Requires a mortgagee to accept and apply payments.
Summary
This bill amends New York’s Real Property Law and Real Property Actions and Proceedings Law to clarify when a mortgage is considered paid and when a lender must issue a discharge or satisfaction of mortgage. It adds language stating that if a borrower tenders payment at the location and in the manner specified by the mortgagee, the mortgagee must accept the payment and may not return or destroy it when the borrower relied on a payoff statement; the lender must promptly apply the payment to principal, interest, or other amounts due under the mortgage.
The bill also revises rules governing mortgage assignments and discharges. It preserves existing exceptions for secondary-market mortgage transactions, construction-to-permanent financing, refinancing, loan modifications to avoid foreclosure, and certain sale-related refinancings, while requiring specific sworn statements for assignments in most other cases. It further updates the mortgage satisfaction process by requiring mortgagees, after full payment, to execute and record or deliver a satisfaction of mortgage within specified timeframes, with existing monetary penalties for delay remaining in place.
Impact
The bill would affect mortgage lenders, servicers, borrowers, and county recording systems by tightening the rules for accepting payoff funds and by clarifying discharge and assignment requirements under state law. It amends Real Property Law section 275 and RPAPL section 1921, reinforcing that a lender cannot reject or discard a payoff made in reliance on a payoff statement and must apply it to the loan balance. It also preserves and refines the legal framework for recording mortgage assignments and for issuing satisfactions after payoff, which may reduce disputes over whether a mortgage has been fully paid and when a discharge must be recorded.
Sentiment
The bill appears to be framed as a consumer-protection and administrative-clarification measure, with the caption emphasizing that mortgagees must accept and apply payments. Although there are no committee transcripts or recorded votes provided, the text suggests a policy goal of preventing lenders from mishandling payoff funds and ensuring borrowers receive timely mortgage discharges. The overall tone of the legislation is procedural and remedial rather than controversial.
Contention
The main potential point of contention is the bill’s restriction on mortgagees’ ability to return or destroy payments received in reliance on payoff statements, which could affect lender and servicer practices for resolving payoff discrepancies. Another possible issue is the continued use of sworn statements and special exceptions for mortgage assignments, especially in secondary-market transactions, which may draw attention from lenders, title companies, and mortgage investors concerned about compliance burdens. No specific opposing viewpoints are documented in the provided materials, but the affected parties would likely include mortgage lenders, servicers, borrowers, and recording offices.
Prohibits mortgagee from refusing to accept partial mortgage payments from a mortgagor which does not bring the mortgagor current on such mortgagor's mortgage debt.