New York State Legislature Pass Law Allowing Reverse Mortgages for Cooperatives

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The New York State Legislature last week once again passed legislation allowing seniors living in apartment buildings to apply for a reverse mortgage, as part of a new initiative to give older people in the state another option to access equity in their home. … This is stated in a statement made by the office of Rep. Jeffrey Dinowitz, a Democrat representing New York’s 81st legislative district.

The new legislation passed in the legislature takes into account the latest efforts by the New York City legislature and the reverse mortgage industry to enable cooperative residents to apply for reverse mortgages. vetoed Governor of New York Andrew Cuomo.

New Bill A1508 is currently being submitted to the New York State Senate, but may still face opposition from Governor Cuomo if his earlier concerns about consumer protection are not addressed.

Passage of a new bill

The number of cooperative dwellings in New York State provides ample reason for older people in such a situation to access capital in their home through a reverse mortgage, according to the rationale drawn up by Congressman Dinovitz, sponsor of the Assembly Bill.

“In New York, about 75% of residential buildings are cooperatives,” the rationale says. “Many of those who live in cooperative apartments are elderly people with low to medium incomes. The National Association of Housing Cooperatives (NAHC) and the New York City Council of Cooperatives and Condominiums (CNYC) have lobbied the Department of Housing and Urban Development (HUD) over the past sixteen years to implement legislation to loan back cooperative housing units for seniors. The biggest obstacle is that cooperatives are not real estate. ”

The rationale clarifies that as long as there is sufficient consumer protection, current HUD policies that restrict cooperative residents from applying for reverse mortgages should not apply. The new law offers sufficient consumer protection and will allow more older people to stay in the home of their choice, it says.

“With the right rules and the protection of responsibility, the elderly should be allowed

get backward instead of being forced to move out of the house, ”the excuse says. “With this bill, extended consumer protection measures will be added to the co-operative loan return process for an apartment and will ensure that older people who are so desperate to stay in their homes can do so.”

The State Assembly passed the revised bill by 148 votes to 1, while the State Senate passed its version of the bill, sponsored by State Senator Alessandra Biaggi (D), with 62: 1 votes. Senator Sue Serino (right) was the only negative in the State Senate. representing the 41st district of New York. It was not immediately clear which of the Assembly representatives voted against the bill.

When we were contacted for comment, NRMLA President Steve Irwin said the association was pleased with the bill and looked forward to Governor Cuomo’s next action.

“The NRMLA is tracking promissory notes for reverse mortgage cooperatives in New York, and we were delighted to see that this law was passed last Friday before both New York chambers called their hearing,” Irwin told RMD. “The NRMLA has worked very closely with several of the stakeholders involved in drafting this law, and while some technical issues remain to be addressed, we are delighted that New York cooperative owners may soon receive another funding option available to them through a private reverse mortgage lending marketplace. Now we are very closely watching when it can be signed by the governor. “

Sponsor Rep. Dinowitz hailed the adoption of the Assembly Bill as a way for seniors to gain new ways to access capital in their homes without having to sell or move from their current place of residence.

“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, ”Rep. Dinowitz said in a statement. “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.”

While acknowledging that Governor Cuomo vetoed the previous version, which was adopted by both houses in 2019, Rep. Dinowitz nevertheless hopes that the governor will find the new version more satisfactory and will approve it with his signature when it arrives in his office.

“I hope Governor Cuomo reconsidered his opposition to this policy, and I urge him to sign this law as soon as it is brought to his table,” Rep. Dinowitz said.

History

The new version of the bill is the result of significant work by the National Reverse Mortgage Lenders Association (NRMLA) and its external consultant with consumer advocates and other stakeholders to provide more adequate consumer protection for cooperative residents who may seek a reverse mortgage.

“NRMLA and [Weiner Brodsky Kider] (WBK) […] spent a lot of time and effort trying to get [previous] the law has been passed, ”said Sorush Shahin of the WBK in Virtual Policy NRMLA. The conference in April. “They worked with consumer advocacy groups and lobbyists to make certain changes to the bill to see it through, and it almost worked.”

While a new movement on this topic is encouraging, the likelihood of full adoption and codification by the governor could be very high due to the similarities between the new and old versions of the bill, as well as the fact that Governor Cuomo is still governor. “The current executive director of New York State,” Shaheen said.

New York State Senate Bill S03686, which was drafted in February 2019 prior to being passed by the State Senate and Assembly in June of that year, is the result of the work of NRMLA officials, WBK lawyers, and consumer advocacy groups to work together -Transient residents the ability to use the capital of their home through a reverse mortgage loan with substantial consumer protection.

“As we know, FHA does not insure cooperative-backed loans, forward or backward,” said WBK attorney James Milano at the Virtual Policy Conference. “Under the New York Reverse Mortgage Act, they did not and do not allow the provision of reverse mortgages in New York through cooperative collateral today. [NRMLA President] Steve [Irwin] and I both personally worked on a bill that was passed two years ago that would allow cooperatives to provide reverse mortgages. “

In a letter explaining his veto at the end of 2019, Governor Cuomo, who served as HUD secretary during Bill Clinton’s second term in office from 1997 to 2001, explained that he believes the respective borrowers may still be vulnerable to forfeiture. foreclosures in accordance with the wording of the vetoed bill. …

“While I understand that some of the older people who own shares in the building would like to be able to use their capital, I am concerned that despite the consumer protection measures designed to protect borrowers from fraud contained in this bill, these borrowers will continue to be exposed to unnecessary risk that could lead to foreclosure, ”Cuomo said in his case for the veto.

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