Kathy Hochul, the Governor of New York, has signed a bill into law authorizing lenders to make reverse mortgages secured by ownership of a New York cooperative apartment.
Proponents say this will increase the size of the reverse lending market in the state significantly. She signed the new legislation on December 1, 2021.
This was the same law that former Governor Andrew Cuomo vetoed in 2019 and will take effect on May 30, 2022. Details of the law were covered by attorneys from Locke Lord LLP on JDSupra.
The new law overlaps existing NY law and federal law, but offers some unique provisions, including:
- Reverse mortgages secured by co-ops must be approved by the co-op board of directors.
- Co-op reverse borrowers must be at least 62 years old, whereas real-property reverse borrowers currently must be only 60.
- defaults that can trigger maturity include tax or insurance arrearage, bankruptcy, or lack of maintenance.
There is still more work to do as the law requires the state’s Department of Financial Services to create a work group to address any matters that may require additional rules or regulations.