NY State Senate Bill 2015-S864

Senate Bill S864

2015-2016 Legislative Session

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

download bill text pdf

Archive: Last Bill Status - In Senate Committee Aging Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to aging
Jan 07, 2015	referred to aging

2015-S864 (ACTIVE) - Details

See Assembly Version of this Bill:: A1856
Current Committee:: Senate Aging
Law Section:: Real Property Law
Laws Affected:: Amd §280, RP L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S1339, A6763
2011-2012: S1078, A7096
2013-2014: S303, A35

2015-S864 (ACTIVE) - Summary

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.

2015-S864 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S864

TITLE OF BILL:

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

PURPOSE:

This bill will limit shared appreciation in revenue mortgage.

SUMMARY OF PROVISIONS:

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.

JUSTIFICATION:

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 which 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:

S.303 (2014)
S.1078-A (2011)
S.642 (2008)

FISCAL IMPLICATIONS:

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.

2015-S864 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   864

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             January 7, 2015
                               ___________

Introduced  by  Sen. MARTINS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Aging

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.



 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00059-01-5

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