reverse mortgage loan, thus in
    41  the absence of such a summary the related reverse mortgage loan shall be
    42  null and void.
    43    5.  Any person who has been injured by reason of any violation of this
    44  section or the rules and regulations related thereto may bring an action
    45  in his or her own name to recover treble his or her actual damages, plus
    46  the prevailing plaintiff's reasonable attorneys fee.
    47    6. The superintendent of financial services is authorized  to  promul-
    48  gate any rules or regulations he or she deems necessary to implement the
    49  provisions of this section.
    50    § 2. This act shall take effect on the one hundred twentieth day after
    51  it shall have become a law; provided, however, that effective immediate-
    52  ly,  any  actions  necessary  for  the implementation of this act on its
    53  effective date are authorized and directed to be completed on or  before
    54  such date.
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