New York Laws
Article 8 - Conveyances and Mortgages
279 - Graduated Payment Mortgage.

(a) the average annual rate of increase for principal and interest
payments shall not exceed:
(i) 7.5 percent per annum for a mortgage with a graduation period of
five years or less;
(ii) 6.5 percent per annum for a mortgage with a graduation period of
six years;
(iii) 5.5 percent per annum for a mortgage with a graduation period of
seven years;
(iv) 4.5 percent per annum for a mortgage with a graduation period of
eight years;
(v) 3.5 percent per annum for a mortgage with a graduation period of
nine years; and
(vi) 3 percent per annum for a mortgage with a graduation period of
ten years.
(b) periodic payments of principal and interest shall not change more
than once per annum and increases shall be limited to the first ten
years of the term of the mortgage.
(c) payments of principal and interest are required in amounts
sufficient to pay all interest and full repayment of principal within a
period not to exceed forty years.
3. Graduated payment mortgages may be offered only if the lender:
(a) offers the prospective borrower a non-graduated payment mortgage
loan at the prevailing rate being offered by that lender;
(b) provides the mortgagor with the option to convert the graduated
payment mortgage loan to a non-graduated payment mortgage loan at a
pre-determined time agreed upon between the borrower and lender and at
the same rate of interest provided for the graduated payment mortgage
loan; and
(c) discloses in advance on a uniform disclosure statement, prescribed
by the superintendent of financial services, the relevant provisions of
the graduated payment mortgage loan including:
(i) a side by side comparison of interest rates and other terms that
differ between a non-graduated payment mortgage loan and a graduated
payment mortgage loan;
(ii) payment schedules for both types of loans and the total payment
in dollars over the full term of each loan;
(iii) a statement prominently displayed that borrowers have the option
to elect a non-graduated payment mortgage loan; and
(iv) a description of the conversion option.
4. Failure of any lender to comply with any of the foregoing
provisions shall not render the mortgage void or unenforceable unless
otherwise provided by law.
5. The provisions of this section shall be applicable only to a
mortgage on real property improved by a one to six family residence
given by a natural person to secure a loan or to any agreement or note
made by a natural person in pursuance of any loan for the purpose of
financing the purchase of or refinancing an existing ownership interest
in certificates of stock or other evidence of an ownership interest in,
and a proprietary lease from, a corporation or partnership formed for

the purpose of the cooperative ownership of real estate, unsecured
except to the extent of an assignment or transfer of the stock
certificates or other evidence of ownership interest of the borrower and
the proprietary lease within ninety days from the making of the loan
which would otherwise conform to the provisions of this section but is
not otherwise entitled to be recorded as a mortgage.

Structure New York Laws