N.Y. Real Property Law Section 279
Graduated payment mortgage

1.

A “graduated payment mortgage” means a mortgage which provides:

(i)

monthly payments of principal and interest which are lower during the initial years of the mortgage; and

(ii)

that the graduation rate for the monthly payments, the term of graduation and the interest rate are fixed throughout the term of the loan; and

(iii)

monthly payments of principal and interest shall be sufficient to pay all interest and to effect full repayment of principal within the term of the mortgage as fixed at its origination.

2.

Every graduated payment mortgage shall be subject to the following: (a) the average annual rate of increase for principal and interest payments shall not exceed:

(i)

7.5 percent per annum for a mortgage with a graduation period of five years or less;

(ii)

6.5 percent per annum for a mortgage with a graduation period of six years;

(iii)

5.5 percent per annum for a mortgage with a graduation period of seven years;

(iv)

4.5 percent per annum for a mortgage with a graduation period of eight years;

(v)

3.5 percent per annum for a mortgage with a graduation period of nine years; and

(vi)

3 percent per annum for a mortgage with a graduation period of ten years. (b) periodic payments of principal and interest shall not change more than once per annum and increases shall be limited to the first ten years of the term of the mortgage. (c) payments of principal and interest are required in amounts sufficient to pay all interest and full repayment of principal within a period not to exceed forty years.

3.

Graduated payment mortgages may be offered only if the lender: (a) offers the prospective borrower a non-graduated payment mortgage loan at the prevailing rate being offered by that lender; (b) provides the mortgagor with the option to convert the graduated payment mortgage loan to a non-graduated payment mortgage loan at a pre-determined time agreed upon between the borrower and lender and at the same rate of interest provided for the graduated payment mortgage loan; and (c) discloses in advance on a uniform disclosure statement, prescribed by the superintendent of financial services, the relevant provisions of the graduated payment mortgage loan including:

(i)

a side by side comparison of interest rates and other terms that differ between a non-graduated payment mortgage loan and a graduated payment mortgage loan;

(ii)

payment schedules for both types of loans and the total payment in dollars over the full term of each loan;

(iii)

a statement prominently displayed that borrowers have the option to elect a non-graduated payment mortgage loan; and

(iv)

a description of the conversion option.

4.

Failure of any lender to comply with any of the foregoing provisions shall not render the mortgage void or unenforceable unless otherwise provided by law.

5.

The provisions of this section shall be applicable only to a mortgage on real property improved by a one to six family residence given by a natural person to secure a loan or to any agreement or note made by a natural person in pursuance of any loan for the purpose of financing the purchase of or refinancing an existing ownership interest in certificates of stock or other evidence of an ownership interest in, and a proprietary lease from, a corporation or partnership formed for the purpose of the cooperative ownership of real estate, unsecured except to the extent of an assignment or transfer of the stock certificates or other evidence of ownership interest of the borrower and the proprietary lease within ninety days from the making of the loan which would otherwise conform to the provisions of this section but is not otherwise entitled to be recorded as a mortgage.

Source: Section 279 — Graduated payment mortgage, https://www.­nysenate.­gov/legislation/laws/RPP/279 (updated Sep. 22, 2014; accessed Apr. 20, 2024).

240
Definitions and use of terms 240‑B
Certain conveyances authorized 240‑C
Joint tenancy severance 241
Ancient conveyances abolished 242
Disclosure prior to the sale of real property 243
Grant of fee or freehold 244
When grant takes effect 245
Estate which passes by grant or devise 246
Certain deeds declared grants 247
Conveyance by tenant for life or years of greater estate than possessed 248
Effect of conveyance where property is leased 249
Covenants in mortgages 251
Covenants not implied 252
Lineal and collateral warranties abolished 253
Construction of covenants in grants of freehold interests 254
Construction of clauses and covenants in mortgages and bonds or notes 254‑A
Right of election of mortgagee in certain cases 254‑B
Limitation on late charges 254‑C
Right to a copy of real property appraisals and consumer reports in certain cases 254‑D
Fees by mortgagee for direct payment of real property taxes by mortgagor prohibited 255
Construction of grant of appurtenances and of all the rights and estate of grantor 256
Construction of grant in executor’s or trustee’s deed of appurtenances, and of the estate of testator and grantor 257
Covenants bind representatives of grantor and mortgagor and inure to the benefit of whom 258
Short forms of deeds and mortgages 259‑C
Provision in lease of real property for waiver of trial by jury in actions for personal injury or property damage 260
Lands adversely held may be conveyed or mortgaged 261
Maintenance of telegraph or other electric wires raises no presumption of grant 265
Fraudulent intent, question of fact 265‑A
Home equity theft prevention 265‑B
Distressed property consulting contracts 266
Rights of purchaser or incumbrancer for valuable consideration protected 267
Conveyances with power to revoke, determine or alter 268
Disaffirmance of fraudulent act by executor and others 269
When remainderman may pay interest owed by life tenant 270
Powers of courts of equity not abridged 271
Construction of covenants in mortgages on leases of real property and bonds or notes 272
Construction of grant of appurtenances, and all of the rights and estate of the mortgagor 273
What form of mortgage on lease of real property 274
Transfers and mortgages of interest in decedents’ estates 274‑A
Certificate of principal amount unpaid on mortgages of real property 275
Certificate of discharge of mortgage required 276
Effect of certain easements on the right to invest in mortgages 277
Modification and extension of mortgage investment 277‑A
Powers of fiduciaries and others holding guaranteed mortgages or mortgage investments 278
Exchange of mortgage investment 278‑A
Sale or exchange of certain real property or mortgage investments therein authorized 279
Graduated payment mortgage 280
Reverse mortgage loans for persons sixty years of age or older 280‑A
Reverse mortgage loans for persons seventy years of age or older 280‑B
Federal home equity conversion mortgage regulation 280‑D
Federal home equity conversion mortgage default and foreclosure regulation 281
Credit line mortgage 282
Mortgagor’s right to recover attorneys’ fees in actions or proceedings arising out of foreclosures of residential property
Green check means up to date. Up to date

Accessed:
Apr. 20, 2024

Last modified:
Sep. 22, 2014

§ 279’s source at nysenate​.gov

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