Closing questions
Can you do a CEMA on a condo refinance?
A condo refinance can use a CEMA because the loan is a recorded mortgage. How the assignment works, what it saves, and which lenders decline to cooperate.
Can you do a CEMA on a condo refinance?
Quick Answer
The mechanism is an assignment rather than a payoff. Instead of satisfying the old mortgage and recording a wholly new one, the existing lender assigns its mortgage to the new lender, and the two are consolidated and modified into a single lien in the new amount. What records is the assignment and the consolidation agreement.
The saving is on mortgage recording tax under Tax Law section 253, because the tax reaches the new money rather than the full principal of the consolidated lien. On a refinance where most of the balance is carried forward, that is a meaningful line on the borrower’s side, which is why borrowers ask for it by name.
It is not free and it is not automatic. The existing lender charges an assignment fee and takes its own time producing the assignment, the new lender must accept a CEMA and many loan programs do not, and title work is heavier because the chain of mortgages being consolidated has to be reviewed and set out in an exhibit.
Timing is the practical constraint. Requesting the assignment package early, confirming the servicer will cooperate, and building the extra weeks into the rate lock is the difference between a CEMA that saves money and one that costs the borrower a lock extension. Ask before the loan is locked, not after.
Does a purchase CEMA work the same way on a condo?
The idea is the same, with a different assignor. On a purchase CEMA the seller’s existing mortgage is assigned to the purchaser’s lender and consolidated with the new loan, so the tax reaches only the new money. It requires a cooperative seller, a cooperative servicer, and contract language obliging both.
Who decides whether a CEMA is worth doing?
The borrower, on arithmetic. Set the tax saved against the assignment fee, the extra title and recording charges, the added attorney time and the risk of delay. The larger the balance being carried forward, the more clearly it works. On a small balance or a tight lock, a straight refinance is often the sounder choice.
What else should you read before closing?
In the glossary
- CEMA (Consolidation, Extension and Modification Agreement)An agreement in which an existing mortgage is assigned and consolidated with new financing rather than being satisfied and re-recorded. It requires...
- Mortgage recording taxThe New York tax due when a mortgage is recorded, computed on the new money secured. On a building with six or fewer apartments the lender pays 0.2...
- RecordingFiling an instrument with the register or county clerk so it becomes part of the public record. Recording establishes priority against later purcha...
- ACRISNew York City's public index of recorded property documents for Manhattan, Brooklyn, Queens and the Bronx. Deeds, mortgages, satisfactions, easemen...
- Satisfaction of mortgageThe instrument that releases a paid mortgage from the record. Until it is recorded, the old mortgage still appears as a lien against the property.
- Payoff letterA lender's statement of the amount required to satisfy and release a mortgage on a specific date, with a daily interest figure for any later date.
- Co-op lien searchThe search performed on a co-op purchase covering UCC filings, judgments, liens and unpaid building charges tied to the shares and to the selling s...
- Proprietary leaseThe occupancy lease a co-op corporation grants a shareholder for a specific unit. It is assigned at closing together with the stock certificate for...
Questions this raises
- Why is there no CEMA on a co-op?A co-op loan is secured by a UCC filing, not a recorded mortgage, so no mortgage recording tax applies and a CEMA has nothing to consolidate or save.
- How does a CEMA work at closing?A CEMA assigns the old mortgage instead of satisfying it, so New York mortgage recording tax is paid only on new money. The documents and the seque...
- What is the difference between common charges and maintenance?Condo common charges fund operations only, with taxes billed separately. Co-op maintenance bundles operations, property taxes and the underlying mo...
- What is a non-warrantable condo?A non-warrantable condo fails secondary market eligibility, so conventional financing is unavailable. What causes it and how buyers finance around it.
Building types
- Co-op and condo refinance, and CEMARefinancing an apartment: a condo refinance can use a CEMA to cut mortgage recording tax, a co-op refinance cannot, because there is no recorded mo...
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- Investor and pied-a-terre condo purchaseA condominium bought to rent out or to keep as a second home, where sublet policy, entity ownership and non-resident tax questions drive the struct...
The statute itself
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