A bill which would allow seniors aged 70 or older living in New York state to take out a reverse mortgage loan on a co-operative living space appears to be in legislative limbo, likely through no fault of the reverse mortgage industry and having more to do with the recent turnover of the state’s governor. This is according to the latest information available regarding the recently-passed bill made available by the New York State Assembly and the New York State Senate.
The newest version of the bill — which serves as the culmination of a years-long effort by members of the reverse mortgage industry and New York state lawmakers — was authored after a similar bill which would allow reverse mortgages on co-ops failed to overcome a veto by then-Gov. Andrew Cuomo. The latest version of the bill was passed less than 60 days before Cuomo resigned from office following allegations of sexual misconduct.
Current status of the bill
While calls to the primary sponsor of the Assembly version of the bill and to the office of Gov. Kathy Hochul went unreturned, the National Reverse Mortgage Lenders Association (NRMLA) has been observing any momentum on its legislative priorities including this bill. This is according to Steve Irwin, president of NRMLA.
“NRMLA has been following the co-op bill in New York closely,” Irwin said in a statement to RMD. “I have been advised that there are only two bills that have been signed since Gov. Cuomo stepped down and Gov. Hochul took office, which really is not a surprise as she continues to put her administration together. I think we will start to see things start moving by the last week of September or early October. As the Governor’s office gets up to speed on such housing matters, we can expect to see more definitive action.”
The bill was passed in the State Assembly in mid-June, by which point Gov. Cuomo saw intensifying amounts of sexual misconduct allegations. New York Attorney General Letitia James launched an official investigation which published a report in August, which concluded that Cuomo had sexually harassed 11 women during his time in office. A week after the report was published, Cuomo announced that he would resign from office effective on August 24, at which point Hochul — who had been serving as lieutenant governor — would assume the governor’s office.
In April, the reverse mortgage industry had indicated that it would prepare to make another attempt at getting reverse mortgages on co-ops approved in New York in a presentation made by the association’s outside counsel during the NRMLA Virtual Policy Conference in April.
While new movement on the topic appeared encouraging at that time, the likelihood of full passage and codification by then-Gov. Cuomo was not guaranteed, owing to the similarities between the new version of the bill and a previously-passed version which Cuomo vetoed at the end of 2019.
The bill requires the New York Department of Financial Services (NYDFS) to issue regulations related to the new type of loan, which could mean that even though the bill has been passed, more requirements for these types of loans could be required.
However, the bill was ultimately passed in June, with the State Assembly passing a revised version of the bill with a vote of 148-1, while the State Senate passed its version of the bill sponsored by State Sen. Alessandra Biaggi (D) with a vote of 62-1. In the State Senate, the sole “nay” vote came from Sen. Sue Serino (R) representing New York’s 41st district. It is not clear which Assembly representative voted against the bill.
Sponsor Rep. Jeffrey Dinowitz (D) lauded the passage of the Assembly Bill as a way for seniors to have new ways to access the equity in their homes without having to sell or move from their current residence.
“Cooperative apartments are a very common way for New Yorkers to achieve the goals of homeownership, and seniors who live in these coops deserve to have access to the same resources as traditional homeowners so that they are not forced to sell their homes in order to get access to cash,” Rep. Dinowitz said in a statement after the bill’s passage. “Our goal should be to help seniors age in place, in the homes that they have often lived in for decades, and this legislation does just that.”
Gov. Cuomo’s original veto, Gov. Hochul’s next move
At the time, Dinowitz expressed hope that Gov. Cuomo would sign the newly-passed bill into law, given that Cuomo had chosen to veto a similar bill in the past based on what he described as insufficient consumer protections. Cuomo, who had served as one of the Secretaries of the U.S. Department of Housing and Urban Development (HUD) during the Bill Clinton administration, said at the time of his veto that consumer protections were insufficient at the time.
“While I understand that some senior citizens who own shares of a building would like to be afforded the option to draw on their equity, I am concerned that despite the consumer protections designed to protect borrowers from unscrupulous practices contained in this bill, these borrowers will still be exposed to unnecessary risk that could lead to foreclosure,” Cuomo said upon his veto.
Gov. Hochul has thus far not taken any explicit action related to reverse mortgages since coming into office, however she did take an action that is adjacent to the product category. On September 2, Gov. Hochul signed an extension of a moratorium on residential foreclosures through January 15, 2022.