Closings 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 the current lender's cooperation and extra lead time.
What is a CEMA and how does it save mortgage recording tax?
Quick Answer
The full definition
An agreement in which an existing mortgage is assigned and consolidated with new financing rather than being satisfied and re-recorded. It requires the current lender's cooperation and extra lead time.
Also called: Consolidation Extension and Modification Agreement, Purchase CEMA.
Which related terms should you know?
These are the terms that come up alongside cema (consolidation, extension and modification agreement) in the same file.
- Mortgage recording tax
- The 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 0.25 points of the combined rate and may not pass it to the borrower, so a buyer there budgets 1.8 or 1.925 percent rather than the full rate. A CEMA is the standard structure used to reduce the taxable amount.
- Satisfaction of mortgage
- The 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 letter
- A 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.
- Recording
- Filing an instrument with the register or county clerk so it becomes part of the public record. Recording establishes priority against later purchasers and lenders.
- Reissue rate
- A reduced premium for a property previously insured within the look-back window set by the filed rate schedule. The prior policy, or a copy of it, is the proof required.
Where does cema (consolidation, extension and modification agreement) come up in a New York City closing?
A Brooklyn refinance rolling a $600,000 balance into a $700,000 loan pays mortgage recording tax on the $100,000 of new money once the CEMA is accepted.
What else should you read before closing?
Questions this raises
- 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...
- When does the reissue rate apply?Producing a prior owner's or lender's policy within the reissue period lowers the New York premium. Where to find the old policy and what qualifies...
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.
The statute itself
Have a closing coming up?
Tell us about the transaction. An attorney reads every intake form and responds the same business day.
Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.