New York Adopts Shared Appreciation Mortgage Modification
by: Margaret Wright
New York has adopted regulations concerning shared appreciation mortgage modification as Title 3 NYCRR Part 83.
Upon the sale of a residential property, a shared appreciation agreement provides a share to the lender or servicer in the appreciation of the value of the property. In order to have a shared appreciation agreement, the mortgage loan holder must reduce the principal amount of the loan by agreement to assist a mortgagor to avoid foreclosure.
A shared appreciation agreement is only available where:
- The unpaid principal balance exceeds the appraised value of the property;
- The mortgagor is 60 days past due payment or the loan is subject to an active foreclosure action;
- Additional alternatives and programs have been disclosed to the mortgagor, including modifications offered by the lender or under HAMP, GSEs, FHA and traditional refinance options.
Additionally, prior to entering a shared appreciation agreement a notice is required to be provided to the mortgagor including certain disclosures and information as specified by the regulation.
The regulation also includes the method by which to calculate the unpaid principal balance and principal reduction and calculation of the mortgagor holder’s share of appreciation in value.
The mortgage holder may charge additional fees simultaneously with the execution of the shared appreciation agreement. These fees include:
- An appraisal fee for the actual cost of one appraisal only
- Transfer, recording or related tax fees associated with the agreement
- Title service fees
- Credit report, flood zone search or mortgage insurance fees
- Reasonable and customary attorney fees
View the new NY regulation in its entirety:
About the Author:
Margaret Wright, J.D., is V.P. and Regulatory Compliance Director at Bankers Advisory. She is a graduate of Stonehill College and earned her Juris Doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar. She can be reached at Margaret@bankersadvisory.com
Margaret Wright, JD, is regulatory compliance director with CLA. She is a graduate of Stonehill College and earned her juris doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar.
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