BILL NUMBER: S6363
SPONSOR: BAILEY
 
TITLE OF BILL:
An act to amend the real property law and the real property actions and
proceedings law, in relation to discharge of a mortgage
 
PURPOSE:
To ensure timely processing and recording of mortgage satisfactions and
protect borrowers by requiring mortgagees to accept and apply payments
based on payoff statements.
 
SUMMARY OF PROVISIONS:
* Section 1: Amends Real Property Law § 275 to:
* Clarify circumstances under which a mortgage continues to secure a
bona fide debt.
* Mandate that mortgagees accept and apply payments received in reliance
on payoff statements and prohibit returning or destroying such payments.
* Section 2: Amends Real Property Actions and Proceedings Law § 1921 to:
* Reinforce the obligation of mortgagees to execute and present satis-
factions of mortgage within specified timeframes after payment of the
mortgage.
* Impose penalties of $500 to $1,500 for failing to record satisfactions
within 30, 60, or 90 days, respectively.
* Require mortgagees to accept and apply payments received in reliance
on payoff statements.
* Section 3: Establishes the act's immediate effective date.
 
JUSTIFICATION:
The discharge of a mortgage marks a critical point in a borrower's
financial journey, and delays or disputes in processing can cause
significant hardship. Currently, mortgagees are not explicitly required
to accept payments based on payoff statements, leading to instances
where payments are returned or destroyed, creating unnecessary financial
and legal challenges for borrowers.
This legislation ensures:
* Mortgagees promptly process payments and apply them to outstanding
obligations.
* Borrowers are protected from undue delays in obtaining recorded satis-
factions of their mortgage, which are essential for securing clear title
to their property.
* Accountability through financial penalties for mortgagees who fail to
meet recording deadlines, deterring negligence and fostering better
practices. By addressing these issues, the bill aims to protect borrow-
ers' rights and streamline mortgage payoff processes in New York State.
 
LEGISLATIVE HISTORY:
This is a new bill.
 
EFFECTIVE DATE:
This act shall take effect immediately upon becoming law.

Statutes affected:
S6363: 275 real property law, 1921 real property actions and proceedings law, 1921(1) real property actions and proceedings law