New York Governor Signs Sweeping Reverse Mortgage Bill Into Law

A reverse mortgage bill aiming to change the way industry professionals do business in the state of New York was signed into law on Friday by Governor Andrew Cuomo, RMD has learned. This has codified the bill into New York state law, and Governor Cuomo’s office confirmed to RMD that he had signed it.

Assembly bill A5626 was first passed by the New York State Assembly in May, and takes sweeping aim at what it calls “deceptive practices,” requiring reverse mortgage lenders to provide supplemental consumer protection materials while imposing additional restrictions on lenders related to their payment of insurance premiums and property taxes.

The bill also requires that both lenders and borrowers be represented by an attorney at the time of closing, and at least one attorney must be present to conduct the closing itself. Sponsored in the New York State Assembly by Helene E. Weinstein, who represents Assembly District 41 in Brooklyn, the intent of the new law was detailed in a memo circulated to New York state lawmakers as answering the necessity of regulating a complex product that is sold to a protected class with current regulations that are described by the memo as “inadequate.”


“Reverse mortgages are complicated and expensive financial products. Many seniors do not understand how they work or what their true long-term costs are,” the memo says. “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 significant financial assets.”

The bill aims to reinforce regulations governing reverse mortgages by reducing defaults and foreclosures for reverse mortgage borrowers across the state.

Prior to the initial creation of the bill that was just signed, Governor Cuomo outlined in his 2017 State of the State address to New York lawmakers that addressing the financial exploitation of seniors would be a top priority for his administration, and made a series of proposals which included the tighter regulation of reverse mortgages within New York.

“Under current law, consumer protections available to homeowners are not provided to homeowners with a reverse mortgage,” a spokesperson for the governor said in a press release at the time. “In order to safeguard seniors from the risks of reverse mortgages and provide equal protections to all homeowners, Governor Cuomo will take [action].”

The bill will become effective on the nineteenth day after it becomes law, according to its own provisions. Read the full text of the new law at the New York State Senate.

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  • While I am no whiz at math, does this sound like one, two, or three attorneys must be at closing? “The bill also requires that both lenders and borrowers be represented by an attorney at the time of closing, and at least one attorney must be present to conduct the closing itself.”

    If I read the quotation correctly and Chris got it right, three attorneys are required at closing. Since I am not licensed in New York, it is not worth my time to understand current New York law related to mortgage closings and the number of attorneys that must be at mortgage loan closings.

    So who will pay for all three of these attorneys? If New York already requires an attorney at closing (I must confess that I do not know) and they are paid as closing facilitators, that means someone will have to pay for two more attorneys. Since the lender’s attorney is required, it would seem that lenders will include that cost like courier/messenger services and the initial FHA MIP as a reimbursable upfront cost and FHA will find that the costs of at least the closer’s attorney and the lender’s attorney are mandatory obligations.

    However, what will the cost of the applicant’s attorney be considered as? Can it be included as a mandatory obligation so that it is but another reimbursable (but this time to the borrower?) upfront cost of the BORROWER? Will the applicant’s attorney need to counsel the applicant before closing? Is there a cap on that attorney’s fee? Imagine if the applicant’s attorney talks the applicant out of getting the reverse mortgage BEFORE closing.

    For now let us call this newly signed bill as the full employment act for NY attorneys of 2019.

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