What's happening
This bill requires lenders to provide seniors with a detailed information summary before closing on federally-backed reverse mortgages, ensuring transparency and borrower protection.
Why it matters
Mandates a comprehensive disclosure. The law requires lenders to provide a state-approved summary that details costs, payment schedules, default actions, and other crucial terms, helping seniors better understand the financial implications of a reverse mortgage.
Highlights risks and alternatives. The summary must explicitly state that reverse mortgages are not free, outline potential risks (like foreclosure), and present alternative solutions (e.g., selling the home, social programs, debt counseling), enabling informed decision-making.
Strengthens legal protections. If the required summary is not given, the reverse mortgage becomes null and void. Borrowers harmed by violations can sue for triple damages plus attorney fees, giving seniors significant legal recourse against predatory practices.
Improves access to support resources. The summary must include information about tax exemptions, counseling, legal aid, and advocacy organizations, equipping seniors with tools and contacts to address complications and protect their interests.
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Who cares
Headline styles
Inform Seniors on Reverse Mortgages
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 38
1 Co-sponsor
History
- Referred to aging
- Reported and committed to finance
- Referred to aging
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.
Explain Reverse Mortgages Upfront
In Assembly Committee · Codes · Sponsor Helene Weinstein
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2373
2019-2020 Regular Sessions
IN SENATE
January 24, 2019
Introduced by Sens. CARLUCCI, SEPULVEDA -- 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 the provision of certain information to mortgagors of reverse mortgages issued under the federal home equity conversion mortgage for seniors program
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The real property law is amended by adding a new section 280-b to read as follows:
§ 280-b. Federal home equity conversion mortgage information summary sheet. 1. For the purposes of this section the following terms shall have the following meanings:
(a) Reverse mortgage loan. A reverse mortgage loan as defined in section two hundred eighty of this article, which is issued in this state pursuant to the home equity conversion mortgage for seniors program operated by the federal Department of Housing and Urban Development.
(b) Authorized lender. An authorized lender as defined in section two hundred eighty of this article authorized to make reverse mortgage loans, as defined in this section.
(c) Mortgagor. A mortgagor as defined in section two hundred eighty of this article.
(d) Department. The department of financial services established pursuant to section one hundred two of the financial services law.
2. The department shall establish and distribute to authorized lenders, and periodically update, a New York state home equity conversion information summary. Such summary shall include, but not be limited to:
(a) notice that reverse mortgage loans are not free or cost free, and such loans have associated costs that are included in the financing thereof;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00916-02-9
S. 2373 2
(b) a schedule of payments to be made to and from the mortgagor, and the total payment for both the mortgagee and the authorized lender over the term of the reverse mortgage loan contingent upon the type of such loan being offered;
(c) a statement advising mortgagors to consult with licensed professionals regarding the tax and estate planning consequences of reverse mortgage loans;
(d) where applicable, a description of the prepayment and refinancing provisions of the reverse mortgage loan;
(e) an explanation and itemization of the potential costs of reverse mortgage loans, including the rate of interest and total interest payable on such loan;
(f) a summary of actions or conditions that will constitute a default of the reverse mortgage loan;
(g) a summary and explanation of alternatives to entering into a reverse mortgage loan on the basis of economic hardship including, but not limited to, direct sale of the residence, social safety net programs, debt consolidation or economic counseling;
(h) information on a mortgagor's basic rights in the foreclosure process;
(i) a summary of the real property tax exemptions which are available to the mortgagor in order to reduce his or her cost of living;
(j) information about New York state-based organizations that provide federal Department of Housing and Urban Development certified reverse mortgage counseling;
(k) information on legal assistance and advocacy organizations and services which provide assistance to mortgagors in the event that complications or issues arise relating to the reverse mortgage loan; and
(l) such other information as the department shall deem necessary to fully inform mortgagors of their rights and responsibilities under a reverse mortgage loan.
3. Not less than five days prior to the closing upon a reverse mortgage loan, the authorized lender shall provide the mortgagor with a completed New York state home equity conversion information summary in duplicate. Each mortgagor shall sign both copies of such summary, attesting that he or she has read and fully understands the summary. One copy thereof shall be retained by the authorized lender and the other shall be retained by the mortgagor's attorney.
4. The provision of the information summary established by this section is integral to the execution of a reverse mortgage loan, thus in the absence of such a summary the related reverse mortgage loan shall be null and void.
5. Any person who has been injured by reason of any violation of this section or the rules and regulations related thereto may bring an action in his or her own name to recover treble his or her actual damages, plus the prevailing plaintiff's reasonable attorneys fee.
6. The superintendent of financial services is authorized to promulgate any rules or regulations he or she deems necessary to implement the provisions of this section.
§ 2. This act shall take effect on the one hundred twentieth day after it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the real property law, in relation to the provision of certain information to mortgagors of reverse mortgages issued under the federal home equity conversion mortgage for seniors program
Purpose of bill
This bill requires that the Department of Financial Services issue a reverse mortgage information summary sheet to mortgage originators. These summary sheets will provide consumer rights information to seniors to help them better understand these financial products.
Summary of provisions of bill
Section 1: Amends the real property law concerning reverse mortgages to provide that for all reverse mortgages issued under HUD's home equity conversion mortgage program in New York State, the Department of Finan- cial Services must issue a summary sheet to be provided to seniors prior to the execution of a reverse mortgage loan.
The summary sheet will contain information useful to seniors, including the real costs of reverse mortgage loans, information about fees, finan- cial alternatives to reverse mortgages, responsibilities regarding mort- gage insurance and tax payments, conditions that will trigger a default, information about New York State-based organizations which provide HUD- certified reverse mortgage counseling, how to contact legal services organizations in the event of foreclosure, etc.
Lenders must provide the summary sheet to seniors not less than five days prior to closing on a reverse mortgage.
This section also makes the information summary sheet an essential component of future reverse mortgages, and requires that the senior sign the sheet confirming receipt and that the originator maintain a copy.
The section will be enforceable via treble damages and attorney's fees for prevailing plaintiffs.
Section 2: The act will take effect on the one hundred twentieth day after it becomes law, but the Department of Financial Services is authorized to immediately take any actions necessary for its implementa- tion.
Existing law
Under current law, home equity conversion mortgage lenders under the HUD program are not mandated to provide an extensive reverse mortgage infor- mation summary sheet to seniors.
Justification
Reverse mortgages are complicated and expensive financial products. Many seniors do not understand how they work or what their true long- term costs are. Exacerbating this problem are unscrupulous lenders who market reverse mortgages as public services or government-sponsored products. Inadequate regulation of this industry resulted in a sharp uptick in defaults in 2016, as more seniors fell into foreclosure on these products, losing not only their homes, but also their most signif- icant financial assets.
Foreclosures in the reverse mortgage industry have taken place against seniors for making payments mere cents short of their tax or mortgage insurance bills. Lenders eager to tap the equity in these homes are sometimes aggressive to foreclose and see a return on their investment.
Seniors must be provided with comprehensive information about these products, their true long-term costs, conditions that will result in a default, methods to reduce their tax liability, available services to help them in the event of a default and/or foreclosure, etc.
This required summary sheet is one step toward ensuring seniors have all of the information they need to make an educated and fully informed decision about whether a reverse mortgage is the right financial product to address their economic situation.
Legislative history
2017-18: S4494/A5822 - JUDICIARY/ 01/03/18 ordered to third reading cal.416
Fiscal implications for state and local governments
To be determined.
Effective date
120th day after it shall have become law
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.