The New York State Legislature re-passed law last week allowing seniors living in cooperative apartment buildings to apply for a reverse mortgage loan to give seniors in the state one more option to access their home’s equity. This comes from an announcement by the office of Rep. Jeffrey Dinowitz, a Democrat who represents the 81st Congregation District of New York.
The new legislation, which was passed in legislature, takes into account recent efforts by New York lawmakers and the reverse mortgage industry to allow co-op residents to apply for a reverse mortgage Vetoed by New York Governor Andrew Cuomo.
The new bill, A1508, is now going to the New York State Senate for deliberation but may continue to meet opposition from Governor Cuomo unless his previous consumer concerns are addressed.
The passage of the new bill
The number of cooperative homes in New York State provides sufficient justification for seniors in such situations to access their home equity through a reverse mortgage, according to the rationale authored by Rep. Dinowitz, sponsor of the Assembly Bill.
“In New York, around 75% of residential buildings are co-operatives,” the statement said. “Many who live in cooperative housing units are older and have low to middle incomes. The National Association of Housing Cooperatives (NAHC) and the Council of New York Cooperatives and Condominiums (CNYC) have been lobbying the Department of Housing and Urban Development (HUD) for the implementation of reverse cooperative home loan legislation for the aging population for the past sixteen years . The biggest hurdle is that cooperatives are not real property. “
As long as there is adequate consumer protection, the HUD’s current policy of preventing cooperative residents from applying for reverse mortgages should no longer be enforced, the explanatory memorandum said. The new law provides adequate consumer protection and will allow more seniors to stay in the home of their choice, it says.
“With the right regulations and liability protection, the older population should be able to
instead of being forced to move out of their homes, ”the reasoning said. “This bill adds expanded consumer protection to the process of acquiring a reverse cooperative home loan and ensures that the elderly community, desperate to stay in their homes, can do so.”
The State Assembly passed the revised bill with a 148-1 vote, while the State Senate passed its version of the law sponsored by Senate Senator Alessandra Biaggi (D) by 62-1. In the state Senate, the only “no” vote came from Senator Sue Serino (R), who represented New York’s 41st District. It was not immediately clear which assembly representative voted against the bill.
When asked for comment, NRMLA President Steve Irwin said the association is pleased with the passage of the bill and that it is awaiting the next action from Governor Cuomo.
“The NRMLA has been tracking the Reverse Mortgage Collaboration Bills in New York, and we were pleased to see that bill passed last Friday before both NY houses were adjourned for sitting,” Irwin told RMD. “NRMLA has worked very closely with several of the stakeholders involved in drafting this legislation, and while there are still some technical issues to be resolved, we are pleased to see co-owners in New York soon have another funding option through the private label reverse mortgage market . We are now paying very close attention to when this is signed by the governor. “
Sponsor Rep. Dinowitz praised the passage of the Assembly Bill as a way for seniors to find new ways to access equity in their homes without having to sell or leave their current residence.
“Cooperative housing is a very common way for New Yorkers to achieve home ownership goals, and seniors who live in these cooperatives deserve access to the same resources as traditional homeowners so they aren’t forced to move their homes to sell them to get access to cash, “Rep. Dinowitz said in a statement. “Our goal should be to help seniors age on the spot, in the homes they have often lived in for decades, and this legislation does just that.”
Given that Governor Cuomo vetoed the previous version, which was passed in both chambers in 2019, Rep. Dinowitz nevertheless hopes that the Governor will find the new version more satisfactory and that his signature will fix it as soon as it is in his Office arrives.
“I hope that Governor Cuomo has reconsidered his opposition to this policy and I urge him to sign it as soon as it gets to his desk,” said MP Dinowitz.
The new version of the bill is the result of significant work by the National Reverse Mortgage Lenders Association (NRMLA) and its outside advisors with consumer advocates and other stakeholders to ensure that more adequate consumer protection is in place for co-op residents who can access a reverse mortgage.
“NRML and [Weiner Brodsky Kider] (WBK) […] invest a lot of time and effort to get that [previous] Bill passed, ”said Soroush Shahin of WBK at NRMLA’s Virtual Policy conference In April. “They worked with consumer groups and lobbyists to make certain changes to the bill to get it over the finish line and it almost worked.”
While new movements on the matter are encouraging, the likelihood of full approval and codification by the governor could be due to the similarities between the new version of the bill and the old one, and the fact that Governor Cuomo is still the seated executive of New York State, said Shahin.
New York State Senate Act S03686, drafted in February 2019 before passing both the Senate and State Assemblies in June, was a product of work between NRMLA officials, WBK attorneys, and consumer groups to help co-op residents Ability to use their home equity through a reverse mortgage loan with substantial consumer protection.
“As we know, FHA does not insure any cooperative, forward or reverse secured loans,” said WBK attorney James Milano at the Virtual Policy Conference. “In New York Reverse Mortgage Act, they did not allow, and do not allow, reverse mortgages in New York through cooperatives. [NRMLA President] Steve [Irwin] and I both personally worked two years ago on a bill that was passed that would have allowed reverse mortgages to be secured through cooperatives. “
In a letter explaining his late 2019 veto, Governor Cuomo – who served as HUD secretary during President Bill Clinton’s second term from 1997 to 2001 – stated that he believes relevant borrowers will be affected by the Language of the veto law could still be vulnerable to foreclosure.
“While I understand that some seniors who own shares in a building may want to be able to access their equity, I am concerned that these borrowers are doing so despite the consumer protection aimed at protecting borrowers from unscrupulous practices in this bill will still be exposed to an unnecessary risk that could lead to foreclosure, ”said Cuomo in his rationale for the veto.