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.
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?
In the glossary
- Mortgage recording taxThe New York tax due when a mortgage is recorded, computed on the new money secured. A CEMA is the standard structure used to reduce the taxable am...
- 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.
- RecordingFiling an instrument with the register or county clerk so it becomes part of the public record. Recording establishes priority against later purcha...
- Reissue rateA 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, ...
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
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