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#77115 - 04/30/03 07:55 PM NY CEMA
padman19 Offline
New Poster
Joined: Apr 2003
Posts: 2
First - forgive me, I am not a banking insider. I have been trying to track down some help with a question, and I have come to you guys. What is a CEMA (NY) - and how does it affect the mortgage refinance process? My original lender has charged me $600 for a CEMA statement (I am refinancing with a new lender). My new lender informed me that this statement will help me to reduce my mortgage taxes on my new mortgage (and would save me over $600)since it gives me credit for mortgage taxes already paid on the original mortgage. I inquired about refinancing with my old lender and the CEMA credit, they told me that they do not offer the CEMA discount and that I would have to pay mortgage taxes in full (again) if I refinanced with them. (At first, my loan officer had never even heard of CEMA, she had to check with a manager.) Am I getting the run-around?

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#77116 - 05/02/03 01:18 PM Re: NY CEMA
SPF36 Offline
New Poster
SPF36
Joined: Jul 2002
Posts: 20
A CEMA is actually the name of a document that will be used to close your loan, Consolidation, Extension and Modification Agreement. You aren't getting the run around from the new lender, but your existing lender who holds your mortgage might be, but they're also not doing anything illegal or in violation of any regulation.

In order to avoid paying the NYS Mortgage Tax again, which you paid when you purchased the home at the cost of 3/4%, minus $25, if you close with a CEMA you will only have to pay the tax on any new money (any increase in the loan amount above what you originally borrowed when you closed on your purchase or last refinance). This can be a significant savings, even more so if the property is within the 5 boroughs, where you would pay an additional 1% NY City Tax or not by doing a CEM. It is solely up to each lender/bank to allow the CEM and at what cost. The existing lien holder must obtain and provide the original Mortgage and Note to the new lender, which will not be "satisified", but rather modified, thereby technically you haven't taken out a new loan and NYS doesn't get the mortgage tax. Since the existing lien holder does have to do some work in obtaining those documents, they charge fees for it. Some will charge a fee so high as to not make it worth your while to do the CEM, thereby keeping your loan on their books or forcing you to refinance with them. That doesn't seem to be the case in your situation, since you stated that the existing lien holder will allow the CEM with another lender at the cost of $600, but will not allow it if you go through them....doesn't make sense.

The new bank will need to prepare the CEMA, in addition to all other normal closing documents, thereby the closing attorney will charge for this "service". Your new Note for this loan will only be for any new monies and only these new monies are reportable for HMDA purposes as an origination since the existing lien is not satisfied (it is paid off of course).

FYI - I am also in the process of going through a refinance and have to pay my existing lender $300 for the CEM and $350 to the new lender to prepare the CEMA document.

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#77117 - 05/05/03 02:34 PM Re: NY CEMA
Anonymous
Unregistered

Thanks for the info!

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#1312460 - 12/23/09 05:25 PM Re: NY CEMA SPF36
DNUW Offline
New Poster
Joined: Jul 2009
Posts: 7
Is there any regulatory documentation stating that the new monies from a NY CEMA is reportable for HMDA?

Thanks
DNUW

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