Relates to discharge of a mortgage, the official text

S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2739
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             January 22, 2025
                                ___________
 
 Introduced  by  M. of A. CRUZ -- read once and referred to the Committee
   on Banks
 
 AN ACT to amend the real property law and the real property actions  and
   proceedings law, in relation to discharge of a mortgage
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Subdivisions 2 and 3 of section 275 of  the  real  property
 law,  as added by chapter 748 of the laws of 1990, is amended to read as
 follows:
   2. (A) For purposes of this section, the full amount of principal  and
 interest  due  on a mortgage shall not be considered to be paid whenever
 such mortgage continues to secure a bona fide debt  and  an  enforceable
 lien continues to exist, such as may occur in the following situations:
   [(a)]  (I) the commercial practice of lenders trading or selling mort-
 gages on the secondary market;
   [(b)] (II) the replacement  of  a  construction  loan  with  permanent
 financing;
   [(c)]  (III)  the  refinancing  of an existing loan with a new lender,
 such as where the original lender assigns a note and the mortgage secur-
 ing its payment to another lender in return for consideration  and  such
 mortgage  is  consolidated with another mortgage which secures any funds
 advanced by the new lender to the mortgagor;
   [(d)] (IV) the modification of the terms of a loan by a mortgagor  and
 mortgagee in order to avoid foreclosure; and
   [(e)]  (V)  a  refinancing that occurs in conjunction with the sale of
 property such that the seller conveys property to the purchaser  subject
 to the lien of the mortgage and the original lender assigns its note and
 mortgage on the property to the purchaser's lender.
   (B)  NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE CONTRARY, IF
 PAYMENT IS RECEIVED AT THE LOCATION AND IN THE MANNER SPECIFIED  BY  THE
 MORTGAGEE,  THE  MORTGAGEE MUST ACCEPT AND MAY NOT RETURN OR DESTROY ANY

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05468-01-5
 A. 2739                             2
 
 PAYMENT RECEIVED IN RELIANCE ON A PAYOFF  STATEMENT  AND  MUST  PROMPTLY
 APPLY  SUCH  PAYMENT  TO  THE  UNPAID  PRINCIPAL,  INTEREST OR ANY OTHER
 AMOUNTS DUE UNDER THE MORTGAGE.
   3.  Except  with respect to the assignment of a mortgage in connection
 with a transaction described in SUBPARAGRAPH (I)  OF  paragraph  (a)  of
 subdivision  two  of this section, in order to record an assignment of a
 mortgage there must be set forth in the assignment document or  attached
 thereto  and  recorded  as part thereof a statement under oath signed by
 the mortgagor or any other party to the transaction having knowledge  of
 the  facts  (provided such other party asserts such knowledge), that the
 assignee is not acting as a nominee of the mortgagor and that the  mort-
 gage  continues  to  secure  a bona fide obligation. With respect to the
 assignment of a mortgage in connection with a transaction  described  in
 SUBPARAGRAPH  (I)  OF  paragraph (a) of subdivision two of this section,
 such assignment shall contain the following statement: "This  assignment
 is  not  subject to the requirements of section two hundred seventy-five
 of the Real Property Law because it is an assignment within the  second-
 ary mortgage market."
   §  2.  Subdivision  1 of section 1921 of the real property actions and
 proceedings law, as amended by chapter 467  of  the  laws  of  2005,  is
 amended to read as follows:
   1.  (A)  After payment of authorized principal, interest and any other
 amounts due thereunder or otherwise owed by law has actually been  made,
 and  in  the  case  of  a credit line mortgage as defined in section two
 hundred eighty-one of the real property law on written request, a  mort-
 gagee of real property situate in this state, unless otherwise requested
 in  writing  by  the  mortgagor  or  the assignee of such mortgage, must
 execute and acknowledge before a proper officer, in like  manner  as  to
 entitle  a  conveyance  to  be recorded, a satisfaction of mortgage, and
 thereupon within thirty days arrange to have the satisfaction  of  mort-
 gage:  [(a)] (I) presented for recording to the recording officer of the
 county where the mortgage is recorded, or [(b)] (II) if so requested  by
 the  mortgagor  or  the  mortgagor's  designee,  to the mortgagor or the
 mortgagor's designee. Failure by a mortgagee to present a certificate of
 discharge for recording shall result in the mortgagee  being  liable  to
 the  mortgagor in the amount of five hundred dollars if [he or she] SUCH
 MORTGAGEE fails to present such certificate within  thirty  days,  shall
 result  in  the mortgagee being liable to the mortgagor in the amount of
 one thousand dollars if [he or she] SUCH MORTGAGEE fails  to  present  a
 certificate of discharge for recording within sixty days or shall result
 in  the  mortgagee  being  liable  to the mortgagor in the amount of one
 thousand five hundred dollars if [he or she]  SUCH  MORTGAGEE  fails  to
 present a certificate of discharge for recording within ninety days. For
 the purposes of such liability under this subdivision, the term "mortga-
 gee"  shall  not include a person, partnership, association, corporation
 or other entity which makes less than five mortgage loans in any  calen-
 dar  year.  The  mortgagee shall within forty-five days deliver the note
 and the mortgage and where a title is registered under article twelve of
 the real property law, the registration copy of  the  mortgage  and  any
 registration certificates in the mortgagee's possession to the mortgagor
 or  the mortgagor's designee making such payment and request if required
 as aforesaid. Delivery of a satisfaction of mortgage in accordance  with
 the  terms  of section two hundred seventy-five of the real property law
 shall be deemed to satisfy the requirements of  this  section  regarding
 the satisfaction of mortgage.
 A. 2739                             3
 
   (B)  NOTWITHSTANDING ANY PROVISION OF THIS SECTION OR SECTION NINETEEN
 HUNDRED TWENTY-ONE-A OF THIS ARTICLE TO  THE  CONTRARY,  IF  PAYMENT  IS
 RECEIVED  AT  THE LOCATION AND IN THE MANNER SPECIFIED BY THE MORTGAGEE,
 THE MORTGAGEE MUST ACCEPT AND MAY NOT  RETURN  OR  DESTROY  ANY  PAYMENT
 RECEIVED  IN RELIANCE ON A PAYOFF STATEMENT AND MUST PROMPTLY APPLY SUCH
 PAYMENT TO THE UNPAID PRINCIPAL, INTEREST OR ANY OTHER AMOUNTS DUE UNDER
 THE MORTGAGE.
   § 3. This act shall take effect immediately.