Bill S1078A-2011

Provides that a lender may receive not more than 20% of the future appreciation of property secured by a reverse mortgage granted to a person 60 years old or older

Provides that a lender providing a reverse mortgage to a person who is 60 years of age or older may receive not more than 20% of the future appreciation of property secured by the mortgage as consideration for providing such reverse mortgage.



  • Apr 25, 2012: PRINT NUMBER 1078A
  • Jan 4, 2012: REFERRED TO FINANCE
  • Jan 5, 2011: REFERRED TO FINANCE




An act to amend the real property law, in relation to reverse mortgage loans for persons sixty years of age or older


This bill will limit shared appreciation in revenue mortgage.


This bill would amend the real property law to limit the shared appreciation any authorized lender may receive no more than 20 per cent of the appreciation during the term of the mortgage.


In 1994, the Real property Law was amended to formalize the reverse mortgage law in the state of New York. (Reverse mortgage allows senior citizens to take equity out of their homes while they are living there through equal installments, a line of credit or a lump sum).

Those mortgages are now being satisfied either by the mortgagor paying off the mortgage, selling the property themselves or through their estate.

Due to fluctuating market conditions and one side contacts, the Legislature has learned that certain mortgage lenders have, however, been misusing this valuable financial instrument to exact enormous unmerited profits. For example, when one individual mortgagor received a lump sum payment of $114,000, and the mortgagor had to sell the property just seven years later, the authorized lender issued a payout letter of $451,000. This included $113,000 in compounded interest and $223,000 of shared appreciation at the rate of 50%. with the real estate market experiencing historic fluctuations, this problem is becoming ever more of an issue.

This bill would attempt to remedy this usurious gouging by the authorized lender by reducing the shared appreciation from 50% to 20%. This would accordingly be a much more equitable distribution of the shared appreciation.

LEGISLATIVE HISTORY: 2008: S.642 - Passed Senate 61-0


This bill would increase revenue to state and local governments by encouraging the issuance of reverse mortgages with fair returns and the marketability and sale of real property.

EFFECTIVE DATE: This bill would take effect One hundred eightieth day after it shall have become a law.


STATE OF NEW YORK ________________________________________________________________________ 1078--A 2011-2012 Regular Sessions IN SENATE January 5, 2011 ___________
Introduced by Sens. MARTINS, SKELOS -- read twice and ordered printed, and when printed to be committed to the Committee on Finance -- recom- mitted to the Committee on Finance in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the real property law, in relation to reverse mortgage loans for persons sixty years of age or older THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 280 of the real property law is amended by adding a new paragraph (d-1) to read as follows: (D-1) SUCH RULES OR REGULATIONS AS THE SUPERINTENDENT OF FINANCIAL SERVICES SHALL ADOPT, THE AUTHORIZED LENDER, AT ITS OPTION, MAY RECEIVE NO MORE THAN TWENTY PERCENT OF THE FUTURE APPRECIATION OF THE PROPERTY SECURING THE REVERSE MORTGAGE LOAN AS FULL OR PARTIAL CONSIDERATION FOR THE MAKING OF A REVERSE MORTGAGE LOAN; PROVIDED, HOWEVER, THAT SUCH FUTURE APPRECIATION SHALL BE LIMITED BY SUCH RULES AND REGULATIONS AS THE SUPERINTENDENT OF FINANCIAL SERVICES MAY ADOPT OR THE AUTHORIZED LENDER MAY CHARGE A FIXED RATE OF INTEREST ON THE OUTSTANDING BALANCE OF MONIES ADVANCED UNDER THE REVERSE MORTGAGE AGREEMENT OR ANY COMBINATION THEREOF. ANY SUCH APPRECIATION SHALL NOT BE CONSIDERED INTEREST FOR THE PURPOSES OF ANY LAW REGULATING THE MAXIMUM RATE OF INTEREST WHICH MAY BE CHARGED, TAKEN OR RECEIVED INCLUDING SECTIONS 190.40 AND 190.42 OF THE PENAL LAW; AND S 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.


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