NYCL AGO 96-F4.

• Case Date: April 02, 1996
• Court: New York

New York Attorney General Opinions 1996. AGO 96-F4. April 2, 1996Formal Opinion No. 96-F4Hon. Neil D. Levin Superintendent No. 96-F4 Banking Department 2 Rector Street New York, NY 10006BANKING LAW §§ 6-h, 14; REAL PROPERTY LAW §§ 280 and 280-a, 281; TAX LAW § 253-b(2); 12 USC § 1715Z-20; L 1993 Ch 613; L 1984 CH 789.The 1993 amendments to the Real Property Law imposing a twenty year limit on priority of liens for credit line mortgages are not applicable to reverse mortgages.Dear Superintendent Levin: Your counsel has requested a formal opinion from this office regarding the priority of liens on reverse mortgage loans made pursuant to Banking Law § 6-h. Under Real Property Law §§ 280 and 280-a, "the priority of the lien of a reverse mortgage shall date from the recording of the reverse mortgage irrespective of the date of any advance of reverse mortgage loan proceeds" (Real Property Law §§ 280 [5], 280-a[5]), "or the date by which an authorized lender shall be entitled to shared appreciation or accrued but unpaid interest" ( id. , § 280-a[5]). In contrast, the statute establishing the priority of liens of a credit line mortgage, which was amended in 1993 to include reverse mortgages in the definition of credit line mortgage, dates the liens to the time the mortgage was entered into but only as to those advances made within twenty years of the date of its initial recording. Id. , § 281(2). You inquire whether the priority of reverse mortgage liens is governed by sections 280 and 280-a of the Real Property Law, or whether their priority is subject to the twenty year limitation contained in Real Property Law § 281. It is our opinion that the priority of such liens dates from the recording of the reverse mortgage loan irrespective of when the actual advances are made and that the twenty year limitation set forth in Real Property Law § 281 does not apply . First authorized by Chapter 789 of the Laws of 1984, reverse mortgage loans were designed by the Legislature to serve as a vehicle through which homeowners who are over 60 years of age and who are "house rich, but cash poor" could borrow on the equity of their homes without having to forfeit possession or ownership. See , Bill Jacket, L 1993 Ch 613; see also , New York State Senate Research Service, "Issues in Focus", 92-67; 1993 Summary of Legislation 5-13 to...