S T A T E   O F   N E W   Y O R K
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                                  6172

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                              March 8, 2011
                               ___________

Introduced by M. of A. WEPRIN -- read once and referred to the Committee
  on Housing

AN  ACT  to  amend the real property law, the banking law, the insurance
  law, the public authorities law, the tax law, and the social  services
  law,  in  relation  to  reverse  mortgage loans; and to repeal section
  280-a of the real property law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section 280 of the real property law, as added by chapter
613 of the laws of 1993 and subdivision 5 as amended by  chapter  33  of
the laws of 1996, is amended to read as follows:
  S  280.  Reverse mortgage loans for persons [sixty] SIXTY-TWO years of
age or older. 1. For purposes of this section the following terms  shall
have the following meanings:
  (a)  Reverse  mortgage loans. A loan which is secured by a first mort-
gage on real property improved by a one- to four-family residence, COOP-
ERATIVE APARTMENT, LIFE ESTATE, TRUST, LEASEHOLD or condominium that  is
the  residence  of the [mortgagor(s)] BORROWER OR BORROWERS the proceeds
of which are advanced to the [mortgagor(s)] BORROWER OR BORROWERS during
the term of the loan USING ANY ONE OR MORE METHOD OF PAYMENTS  in  equal
MONTHLY  installments USING TENURE OR TERM PAYMENTS, in advances through
a line of credit or otherwise, in lump sums, or  through  a  combination
thereof  USING  A  MODIFIED  TENURE OR MODIFIED TERM PAYMENTS. A REVERSE
MORTGAGE LOAN MAY BE FHA INSURED (HECM) PURSUANT TO SUBDIVISION FOUR  OF
THIS SECTION OR A NON FHA INSURED LOAN (PROPRIETARY).
  (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] REVERSE MORTGAGE MATURI-
TY. A REVERSE MORTGAGE matures solely upon contingent  events,  such  as
events  including but not limited to death [or] OF THE SURVIVING BORROW-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04174-03-1
              

A. 6172                             2

ER, the real property securing the loan no  longer  being  the  [mortga-
gors']  BORROWERS'  principal  residence  OR  THE SUBJECT PROPERTY BEING
SOLD.
  [(d)] (C) 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 banks 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 banks.
  [(e)  Mortgagor]  (D) BORROWER.   A tenant in severalty who is [sixty]
SIXTY-TWO 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] SIXTY-TWO years of age or older AND SIGNS THE LOAN  APPLICATION.
HOWEVER, A PARTY WITH A REMAINDER INTEREST WHO HAS NOT SIGNED THE APPLI-
CATION  BUT  SIGNS  THE MORTGAGE, SIGNS THE MORTGAGE AS AN ACCOMMODATION
AND NOT AS A BORROWER AS DEFINED IN THIS SECTION.
  [(f)] (E) Banking board. The board  established  pursuant  to  section
thirteen of the banking law.
  [(g)]  (F)  Superintendent of banks. The position established pursuant
to section twelve of the banking law as the head of the banking  depart-
ment and pursuant to section thirteen of the banking law as the chairman
and executive head of the banking board.
  (G)  MORTGAGOR.  MORTGAGOR IS ONE WHO SIGNS THE MORTGAGE AS A BORROWER
OR AS A NON-BORROWER WHEN ONE HOLDS A REMAINDER INTEREST, OR SIGNS AS  A
TRUSTEE.
  (H)  HOME  EQUITY CONVERSION MORTGAGE (HECM). THE FHA REVERSE MORTGAGE
LOAN UNDER THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.
  (I) TENURE PAYMENT. EQUAL MONTHLY PAYMENTS ARE MADE BY THE  LENDER  TO
THE  BORROWER  OR  BORROWERS  AS  LONG AS PROPERTY REMAINS THE PRINCIPAL
RESIDENCE UNLESS THE LOAN BECOMES DUE PURSUANT TO PARAGRAPH (C) OF  THIS
SUBDIVISION.
  (J) TERM PAYMENT. EQUAL MONTHLY PAYMENTS ARE MADE BY THE LENDER TO THE
BORROWER OR BORROWERS FOR A FIXED TERM OF MONTHS CHOSEN BY THE BORROWER,
UNLESS  THE  LOAN BECOMES DUE PURSUANT TO PARAGRAPH (C) OF THIS SUBDIVI-
SION.
  (K) LINE OF CREDIT. PAYMENTS ARE MADE BY THE LENDER TO THE BORROWER AT
TIMES AND IN AMOUNTS DETERMINED BY THE BORROWER OR BORROWERS, AS LONG AS
THE PROPERTY REMAINS PRINCIPAL RESIDENCE, UNLESS THE  LOAN  BECOMES  DUE
PURSUANT TO PARAGRAPH (C) OF THIS SUBDIVISION.
  (L)  MODIFIED  TENURE.  A  TENURE  PLAN COMBINED WITH A LINE OF CREDIT
FEATURE.
  (M) MODIFIED TERM. A TERM PLAN COMBINED WITH A LINE OF CREDIT FEATURE.
  (N) FULL DRAW. ALL AVAILABLE FUNDS ARE  TAKEN  IN  A  ONE-TIME  SINGLE
PAYMENT.
  (O)  PARTIAL  DRAW.  A  PORTION  OF THE AVAILABLE FUNDS ARE TAKEN IN A
SINGLE PAYMENT.
  (P) PRINCIPAL RESIDENCE. THE DWELLING WHERE THE BORROWER  MAINTAINS  A
PERMANENT  PLACE  OF  ABODE  AND TYPICALLY SPENDS A MAJORITY OF CALENDAR
YEAR. THE PROPERTY SHALL BE CONSIDERED TO BE THE PRINCIPAL RESIDENCE  OF
ANY BORROWER WHO IS TEMPORARILY OR PERMANENTLY IN A HEALTH CARE INSTITU-
TION  AS LONG AS THE PROPERTY IS THE PRINCIPAL RESIDENCE OF AT LEAST ONE
OTHER BORROWER WHO IS NOT IN A HEALTH CARE INSTITUTION.
  (Q) PROPRIETARY REVERSE MORTGAGE. A NON FHA INSURED LOAN.

A. 6172                             3

  (R) COUNSELOR. SHALL BE AN INDIVIDUAL WHO  HAS  MET  ALL  TESTING  AND
EDUCATION  REQUIREMENTS  OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOP-
MENT AND IS INCLUDED IN THE HUD APPROVED ROSTER, AS LONG AS SAID  ROSTER
SHALL BE MAINTAINED.
  (S)  COUNSELING  PROTOCOL.  EACH COUNSELOR SHALL FOLLOW HUD'S DETAILED
COUNSELING PROTOCOL, AS UPDATED AND AMENDED FROM TIME TO TIME. THE COUN-
SELING PROTOCOL FOR ALL REVERSE  MORTGAGE  LOANS,  SHALL  INCLUDE  AMONG
OTHER  THINGS  A DISCUSSION OF: CLIENT NEEDS AND CIRCUMSTANCES; FEATURES
OF A REVERSE MORTGAGE LOAN;  BORROWER  RESPONSIBILITY  UNDER  A  REVERSE
MORTGAGE  LOAN;  COSTS  TO  OBTAIN A REVERSE MORTGAGE; FINANCIAL AND TAX
IMPLICATIONS; ALTERNATIVES TO  A  REVERSE  MORTGAGE  LOAN;  ELDER  ABUSE
ISSUES  AND  WARNINGS  ABOUT  POTENTIAL REVERSE MORTGAGE INSURANCE FRAUD
SCHEMES. AS LONG AS REQUIRED BY HUD, THE CERTIFICATE CAN BE WITHHELD  IF
THE BORROWER IS UNABLE TO ANSWER FIVE OUT OF TEN QUESTIONS ABOUT REVERSE
MORTGAGE  BASICS, AFTER AN EXPLANATION OF THE CONCEPT HAS BEEN STATED BY
THE COUNSELOR. THE COUNSELING PROTOCOL CAN BE DELIVERED FACE TO FACE  OR
OVER THE PHONE, AT THE SOLE OPTION OF THE BORROWER.
  (T)  COUNSELING  CERTIFICATE.  THE  COUNSELOR SHALL ISSUE A COUNSELING
CERTIFICATE UPON THE COMPLETION OF THE SESSION BY EITHER  HAND  DELIVERY
OR THROUGH THE POSTAL SERVICE. AMONG OTHER THINGS, THE CERTIFICATE SHALL
CONTAIN  THE ORIGINAL SIGNATURE OF THE COUNSELOR; COUNSELOR'S ID NUMBER,
AND THE LENGTH OF TIME OF THE SESSION.
  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 banking board;
and
  (b)  subject  to] such rules or regulations as the banking board shall
adopt, any authorized lender or any successor or assign of such  author-
ized  lender which suspends, ceases or makes late payments to a [mortga-
gor] BORROWER under a reverse mortgage loan shall be subject to  forfei-
ture  (as  liquidated  damages to such [mortgagor] BORROWER 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  penal-
ty; and
  [(c)]  (B)  the  outstanding  balance  may be prepaid [in full] by the
[mortgagor] BORROWER without penalty at any time [during the term and/or
tenure of the loan]; PROVIDED, HOWEVER, IF SAID OUTSTANDING  BALANCE  IS
PAID  IN  FULL,  THE  LOAN  WILL BE DEEMED SATISFIED AND NO LONGER BE IN
EFFECT; and
  [(d)] (C) an authorized lender is prohibited from using  or  attaching
any  property or asset of the [mortgagor] BORROWER except the real prop-
erty INCLUDING A COOPERATIVE APARTMENT  securing  the  reverse  mortgage
loan in settlement of a reverse mortgage obligation; and
  [(e)]  (D)  the  authorized  lender  must  deliver to [an applicant] A
BORROWER such disclosures as may be required by the banking board  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;

A. 6172                             4

  (ii)] a statement prominently displayed advising [applicants]  BORROW-
ERS  to  consult  with  appropriate authorities regarding tax and estate
planning consequences of a reverse mortgage;
  [(iii)]  (II)  where  applicable a description of prepayment and refi-
nancing features;
  [(iv)] (III) the interest rate and[, except for a tenure reverse mort-
gage loan,] the total interest payable on the loan;
  [(v)] (IV) a statement concerning the compliance of  the  lender  with
the  criteria established by the banking board that an authorized lender
must meet before it may make reverse mortgage  loans  pursuant  to  this
section; and
  [(vi)]  (V)  a statement setting forth those events which would termi-
nate the reverse mortgage loan; and
  [(f)] (E) in the event that an authorized  lender  or  holder  of  the
reverse  mortgage  loan  intends to initiate foreclosure proceedings the
[mortgagor] BORROWER 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 foreclo-
sure proceedings.  Such entity shall take appropriate action to  protect
the interests of the [mortgagor] BORROWER; and
  [(g)]  (F)  FOR  ALL  REVERSE MORTGAGE LOANS an authorized lender must
deliver to the [applicant] BORROWER, 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  informa-
tion services]. Further, no reverse mortgage [commitment shall be issued
by  an  authorized lender] PROCESSING OF THIS LOAN SHALL BEGIN 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] BORROWER PROVIDES TO AN AUTHORIZED LENDER OR
BROKER  THE  ORIGINAL  COUNSELING  CERTIFICATE ALLOWED UNDER THE FEDERAL
HOUSING ADMINISTRATION (FHA) OR OTHER PROGRAMS  APPROVED  BY  THE  STATE
SUPERINTENDENT  OF BANKING IN CONSULTATION WITH THE STATE OFFICE FOR THE
AGING; and
  [(h)] (G) any such reverse mortgage shall expressly and  conspicuously
bear a legend identifying it as such; and
  [(i)]  (H)  subject  to such rules or regulations as the banking board
may adopt, a reverse mortgage loan shall be made at either  a  fixed  or
variable rate of interest.
  (I) THE PROCESSING OF A REVERSE MORTGAGE SHALL INCLUDE THE ORDERING OF
AN  APPRAISAL, A TITLE SEARCH AND A CREDIT REPORT OR AN FHA CASE NUMBER,
WHEN APPLICABLE. A REVERSE MORTGAGE LOAN CANNOT BE PROCESSED, NOR  SHALL
A BORROWER INCUR ANY PROCESSING EXPENSE UNTIL THE BORROWER COMPLETES THE
REQUIRED  COUNSELING. THE PROCESSING OR A REVERSE MORTGAGE LOAN MAY ONLY
PROCEED ONCE THE COUNSELING IS COMPLETE, AS EVIDENCED BY THE SIGNED  AND
DATED COUNSELING CERTIFICATE.
  3. A reverse mortgage loan pursuant to this section may:

A. 6172                             5

  (a) provide that the [mortgagor's] BORROWER'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 banking board regulation;
  (c) provide that an authorized lender  may,  consistent  with  federal
laws  and regulations, include a due-on-sale clause in its reverse mort-
gage loan agreement and at its option exercise and enforce  such  clause
in accordance with its terms.
  (D)  THE  BORROWER  SHALL  NOT  BE REQUIRED BY AN AUTHORIZED LENDER OR
BROKER TO PURCHASE AN INSURANCE OR ANNUITY PRODUCT AS A  REQUIREMENT  OR
CONDITION  OF  ELIGIBILITY EXCEPT FOR TITLE INSURANCE, HAZARD INSURANCE,
FLOOD OR OTHER PERIL INSURANCE OR OTHER SUCH PRODUCT THAT ARE  CUSTOMARY
AND NORMAL TO THE TRANSACTION.
  4.  The  banking  board  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  banking  board  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 associ-
ation, 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 banking board 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)] (F)
of subdivision two of this section, that authorized lenders must provide
to [mortgagors] BORROWERS.
  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  mort-
gage,  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 mortga-
gors] 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  appre-

A. 6172                             6

ciated,  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 banking board. The refinanc-
ing  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  refi-
nance  or  extend  the  reverse  mortgage  loan  at the end of the term,
subject to such rules or regulations as the banking board 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 banking board may adopt, the  total  reverse  mortgage  loan  amount
shall not exceed such amount or loan to value ratio as may be determined
by the banking board. 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 indi-
vidual 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 bank-
ing  organization  or  licensed  mortgage  banker from providing reverse
mortgages to homeowners in this state under the federal housing adminis-
tration's home  equity  conversion  mortgage  insurance  [demonstration]
program.
  S 2. Section 280-a of the real property law is REPEALED.
  S 3. Subdivision 1 of section 281 of the real property law, as amended
by  chapter 613 of the laws of 1993, paragraph (a) as amended by chapter
183 of the laws of 1999, is amended to read as follows:
  1.  (a) For the purposes of this section,  a  "credit  line  mortgage"
shall  mean any mortgage or deed of trust, other than a mortgage or deed
of trust made pursuant to a building loan contract as defined in  subdi-
vision  thirteen  of  section  two of the lien law, which states that it
secures indebtedness under a note, credit agreement or  other  financing
agreement that reflects the fact that the parties reasonably contemplate
entering  into  a  series of advances, payments and readvances, and that

A. 6172                             7

limits the aggregate amount at any time outstanding to a maximum  amount
specified  in  such  mortgage  or  deed  of  trust. For purposes of this
section, "credit line mortgage" shall include a reverse mortgage loan as
defined in [sections] SECTION two hundred eighty [and two hundred eight-
y-a]  of  this  article  except  that such a credit line mortgage of the
reverse mortgage loan type shall not be subject to the twenty year limi-
tation set forth in subdivision two of this section.
  (b) Payments made by an authorized lender pursuant to any credit  line
reverse  mortgage made in accordance with section [two hundred eighty-a]
TWO HUNDRED EIGHTY of this article during any one year shall be  limited
to such amount [or ratio] as may be determined by the banking board. [In
the  event  that a borrower does not take payment under such credit line
during the course of any year then that borrower shall have the  ability
to  increase  the  yearly  payments  by  that  amount  available but not
borrowed during previous years.]
  S 4. The opening paragraph of section  6-h  of  the  banking  law,  as
amended  by  chapter  613  of  the  laws  of 1993, is amended to read as
follows:
  Notwithstanding any inconsistent provision of law, in addition to  any
other  power  exercised  by  it,  every authorized lender, as defined by
section two hundred eighty [or two hundred eighty-a] of the real proper-
ty law, shall have the power to offer reverse mortgage loans  (1)  which
conform  to the provisions of section two hundred eighty [or two hundred
eighty-a] of the real property law and the rules and regulations promul-
gated by the banking board; or (2) which conform to the requirements  of
the  federal  housing  administration's  home equity conversion mortgage
insurance [demonstration] program for as long as such program exists  as
provided  for in section 1715Z-20 of title 12 of the United States Code.
"Reverse mortgage" shall mean the mortgage, deed of trust or other secu-
rity instrument relating to a particular reverse  mortgage  loan  trans-
action.
  S  5. Paragraph (s) of subdivision 1 of section 14 of the banking law,
as amended by chapter 613 of the laws of 1993, is  amended  to  read  as
follows:
  (s)  To  permit  authorized lenders, as defined by section two hundred
eighty [or two hundred eighty-a] of the  real  property  law,  to  offer
reverse  mortgage loans which shall conform to the provisions of section
two hundred eighty [or two hundred eighty-a] of the real property law.
  S 6. The opening paragraph of paragraph 1 of subsection (c) of section
6501 of the insurance law, as amended by chapter  555  of  the  laws  of
2003, is amended to read as follows:
  an amortized instrument of indebtedness evidencing a loan secured by a
first lien on real estate which at the time the loan is made is not less
than  eighty  percent but not more than one hundred three percent of the
fair market value of the real estate with any percentage  in  excess  of
one  hundred percent being used to finance the fees and closing costs on
such indebtedness, except, however,  for  reverse  mortgage  loans  made
pursuant  to  [sections]  SECTION  two  hundred  eighty [and two hundred
eighty-a] of the real property law; provided that:
  S 7. Subdivision 16 of section 2426 of the public authorities law,  as
added by chapter 613 of the laws of 1993, is amended to read as follows:
  16.  Reverse mortgage. A reverse mortgage loan pursuant to section two
hundred eighty [or two hundred eighty-a] of the real property law  shall
mean  a  loan  which  is  secured  by  a first mortgage on real property
improved by a one to four-family residence or condominium OR COOPERATIVE
APARTMENT that  is  the  residence  of  the  [mortgagor]  BORROWER,  the

A. 6172                             8

proceeds  of which are advanced to the mortgagor during the loan term in
equal installments, in advances through a line of credit  or  otherwise,
in  lump  sums, or through a combination thereof. A reverse mortgage may
be structured to provide for the addition of accrued but unpaid interest
to  principal,  AND  MORTGAGE INSURANCE PREMIUM IN THE AMOUNT OF ONE AND
ONE-QUARTER PERCENT OF THE OUTSTANDING BALANCE REMAINING OR  SUCH  OTHER
AMOUNT AS MAY BE REQUIRED BY THE FEDERAL DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT. Such reverse mortgage loan may provide for an initial lump-
sum advance wherein the mortgagor may receive an amount necessary to pay
closing  costs, including but not limited to loan or commitment fees, if
any, insurance premiums, the cost of house  repairs,  legal  fees,  [the
cost  of  annuities,]  the  costs  of third party counseling, the amount
necessary to pay off existing mortgages or liens, and other  appropriate
costs.
  S  8.  Paragraph  (b) of subdivision 3-b of section 2428 of the public
authorities law, as added by chapter 613 of the laws of 1993, is amended
to read as follows:
  (b) the reverse mortgage  loan  is  issued  pursuant  to  section  two
hundred eighty [or two hundred eighty-a] of the real property law;
  S  9.  Subdivision  2  of  section 252-a of the tax law, as amended by
chapter 613 of the laws of 1993, is amended to read as follows:
  2. Reverse mortgages conforming  to  the  provisions  of  section  two
hundred eighty [or two hundred eighty-a] of the real property law secur-
ing obligations of mortgagors or exempted therefrom pursuant to subdivi-
sion  four of section two hundred eighty [or subdivision four of section
two hundred eighty-a] of the real property law shall be exempt from  any
tax  or  fee imposed by this article. In each case where an exemption is
claimed under this subdivision, the lender shall  provide  documentation
in  a  format  approved by the commissioner [of taxation and finance] to
enable recording officers to affirmatively  determine  when  a  mortgage
being  presented  for recording is a reverse mortgage conforming to such
provisions of the real property law and entitled to an  exemption  under
this subdivision. Where such documentation is not furnished, the maximum
principal  debt  or  obligation  which  shall  be the measure of the tax
imposed by and pursuant to the authority of this article in the case  of
a  reverse  mortgage shall be the proceeds of the loan which the author-
ized lender is obligated to lend the borrower at the execution  of  such
mortgage  or at any time thereafter but determined without regard to any
contingency relating to the addition of any unpaid interest to principal
or relating to any percentage of the future appreciation of the property
securing the loan as consideration or additional consideration  for  the
making of the loan. Provided, however, if subsequent to the recording of
such  mortgage, the proceeds which the authorized lender is obligated to
lend the borrower are increased at any time, such new or further indebt-
edness or obligation shall be the measure of the tax at such time unless
at that time an exemption is applicable under the first sentence of this
subdivision or otherwise.
  S 10. Section 131-x of the social services law, as amended by  section
73  of  part B of chapter 436 of the laws of 1997, is amended to read as
follows:
  S  131-x.  Reverse  mortgage  loans.  Notwithstanding any other incon-
sistent provisions of law and to the extent  permissible  under  federal
law,  regulation or waiver, the proceeds of a reverse mortgage loan made
in conformity with the requirements of section two  hundred  eighty  [or
two  hundred  eighty-a]  of  the real property law or exempted therefrom
pursuant to subdivision four of section two hundred eighty [or  subdivi-

A. 6172                             9

sion  four  of  section  two  hundred eighty-a] of the real property law
shall not be considered as income or resources of the mortgagor for  any
purpose under any law relating to food stamps, public assistance, veter-
an assistance, safety net assistance, low-income home energy assistance,
federal  supplemental  security  income benefits and/or additional state
payments, medical  assistance,  any  prescription  drug  plan  or  other
payments,  allowances,  benefits  or services available pursuant to this
chapter; provided, however, that for applicants  or  for  recipients  of
safety  net assistance, any such reverse mortgage loan proceeds shall be
disregarded  as income and/or resources only in the event that, and  for
so  long  as,  federal  laws and regulations exempt loan proceeds in the
determination of eligibility for both the aid to families with dependent
children and supplemental security income programs.
  S 11. This act shall take effect immediately.