N.Y. Banking Law § 6-a: Investment in obligations of certain persons sixty-five years of age or over incurred to satisfy real property tax indebtedness

§ 6-a. Investment in obligations of certain persons sixty-five years

of age or over incurred to satisfy real property tax indebtedness. 1.

Subject to such regulations and restrictions as the superintendent of

financial services finds to be necessary and proper and notwithstanding

any inconsistent provision of this chapter to the contrary, any bank,

trust company, savings bank, savings and loan association, or life

insurance company authorized to do business in this state may make loans

described in subdivision two of this section.

2. Banking institutions described in subdivision one may make loans

under this section to natural persons aged sixty-five or older subject

to the following conditions:

(a) the principal amount of the loan shall not exceed the aggregate

amount of all real property taxes, special ad valorem levies, and

special assessments paid or owing by the borrower for the current or

prior years or both with respect to real property owned individually or

jointly by such borrower which constitutes the principal residence of

such borrower; provided, however, that the loan agreement may provide

for such principal amount to be modified to include the amount of

additional real property taxes, special ad valorem levies, and special

assessments pertaining to such property as they are incurred; and

(b) such loan shall be secured by a first or second mortgage on the

property which mortgage expressly states in like or similar terms "this

mortgage is given to secure a loan made pursuant to the provisions of

section six-a of the banking law"; and

(c) the annual interest chargeable on such loan shall not exceed the

allowable interest chargeable by such lender to any other person, not

including a corporation, on an obligation secured by a first mortgage

lien; and

(d) a loan which is undertaken pursuant to this section shall not be

payable until the sale or other disposition of such property, provided

however that any borrower may discharge any indebtedness he has

undertaken pursuant to the provisions of this section at any time

without payment of any charges other than principal and interest.

3. Subject to regulations of the superintendent of financial services,

banking institutions described in subdivision one of this section which

make loans pursuant to this section may, pursuant to the loan agreement,

utilize part or all of the proceeds of such loan to make direct payment

of real property taxes, special ad valorem levies, and special

assessments on the property which secures such loan. Any such

institution which retains part or all of the proceeds of such loan for

the purpose of making direct payment of such real property taxes,

special ad valorem levies, and special assessments shall be liable to

such borrower, upon failure to pay such taxes, levies, and assessments

for the amount of such taxes, levies, and assessments plus penalties and

interest imposed thereon.

4. Every banking institution which makes direct payment of real

property taxes, special ad valorem levies, and special assessments

pursuant to subdivision three shall at least annually provide to the

borrower any paid bill it has received for the payment of such taxes,

levies, and assessments. Such bill shall be contained in a succeeding

loan statement as may be sent to such borrower. This section shall not

apply to billings for real property taxes, special ad valorem levies,

and special assessments transmitted by computer tape by a city with a

population of one million or more persons.