Below is a quick overview of the NY CEMA process, but Continental Title and Closing Services, LLC, in conjunction with The Burnham Law Firm offers a complete breakdown of all aspects of the NY CEMA process at www.nycemamortgage.com.
The NY CEMA (Consolidation Extension & Modification Agreement) is one of the least-used yet most valuable tools in the real estate industry. This process, when applicable (the current lender must be willing to perform the CEMA), regularly saves the borrower thousands of dollars in New York State mortgage recording tax costs.
When a person obtains a mortgage in New York State, they typically pay a mortgage recording tax on the entire amount of the mortgage. In Upstate New York, and the five boroughs of New York City, that amount ranges from .75 to 2.8% of the entire mortgage amount. This is typically a large percentage of the overall closing costs. Many people in these situations, paying the recording tax on the total amount of the new mortgage, would be hard-pressed to complete the transaction were it not for the NY CEMA.
How It Works
The NY CEMA works by using the existing mortgage amount, the "old money," towards the computation of the total loan amount and the difference between the two, the "new money," is the basis for the mortgage recording tax. Here is an example for New York County and Nassau County (although the CEMA is available in all counties throughout New York State):
Total Loan Amount.................$500,000
• County & Rate
• New York (2.05% minus $30).......$2670 (mortgage tax savings = $6925)
• Nassau (1.05% Minus $30).......$1170 (mortgage tax savings = $2800)
The value is very real and you need an experienced NY CEMA title insurance company and law firm to handle these transactions.