New York Laws
Article 8 - Conveyances and Mortgages
280 - Reverse Mortgage Loans for Persons Sixty Years of Age or Older.

(a) Reverse mortgage loans. A loan which is secured by a first
mortgage on real property improved by a one- to four-family residence or
condominium that is the residence of the mortgagor(s) the proceeds of
which are advanced to the mortgagor(s) during the term of the loan in
equal installments, in advances through a line of credit or otherwise,
in lump sums, or through a combination thereof.
(b) Term reverse mortgage loan. Any reverse mortgage loan that has a
fixed term to maturity.
(c) Tenure reverse mortgage loan. Any reverse mortgage loan that does
not have a fixed term to maturity, but rather matures solely upon
contingent events, such as events including but not limited to death or
the real property securing the loan no longer being the mortgagors'
principal residence.
(d) Authorized lender. Any bank, trust company, national banking
association, savings bank, savings and loan association, federal savings
bank, federal savings and loan association, credit union, or federal
credit union or any licensed mortgage banker approved for the making of
reverse mortgage loans by the superintendent of financial services or
any entity exempted from licensing pursuant to section five hundred
ninety of the banking law and approved for the making of reverse
mortgage loans by the superintendent of financial services.
(e) Mortgagor. A tenant in severalty who is sixty years of age or
older, or if the real property is held by tenants by the entirety or by
joint tenancy, the youngest of which is sixty years of age or older.
(f) Superintendent of financial services. The superintendent
established pursuant to section two hundred two of the financial
services law.
2. A reverse mortgage loan pursuant to this section shall be subject
to the following:
(a) the loan to value ratio shall be determined by the superintendent
of financial services; and
(b) subject to such rules or regulations as the superintendent of
financial services shall adopt, any authorized lender or any successor
or assign of such authorized lender which suspends, ceases or makes late
payments to a mortgagor under a reverse mortgage loan shall be subject
to forfeiture (as liquidated damages to such mortgagor and not as a
penalty) of twice the interest which would otherwise have been earned
during the period in which payments were suspended, ceased or made late,
provided that said authorized lender or any successor or assign of such
authorized lender shall have the right to make payments pursuant to said
loan agreement within fifteen days of each payment date, without
penalty; and
(c) the outstanding balance may be prepaid in full by the mortgagor
without penalty at any time during the term and/or tenure of the loan;
and
(d) an authorized lender is prohibited from using or attaching any
property or asset of the mortgagor except the real property securing the
reverse mortgage loan in settlement of a reverse mortgage obligation;
and
(e) the authorized lender must deliver to an applicant such
disclosures as may be required by the superintendent of financial
services which shall describe the relevant portions of the reverse
mortgage being offered, and shall include but not be limited to the
following items:
(i) except for a tenure reverse mortgage loan, a schedule of payments
to and from the mortgagor and the total payments in dollars over the
term of the reverse mortgage loan for both the mortgagor and mortgagee
depending on the type of reverse mortgage loan being offered;
(ii) a statement prominently displayed advising applicants to consult
with appropriate authorities regarding tax and estate planning
consequences of a reverse mortgage;
(iii) where applicable a description of prepayment and refinancing
features;
(iv) the interest rate and, except for a tenure reverse mortgage loan,
the total interest payable on the loan;
(v) a statement concerning the compliance of the lender with the
criteria established by the superintendent of financial services that an
authorized lender must meet before it may make reverse mortgage loans
pursuant to this section; and
(vi) a statement setting forth those events which would terminate the
reverse mortgage loan; and
(f) in the event that an authorized lender or holder of the reverse
mortgage loan intends to initiate foreclosure proceedings the mortgagor
shall have the right to designate a third party who shall be notified.
In the event that the mortgagor has not designated a third party to
receive such notice of foreclosure, then the authorized lender or the
holder of said reverse mortgage loan shall notify the local or county
office for the aging of its intent to commence foreclosure proceedings.
Such entity shall take appropriate action to protect the interests of
the mortgagor; and
(g) an authorized lender must deliver to the applicant, upon
application, if available, a statement prepared by the local or county
office for the aging on the advisability and availability of independent
counseling and information services. Further, no reverse mortgage
commitment shall be issued by an authorized lender until the applicant
presents, in writing, a statement that the terms of the reverse mortgage
loan have been explained by an attorney, a housing and urban development
certified counselor or any other counseling service as indicated on the
statement supplied by the county or local office for the aging or a
signed affidavit indicating that the applicant, although made aware of
the importance of counseling and its local availability through the
provision of such information by the authorized lender, chooses not to
utilize any of the aforementioned available services. The form of such
statement and affidavit shall be developed by the New York state office
for the aging; and
(h) any such reverse mortgage shall expressly and conspicuously bear a
legend identifying it as such; and
(i) subject to such rules or regulations as the superintendent of
financial services may adopt, a reverse mortgage loan shall be made at
either a fixed or variable rate of interest.
3. A reverse mortgage loan pursuant to this section may:
(a) provide that the mortgagor's closing costs, including but not
limited to loan or commitment fees, if any, insurance premiums, house
repairs, legal fees, the cost of annuities, the costs of third-party
counseling, the costs of existing mortgages or liens, and other
appropriate costs be included in the principal of the reverse mortgage
loan and disbursed out of the loan proceeds at closing;
(b) provide for the maintenance of an escrow account by the authorized
lender for purposes of payment of real property taxes, insurance on the
property securing the loan, or any other fees and expenses as may be
permitted by superintendent of financial services regulation;
(c) provide that an authorized lender may, consistent with federal
laws and regulations, include a due-on-sale clause in its reverse
mortgage loan agreement and at its option exercise and enforce such
clause in accordance with its terms.
4. The superintendent of financial services shall adopt those rules or
regulations as it considers appropriate to govern reverse mortgage loans
made pursuant to this section. No reverse mortgage loan shall be made
unless it conforms to the requirements of this section and such rules
and regulations as the superintendent of financial services may adopt
except those reverse mortgage loans made pursuant to section two hundred
eighty-a of this article. A reverse mortgage loan made by any authorized
lender, national banking association, federal savings and loan
association or federal credit union in conformity with applicable
federal laws and regulations specifically regulating reverse mortgage
loans shall be deemed to conform to the requirements of this section
unless such reverse mortgage loan fails to conform to such rules and
regulations as the superintendent of financial services has expressly
declared to be neither preempted by, nor otherwise inconsistent with
such federal laws or regulations. Those rules or regulations shall
include, but are not limited to, the form and contents of any disclosure
statement, with the exception of the counseling statement prepared by
the New York state office for the aging pursuant to paragraph (g) of
subdivision two of this section, that authorized lenders must provide to
mortgagors.
5. Notwithstanding any inconsistent provision of law, the priority of
the lien of a reverse mortgage, including the lien for all principal,
interest, fees, costs, shared appreciation and other charges assessed in
connection with the reverse mortgage, shall date from the recording of
the reverse mortgage irrespective of the date of any advance of reverse
mortgage loan proceeds or the date by which an authorized lender shall
be entitled to shared appreciation or accrued but unpaid interest, fees,
costs or other charges.
6. Nothing in this section shall be construed to limit, impair or
otherwise affect the priority under applicable law of any other
mortgage, deed of trust, encumbrance or lien which was recorded or filed
prior to the effective date of this section.
7. The sale or transfer of the real property securing the reverse
mortgage loan to a person other than an original mortgagor or mortgagors
shall result in the termination of the loan.
8. In a term reverse mortgage loan, the real property securing the
reverse mortgage loan may be reappraised by an independent appraiser at
the end of the loan term. If the value of the real property has
appreciated, the term of the reverse mortgage may be extended or
refinanced, however, the total reverse mortgage loan amount may not
exceed such amount or ratio as may be determined by the superintendent
of financial services. The refinancing of the reverse mortgage loan
shall be provided by the original authorized lender or by any other
authorized lender designated by the mortgagee.
9. The principal, including any accrued but unpaid interest, of a
reverse mortgage loan agreement entered into pursuant to this section
may be insured by the mortgagor. If such insurance is purchased from or
otherwise provided by any agency of the state of New York the mortgagor
shall be granted the right, for a term reverse mortgage loan, to
refinance or extend the reverse mortgage loan at the end of the term,
subject to such rules or regulations as the superintendent of financial
services may adopt. The authorized lender shall have the option to
choose between refinancing or extending the reverse mortgage loan.
Subject to obtaining an adequate increase in the insurance and subject

to such rules and regulations as the superintendent of financial
services may adopt, the total reverse mortgage loan amount shall not
exceed such amount or loan to value ratio as may be determined by the
superintendent of financial services. The refinancing of the reverse
mortgage loan shall be provided by the original authorized lender or by
any other authorized lender designated by the mortgagee.
10. Any authorized lender offering reverse mortgage loans pursuant to
this section shall also offer reverse mortgage loans pursuant to section
two hundred eighty-a of this article. Subject to this section in the
event that an authorized lender makes reverse mortgage loans under this
section then that lender must make an equal number of reverse mortgage
loans pursuant to section two hundred eighty-a of this article. Such
loans shall be made to individuals who meet the requirements promulgated
in section two hundred eighty-a of this article provided that such
individual seeking the loan would otherwise qualify and be approved for
that loan. In the event that no or insufficient applications for reverse
mortgage loans pursuant to section two hundred eighty-a of this article
are made to a lender who has previously made reverse mortgage loans
pursuant to this section then there shall be no requirement for that
lender to make a reverse mortgage loan pursuant to section two hundred
eighty-a of this article. It shall also not be a requirement that an
authorized lender make any reverse mortgage loan to any individual who
would not qualify for such loan and/or would not otherwise be approved
for such loan.
11. Nothing contained in this section, section six-h of the banking
law or any other provision of law shall be construed to prohibit a
banking organization or licensed mortgage banker from providing reverse
mortgages to homeowners in this state under the federal housing
administration's home equity conversion mortgage insurance demonstration
program.

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