Waives mortgage tax on the refinanced mortgage that replaces an adjustable rate mortgage initially offered at a sub-prime rate

7 Co-sponsors

• Eric Adams
• Ruben Diaz
• Pedro Espada Jr.
• Craig M. Johnson
• Kevin S. Parker
• John L. Sampson
• Diane J. Savino

Title of bill

An act to amend the tax law, in relation to exempting from the tax on mortgages, any mortgage which replaces an adjustable rate mortgage which initially had a rate of interest below the prime rate

Purpose or general idea of bill

Waives mortgage tax on a refinanced mortgage that replaces an adjustable rate mortgage initially offered at a sub-prime rate, which would allow more homeowners to not lose their homes.

Summary of specific provisions

Section 1 - subdivision 2 of section 250 of the tax law is amended to add new paragraph C to redefine mortgage for the purposes of tax collection to not include mortgages refinanced by homeowners who fell victim to sub-prime mortgage crisis.

Justification

Thousands of Americans are faced with the distressful situation of making their mortgage payments or putting dinner on the table. The sub-prime mortgage crisis has driven thousands of Americans out of their home and has left many families displaced. This has an enormous effect on the lives of children who no longer have a place to sleep, eat or do their homework. The constant pressure that this crisis has put on parents has led to an increase in divorce which causes immense stress that is ultimately relayed to their children.

The sub-prime lending crisis in the united States is depriving thousands of Americans especially New Yorkers of achieving their dream of owning their home. U.S. foreclosure filings jumped 57 percent or 1 in every 538 households and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners lost their homes to lenders.

The latest report released on April 29, 2008 by The New York state Banking Department and RealtyTrac for the first quarter of 2008 clearly indicates that this is a statewide issue affecting all counties and not just New York city. various counties in the state endured drastic increases compared to the first quarter of 2007. Albany county suffered an astounding 401 % increase compared to the first quarter of 2007 and Staten Island saw a change of 110%. In the first quarter of 2008 there were 14,002 foreclosure fillings in New York state a 48% increase from the same quarter a year ago.

This lending crisis has been fed by adjustable-rate mortgages and other shady lending practices that often offer low initial teaser rates that then skyrocket after a period of time. The increase in rates which occur unannounced raises the amount homeowners pay each month.

Struggling homeowners can save their homes by refinancing with a fixed rate mortgage resulting in lower monthly payments. However, refinancing still causes a burden on homeowners due to the large tax imposed on refinanced mortgages which amount to thousands of dollars. Facing limited financial resources during this crisis, homeowners entangled in subprime fiasco should be given this one time opportunity that will serve as a tremendous assistance to them and their families.

This legislation will eliminate the mortgage tax for people who were victims of this sub-prime mess and refinanced from an adjustable rate to a fixed rate. This would give people an extra incentive to refinance and would save homeowners a great amount of money. The money saved from this tax which would have gone to the state can instead be

used for something much more beneficial such as putting dinner on the table.

Prior legislative history

New Legislation.

Fiscal implications for state and local governments

Not applicable.

Effective date

This act shall take effect immediately.