Relates to discharge of a mortgage

Stronger mortgage payoff protections for homeowners

The New York law takes effect immediately. Mortgage holders must accept and promptly apply payoff-statement payments received at the place and in the manner they specified. They cannot return or destroy these payments and must apply them to principal, interest, or other amounts due. After full payment of authorized amounts, holders must sign and acknowledge a document confirming the mortgage is paid off. Within 30 days, they must arrange to submit it for county recording or deliver it to you or your designee if requested. Credit line mortgages also require a written request. Failure to submit the discharge for recording carries penalties of $500 after 30 days, $1,000 after 60 days, and $1,500 after 90 days. Lenders making fewer than five mortgage loans per calendar year are excluded from the liability cap. Within 45 days of payment, holders must return the note, mortgage, and any applicable title registration documents they hold. Delivery of a satisfaction document under the law's mortgage discharge rules satisfies these requirements. A mortgage securing a real debt is not treated as paid off during secondary-market sales, construction-to-permanent financing, refinancing with a new lender, or loan changes to avoid foreclosure. This also covers refinancing during a property sale when the buyer takes the property subject to the mortgage and the original lender transfers the note and mortgage to the buyer's lender. Recording a mortgage transfer generally requires a sworn statement from the borrower or another capable party. It must confirm that the new holder is not acting for the borrower and that a real debt remains secured. Secondary-market transfers instead require a statement identifying that exception.