Dinowitz Act allowing older people in cooperatives to access home equity loans, passed by the legislature




A sign promoting cash purchases is nailed to a pole on Nereid Avenue in the Wakefield district of the Bronx on Friday, August 21, 2020.
Photo by Power of Moloney

The State Assembly and the State Senate passed the Act (A1508) to allow older people living in cooperative apartment buildings to apply for a “reverse mortgage,” a type of loan currently available to homeowners that converts accumulated equity capital into cash. Legislator Jeffrey Dinowitz (81 CE), who was one of the legislators who introduced the law, announced this on Friday, June 11, when the Legislature went into summer vacation.

According to bankrate.com, a home equity loan is a one-time loan secured by equity. Quickloans.com defines equity as the difference between what a person owes on a mortgage and the current value of their home. If a person owes $ 150,000 on a mortgage and his home is worth $ 200,000, he has $ 50,000 of home equity.

Bankrate.com says that home equity loans typically have maturities of up to 30 years and fixed interest rates, which currently average around 5 percent. However, if a person has good credit, their rate may be even lower.

Home loans can be used for almost any purpose, according to bankrate.com, but some of the best uses are to pay off debt at high interest rates or finance home renovations. Applicants typically require 15 to 20 percent of home equity to qualify for a secured home equity loan.

Meanwhile, quickloans.com representatives write that net worth can be increased in two ways. As the mortgage holder pays off the mortgage, his net worth will grow. Their capital will also increase if the value of their home rises. Their equity could also fall if the value of their home falls faster than the rate at which the mortgage owner is paying off the principal balance of their mortgage.

“Co-op condos are a very common way for New Yorkers to achieve homeownership goals, and seniors living in these co-ops deserve access to the same resources as traditional homeowners so that they are not forced to sell their homes to gain access to cash. money, ”Dinowitz said.

The law is backed by the National Association of Housing Cooperatives and the Council of Cooperatives and Condominiums of New York, and was passed amid nearly two decades of unsuccessful lobbying efforts by the US Department of Housing and Urban Development (HUD), the MP said. ) to provide older people in cooperative apartments with access to this type of loans.

Dinowitz wrote that many of those living in cooperative apartments are elderly people with low to medium incomes. Many also have a fixed income derived solely from social security and retirement checks. Although cooperative apartments are not considered “real estate” and therefore traditionally not eligible for such reverse mortgages, cooperative owners invest a significant portion of their lifetime earnings in equity.

Often these seniors face financial needs that they cannot afford from their regular income sources and are forced to sell their homes to raise cash.

Assembly Member Jeffrey Dinowitz
Photo courtesy of the Office of Assembly Member Jeffrey Dinowitz.

The law was previously passed in 2019, but was vetoed by New York Governor Andrew Cuomo on the grounds that “borrowers will continue to be exposed to unnecessary risk that could lead to foreclosure.” This happened despite numerous consumer protection measures included in the legislation, such as restrictions on how lawyers can describe reverse mortgage offers, information on loan advice and other helpful decision-making materials, foreclosure guidelines and / or the sale process. and much more.

The Assembly passed the bill in 2021 by 148 votes to 1, and the State Senate passed the bill, introduced by Bronx / Westchester Senator Alessandra Biaggi (SD 34), with a vote of 62: 1.

“Our goal should be to help older people age on the spot, in the homes they have often lived in for decades, and this law does just that,” Dinowitz said. “I hope that Governor Cuomo reconsidered his opposition to this policy, and I urge him to sign it into law as soon as it is brought to his desk.”


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