•  Summary 
  •  
  •  Actions 
  •  
  •  Committee Votes 
  •  
  •  Floor Votes 
  •  
  •  Memo 
  •  
  •  Text 
  •  
  •  LFIN 
  •  
  •  Chamber Video/Transcript 

S04453 Summary:

BILL NOS04453
 
SAME ASNo Same As
 
SPONSORKLEIN
 
COSPNSRAVELLA, SEPULVEDA
 
MLTSPNSR
 
Add 280-b, RP L
 
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.
Go to top    

S04453 Actions:

BILL NOS04453
 
02/15/2017REFERRED TO JUDICIARY
01/03/2018REFERRED TO JUDICIARY
Go to top

S04453 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          4453
 
                               2017-2018 Regular Sessions
 
                    IN SENATE
 
                                    February 15, 2017
                                       ___________
 
        Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
          printed to be committed to the Committee on Judiciary
 
        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:
    19    (a)  use  the  words  "public service announcement" in any commercial,
    20  mailing, advertisement or writing relating thereto; or
    21    (b) use the words  "government  insured"  or  other  similar  language
    22  representing  that  reverse  mortgage  loans  are insured, supported and
    23  sponsored by any governmental entity in any commercial, mailing,  adver-
    24  tisement or writing relating thereto; or
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07787-05-7

        S. 4453                             2
 
     1    (c) represent that any such loan is other than a commercial product.
     2    3.  (a)  Every  authorized lender or its agent shall provide, with any
     3  solicitation for reverse mortgage products mailed to a physical  address
     4  within the state, supplemental consumer protection materials the content
     5  and form of which shall be specified by the superintendent or his or her
     6  designee.
     7    (b)  Every authorized lender shall provide each applicant or potential
     8  applicant for a reverse mortgage loan  with  the  telephone  number  and
     9  internet  website  address provided by the federal Department of Housing
    10  and Urban Development for the purposes of acquiring home equity  conver-
    11  sion mortgage counseling.
    12    (c)  The  superintendent  is  authorized  to promulgate such rules and
    13  regulations  as  he  or  she  shall  deem  necessary  to  implement  the
    14  provisions of this subdivision.
    15    4.  (a)  Reverse mortgages secured by residential real property within
    16  the state shall be subject to the rules and regulations of  the  federal
    17  Department  of Housing and Urban Development relating to the home equity
    18  conversion mortgage program.
    19    (b) For all borrowers whose tax payments, mortgage insurance payments,
    20  homeowners insurance payments, or payments stemming from any other prop-
    21  erty obligation or obligations are administered by the authorized  lend-
    22  er,  and where these payments are derived from the proceeds of the mort-
    23  gage, the authorized lender shall provide  on  the  borrower's  periodic
    24  account  statement  a  notice which reads in at least twelve point type:
    25  "YOUR TAXES AND INSURANCE ARE CURRENTLY BEING PAID BY  THE  PROCEEDS  OF
    26  THIS  MORTGAGE.  THE  FUNDS  THAT HAVE BEEN SET ASIDE ARE EXPECTED TO BE
    27  EXHAUSTED AFTER THE TAX AND  INSURANCE  PAYMENTS  OF  (SPECIFY  EXPECTED
    28  MONTH  AND  YEAR). IF THE PROCEEDS OF THIS MORTGAGE CANNOT PAY THE TAXES
    29  AND INSURANCE, YOU MUST PAY THESE OBLIGATIONS OR YOUR HOME MAY  BE  LOST
    30  TO  FORECLOSURE.  PLEASE NOTE THAT AS TAX AND INSURANCE AMOUNTS CAN VARY
    31  YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR CHANGES."
    32    (c) An authorized lender shall, by telephone  and  first  class  mail,
    33  inform  and  provide  notice  to a mortgagor when his or her home equity
    34  line of credit or life expectancy set aside is depleted to  ten  percent
    35  or  less  of its value. Such notice shall inform the mortgagor of his or
    36  her obligations relating to such real property including, but not limit-
    37  ed to, mortgage insurance, homeowners insurance and real property  taxes
    38  previously paid by such line of credit or life expectancy set aside, and
    39  that such obligations must continue to be paid when the home equity line
    40  of  credit  or life expectancy set aside is depleted.  Such notice shall
    41  use plain language, written in a clear and coherent manner  using  words
    42  with  common and every day meanings, appropriately divided and captioned
    43  by its various sections.
    44    (d) Each authorized lender shall, by telephone and first  class  mail,
    45  inform  and  provide  notice  to a mortgagor when his or her home equity
    46  line of credit or life expectancy set aside  is  depleted.  Such  notice
    47  shall  inform  the  mortgagor  of his or her obligations relating to the
    48  mortgaged real property including, but not limited to,  mortgage  insur-
    49  ance,  homeowners  insurance  and real property taxes, and that the home
    50  equity line of credit or life expectancy set aside will  no  longer  pay
    51  these  obligations.   Such notice shall use plain language, written in a
    52  clear and coherent manner using words with common and  every  day  mean-
    53  ings, appropriately divided and captioned by its various sections.
    54    5.  In  the  event  that  an authorized lender seeks to foreclose on a
    55  reverse mortgage loan on the basis that the mortgaged real  property  is
    56  no  longer the primary residence of the mortgagor, if during the verifi-

        S. 4453                             3
 
     1  cation of the mortgagor's primary residence no responses are received in
     2  response to mailings relating thereto, such lender shall cause  a  tele-
     3  phone call to be made to the mortgagor, or if the mortgagor is unreacha-
     4  ble  by  telephone, a designated third-party specified by the mortgagor,
     5  and an in person visit to be made to the mortgagor at the mortgaged real
     6  property to be  made  prior  to  the  commencement  of  any  foreclosure
     7  proceeding.  During such visit, the authorized lender or its agent shall
     8  provide clear information as to who they are, that the visit pertains to
     9  the reverse mortgage and the telephone number to call for further infor-
    10  mation.   The authorized lender must wait at least thirty days following
    11  such visit, in addition to any additional time  or  notice  requirements
    12  specified by any other provision of law, before initiating a foreclosure
    13  action  on  the  basis that the mortgaged real property is no longer the
    14  primary residence of  the  mortgagor.  If  the  mortgagor  contacts  the
    15  authorized  lender  and provides proof of residence after such visit but
    16  before the commencement of a foreclosure action, the  authorized  lender
    17  shall  be  barred from initiating such foreclosure action.  Furthermore,
    18  no authorized lender shall charge a mortgagor any fee for any such visit
    19  and inspection. This prohibition on the imposition of fees shall include
    20  any and all inspections conducted by the authorized lender to verify the
    21  status of the reverse mortgage,  or  any  suspected  or  actual  default
    22  condition.
    23    6.  Both  the authorized lender and the mortgagor shall be represented
    24  by an attorney or attorneys at the time of the closing  on  the  reverse
    25  mortgage,  and  each such party shall have at least one attorney present
    26  to conduct the closing.
    27    7. Any person who has been injured by reason of any violation of  this
    28  section  or  any  violation  of the rules and regulations of the federal
    29  Department of Housing and Urban Development relating to the home  equity
    30  conversion  mortgage  program may bring an action in his or her own name
    31  to recover treble  his  or  her  actual  damages,  plus  the  prevailing
    32  plaintiff's reasonable attorney's fees.
    33    8.  Compliance with the provisions of this section shall be conditions
    34  precedent to commencing an  action  to  foreclose  upon  a  home  equity
    35  conversion  mortgage which is subject to the provisions of this section,
    36  and the failure to comply therewith shall be a  complete  defense  to  a
    37  foreclosure action.
    38    §  2.  This  act shall take effect on the ninetieth day after it shall
    39  have become a law; provided, that, effective immediately the superinten-
    40  dent of financial services is authorized  and  directed  to  amend,  add
    41  and/or  repeal  any  rules  and  regulations  necessary to implement the
    42  provision of this act within 180 days after this act shall have become a
    43  law.
Go to top