We tend to view laws as quite static and rigid. Truth be told, some laws and regulations are considered to be foundational to the US law system — these have a very low chance of ever seeing revisions and amendments. Still, this doesn’t mean that the entire justice system remains static and unmoving on both federal and state levels.
The legal system is a living thing. It is there to make people’s lives easier and safer, and with new technology, social norms, and various other changes, the law needs to change as well to fulfill its duties well.
Being that we have a split between state laws and federal laws in the US, it can be quite taxing to keep track of all the changes. Recently a small bill was passed in the state of New York, focusing on additional regulation concerning reverse mortgage co-ops. Let’s start by clearing up what reverse mortgages are.
Reverse mortgages definition
The easiest way to define a reverse mortgage is to say it’s just a specific loan. If you are 62+ years old and have sizable home equity, you are eligible to take a reverse mortgage loan. The loan can provide access to funds in three different forms:
- Lump-sum;
- Line of credit;
- Fixed monthly payments.
This type of loan doesn’t require loan payments but becomes payable once the borrower moves away, sells their home, or passes away. The apartment or house will go through evaluations, including everything from plumbing inspection to the state of the neighbourhood it is in, to determine its value.
The elderly is supported by all reverse mortgage options to help them manage financial issues when they are no longer getting a steady income.
NY reverse mortgage co-up bill
This bill focuses on allowing seniors who are 70 years old or older and living in the state of New York to take reverse mortgage loans on co-operative living spaces.
The latest bill version is the result of years of work by both NY state lawmakers and the members of the reverse mortgage industry. The State Assembly passed the bill in mid-June 2021, but it hit a snag when it got to the New York state governor at the time.
The governor’s veto
It was unfortunate for this bill that it reached the former state governor when he was facing legal action, and his office was in jeopardy. The former NY governor Cuomo was facing allegations of sexual harassment while holding office. As many as 11 women reported his misbehaviour, and he was forced to resign on August 24th, 2021.
The veto from the former governor of NY, Andrew Cuomo, was made for the previous version of the bill, which has since been changed to avoid this option of being vetoed. Still, due to the office turnaround in the NY governor’s office and the instatement of the acting governor Kathy Hochul, the bill is now in legislative limbo.
So what happens now?
Once the bill is passed in the state assembly and reaches the state governor, the governor’s office has 10 days (not including Sundays) to sign the bill into the state law, or alternatively, veto it again and send it back for modification.
Due to these circumstances, we are facing a different timeline. The governor has 30 days (including Sundays) to make a decision. If the governor doesn’t act at all, and the 30 days go by, the bill will be treated to what’s called a “pocket veto”. A “pocket veto” is an automatic veto that throws the bill back to the legislature.
All the cards are in the hands of the current New York state governor Katy Hochul as it is up to her to make a move. The bill was passed in the State Assembly with a vote of 148 for and 1 against the bill. It was also passed in the State Senate while being pushed by State Sen. Alessandra Biaggi from the Democratic Party.
Why is this bill important for the state of New York?
When we consider that 75% of the residential buildings within New York are cooperatives, it’s rather obvious why this bill is so important. A large number of residents of those cooperatives are elderly that fall into the low and middle-income category.
No less than sixteen years have passed in which NAHC (The National Association of Housing Cooperatives) and CNYC (the Council of New York Cooperatives and Condominiums) have been lobbying the Department of Housing and Urban Development to give this option to the aging NY state residents.
Conclusion
As you can see, the co-op reverse mortgage bill is quite controversial at the moment. We’re still going to have to wait for some time to see how things resolve, but with the correct regulation and liability protection, we can expect to see the bill introduced into the NY state law.
Hopefully, if accepted, the bill will allow more financial flexibility to the elderly over 72 years of age.
