Bill S144-2011

Limits the amount held in mortgage escrow accounts to a one month reserve

Limits the amount held in mortgage escrow accounts to a one month reserve.

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  • Jan 4, 2012: REFERRED TO LOCAL GOVERNMENT
  • Jan 5, 2011: REFERRED TO LOCAL GOVERNMENT

Memo

BILL NUMBER:S144

TITLE OF BILL: An act to amend the real property tax law and the banking law, in relation to the amounts held in mortgage escrow accounts

PURPOSE OR GENERAL IDEA OF BILL: Currently, mortgage servicers are allowed to collect a two month reserve from a mortgagor, over and above the annual tax and insurance amounts. This bill would change the law to allow mortgage servicers to collect a one-month reserve.

SUMMARY OF SPECIFIC PROVISIONS: Section one would amend subdivision 1 section 953 of the real property tax law to allow that the amount held in escrow be no more than on-twelfth the amount of the estimated taxes.

Section two would amend paragraph (a) of subdivision 2 of section 6-k of the banking law to allow that the amount held in escrow be no more than one twelfth the amount of the estimated taxes.

JUSTIFICATION: An escrow reserve is intended to allow a mortgagor to meet increased taxes or insurance costs without having to advance its own funds to cover a shortfall. Although servicers are required to pay interest on the escrow funds, the large reserve unfairly disadvantages the consumer. This law will benefit consumers by lowering monthly payments, and reducing closing costs.

PRIOR LEGISLATIVE HISTORY: S.7489 of 2009-2010; Referred to Local Government

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 144 2011-2012 Regular Sessions IN SENATE (PREFILED) January 5, 2011 ___________
Introduced by Sen. MAZIARZ -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government AN ACT to amend the real property tax law and the banking law, in relation to the amounts held in mortgage escrow accounts THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 953 of the real property tax law, as added by chapter 440 of the laws of 1989, is amended to read as follows: 1. Every mortgage investing institution shall make all payments for taxes for which they hold real property tax escrow accounts, in a timely manner. NOTWITHSTANDING FEDERAL LAW, THE AMOUNT HELD IN SUCH ACCOUNTS MAY NOT EXCEED THE ESTIMATED ANNUAL AMOUNT OF THE TAXES THAT WILL BE PAID BY MORE THAN ONE-TWELFTH OF SUCH AMOUNT. S 2. Paragraph (a) of subdivision 2 of section 6-k of the banking law, as added by chapter 563 of the laws of 1992, is amended to read as follows: (a) Every mortgage investing institution shall make all payments for insurance for which they hold real property insurance escrow accounts in a timely manner. NOTWITHSTANDING FEDERAL LAW, THE AMOUNT HELD IN SUCH ACCOUNTS MAY NOT EXCEED THE ESTIMATED ANNUAL AMOUNT OF THE INSURANCE PREMIUMS THAT WILL BE PAID BY MORE THAN ONE-TWELFTH OF SUCH AMOUNT. S 3. This act shall take effect immediately.

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