What's happening
This bill prohibits prepayment penalties on loans secured by cooperative real property where over 50% of units are owner-occupied.
Why it matters
Protects co-op owners from costly loan penalties. By banning prepayment penalties on loans for co-op buildings where the majority are owner-occupied, this helps residents avoid extra charges if they want to pay off their mortgages early—making homeownership more flexible and potentially more affordable.
Encourages refinancing and financial mobility. Without the threat of prepayment penalties, co-op owners can more easily refinance for better rates or sell their units without financial punishment, supporting financial planning and mobility.
Targets protections to primarily residential buildings. The bill specifically applies to co-ops with over 50% owner-occupied units, focusing the benefit on buildings that function as communities of primary residences rather than investment properties.
May affect lending practices and co-op market dynamics. Lenders may need to adjust underwriting or pricing for loans to these co-ops, which could influence loan availability, interest rates, or the attractiveness of co-op ownership compared to other forms of real estate.
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Who cares
Headline styles
End Co-op Mortgage Penalties
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to rules
- Delivered to senate
- Passed assembly
- Ordered to third reading cal.119
- Returned to assembly
- Died in senate
- Referred to rules
- Delivered to senate
- Passed assembly
- Advanced to third reading cal.233
- Reported
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Mortgage Prepayment Penalties
In Senate Committee · Judiciary · Sponsor Brad Hoylman-Sigal
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2667
2019-2020 Regular Sessions
IN ASSEMBLY
January 24, 2019
Introduced by M. of A. DINOWITZ -- read once and referred to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to pre-payment penalties for mortgages secured by real property owned in a cooperative form of ownership
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph b of subdivision 3 of section 5-501 of the general obligations law, as amended by chapter 472 of the laws of 2008, is amended to read as follows:
b. notwithstanding any other provision of law, the unpaid balance of the loan or forbearance may be prepaid, in whole or in part, at any time. If prepayment is made on or after one year from the date the loan or forbearance is made, no penalty may be imposed. If prepayment is made prior to such time, no penalty may be imposed unless provision therefor is expressly made in the loan contract, provided that no penalty may be imposed if prohibited by sections six-l and six-m of the banking law. No prepayment penalty or fee shall be charged or collected on a loan or forbearance secured by real property owned in a cooperative form of ownership where over fifty percent of the units are shareholder occupied. Such prepayment penalty shall be unenforceable. In all cases, the right of prepayment shall be stated in the instrument evidencing the loan or forbearance, provided, however, that the provisions of this subdivision shall not apply to the extent such provisions are inconsistent with any federal law or regulation.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01343-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.