A 62-year-old homeowner took out a federally-insured HUD reverse mortgage (HECM), but years earlier had deeded the property to family members under 60 while keeping a life estate for herself. Because title is held by people who don't meet the state's own age-60 reverse-mortgage rules, does the mortgage still qualify for New York's reverse mortgage exemption from recording tax?

Plain-English summary

A 62-year-old homeowner ("Ms. M") borrowed against her New York single-family residence under a Home Equity Conversion Loan Agreement, executing a reverse mortgage under HUD's federally insured Home Equity Conversion Mortgage (HECM) program (12 U.S.C. § 1715z-20). As required by the HUD/HECM program, two mortgages were recorded: a first mortgage to the lender (securing payments advanced to Ms. M) and a second mortgage naming the HUD Secretary as mortgagee (securing any payments HUD might make to Ms. M if the lender defaulted). Some time before the loan, Ms. M had deeded the property to family members under age 60, keeping a life estate for herself; because they held title, those younger relatives signed as co-mortgagors alongside Ms. M, even though she alone was the actual borrower.

Tax Law § 252-a.2 exempts reverse mortgages from MRT if they conform to Real Property Law § 280 (age 60+) or § 280-a (age 70+), or if they're exempt from those state provisions because they satisfy the federal HUD/HECM requirements — Real Property Law § 280(4)/280-a(4) says a HUD/HECM-compliant reverse mortgage, if not inconsistent with Banking Board rules, is DEEMED to conform to the state provisions automatically. The opinion contrasts two prior rulings: The Edna Huff Trust (TSB-A-96(4)R), which held that federal HUD conformance suffices for the exemption, and William H. Bradt (TSB-A-04(2)R) — a strikingly similar fact pattern (borrower over 60 who deeded to children under 60, retaining a life estate) — where the exemption was DENIED because the submitted facts didn't actually establish HUD/HECM conformance.

Here, unlike Bradt, the petitioner's submitted mortgage documents affirmatively demonstrated HUD/HECM qualification — most importantly, the required second mortgage to the HUD Secretary, which itself confirms coverage under the federal program. Since the mortgage conforms to federal law and isn't inconsistent with Banking Board regulations, it's deemed to satisfy Real Property Law § 280 and is exempt from MRT under Tax Law § 252-a.2, regardless of the younger co-mortgagors' ages — what matters is the borrower's own age and the mortgage's federal HECM compliance, not every titleholder's age.

Because the standard affidavit format under 20 NYCRR § 644.1(c)(2) was written for mortgages conforming directly to state RPL §§ 280/280-a and doesn't address the "federal-conformance" exemption route, the Department specified substitute documentation for that route: (1) an affidavit from the mortgagee affirming the mortgage conforms to 12 U.S.C. § 1715z-20 and is therefore exempt under RPL § 280(4)/280-a(4) and Tax Law § 252-a.2, and (2) recording the required second HUD mortgage at the same time as the reverse mortgage. If this documentation isn't submitted at recording, MRT is measured by the full loan proceeds obligation, though a refund may be claimed within two years under 20 NYCRR § 654.1 if the exemption is later established.

What this means for you

Elderly homeowners using HUD/HECM reverse mortgages, especially with life-estate/family title arrangements

The exemption turns on the BORROWER's age and genuine federal HECM conformance — not on the age of every person who happens to hold or share title (e.g., family members you deeded the property to while retaining a life estate). Make sure your closing documents clearly evidence HUD/HECM compliance, especially the required second HUD mortgage.

Lenders and closing attorneys on HECM reverse mortgages

Submit the federal-conformance affidavit and record the second HUD mortgage simultaneously with the reverse mortgage to secure the exemption at closing; don't rely on the standard state-law-conformance affidavit format, which doesn't fit this fact pattern.

Contrast with William H. Bradt (TSB-A-04(2)R)

This nearly identical fact pattern reached the OPPOSITE result in Bradt because the taxpayer there failed to demonstrate actual HUD/HECM conformance. The lesson: the outcome doesn't turn on the life-estate/family-title structure itself, but on whether the paperwork actually proves federal program compliance.

Common questions

Q: Does every co-mortgagor need to be over 60 or 70?
A: No — the exemption looks at the actual borrower's age and the mortgage's federal HECM conformance; co-mortgagors who hold title (e.g., family members after a life-estate deed) don't each need to independently qualify.

Q: What documentation secures this exemption at recording?
A: A mortgagee affidavit affirming federal HECM conformance under 12 U.S.C. § 1715z-20, plus recording the required second HUD mortgage simultaneously with the reverse mortgage.

Q: What if I don't submit this documentation at recording?
A: MRT will be charged based on the full loan proceeds obligation; you can then claim a refund within two years of payment if you later establish the exemption, per 20 NYCRR § 654.1.

Q: Can I rely on this specific opinion for my own reverse mortgage?
A: No. It binds the Department only as to this petitioner and these facts.

Citations and references

Statutes and regulations:

• Tax Law § 252-a.2 (reverse mortgage MRT exemption, state-conformance or federal-conformance routes)
• Real Property Law § 280 (reverse mortgage loans for persons 60+); § 280-a (persons 70+)
• 20 NYCRR § 644.1(b)(17) (reverse mortgages conforming to RPL §§ 280/280-a exempt from MRT)
• 20 NYCRR § 644.1(c)(2) (affidavit documentation required for the state-conformance exemption route)
• 20 NYCRR § 654.1 (two-year refund window for erroneously paid MRT)
• 3 NYCRR § 79.1(b) (Banking Board general regulations inapplicable to HUD/HECM loans)
• 12 U.S.C. § 1715z-20 (federal HUD Home Equity Conversion Mortgage insurance program)

Prior opinions cited:

• The Edna Huff Trust, TSB-A-96(4)R (May 22, 1996) (federal HUD conformance suffices for RPL § 280-a exemption)
• William H. Bradt, TSB-A-04(2)R (July 19, 2004) (similar life-estate/under-60-titleholder facts, but exemption DENIED for failure to establish HUD/HECM conformance)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_2007.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a07_5r.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-07(5)R
Mortgage Recording Tax
October 18, 2007

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M070326A

On March 26, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Jason Jerozal – Primary Land Services, LLC, 368 Veterans Memorial
Highway, Commack, NY 11725. Petitioner, Jason Jerozal – Primary Land Services, LLC,
submitted additional information pertaining to the Petition on May 1, 2007.
The issue raised by Petitioner is whether the recording of a reverse mortgage placed on
certain real property is exempt from the mortgage recording tax (Article 11 of the Tax Law)
based on the exemption provided in section 252-a.2 of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Ms. M, age 62, borrowed amounts from an authorized lender (“Lender”) under a Home
Equity Conversion Loan Agreement and executed a reverse mortgage secured by her single
family residence located in New York State. The reverse mortgage in question was executed
under the United States Department of Housing and Urban Development (“HUD”) Home Equity
Conversion Mortgage (“HECM”) reverse mortgage loan program. As required by the
HUD/HECM program, a first mortgage was executed naming Lender as mortgagee to secure
payments advanced by Lender under the reverse mortgage, and a second mortgage was executed
naming the Secretary of Housing and Urban Development as mortgagee to secure any payments
made by HUD to Ms. M.
As part of this Petition, Petitioner has submitted copies of the
relevant mortgage documents that were executed.
Some time ago, Ms. M deeded her real property to members of her family who are under
the age of 62 and retained a life estate in the property. Ms. M and her family members were co­
mortgagors in the closing of the reverse mortgage transaction. Ms. M is the sole borrower, but
because title to the property is held by others, the other owners also signed the mortgage
documents.
Applicable law and regulations
Section 252-a.2 of the Tax Law provides the following exemption for reverse mortgages:
Reverse mortgages conforming to the provisions of section two hundred eighty or
two hundred eighty-a of the real property law securing obligations of mortgagors or
exempted therefrom pursuant to subdivision four of section two hundred eighty or
subdivision four of section two hundred eighty-a of the real property law shall be exempt
from any tax or fee imposed by this article. In each case where an exemption is claimed
under this subdivision, the lender shall provide documentation in a format approved by

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the commissioner of taxation and finance to enable recording officers to affirmatively
determine when a mortgage being presented for recording is a reverse mortgage
conforming to such provisions of the real property law and entitled to an exemption under
this subdivision. Where such documentation is not furnished, the maximum principal
debt or obligation which shall be the measure of the tax imposed by and pursuant to the
authority of this article in the case of a reverse mortgage shall be the proceeds of the loan
which the authorized lender is obligated to lend the borrower at the execution of such
mortgage or at any time thereafter but determined without regard to any contingency
relating to the addition of any unpaid interest to principal or relating to any percentage of
the future appreciation of the property securing the loan as consideration or additional
consideration for the making of the loan. Provided, however, if subsequent to the
recording of such mortgage, the proceeds which the authorized lender is obligated to lend
the borrower are increased at any time, such new or further indebtedness or obligation
shall be the measure of the tax at such time unless at that time an exemption is applicable
under the first sentence of this subdivision or otherwise.
Section 280(4) of the Real Property Law deals with reverse mortgage loans for persons
60 years of age or older and provides, in part:
The banking board shall adopt those rules or regulations as it considers
appropriate to govern reverse mortgage loans made pursuant to this section. No reverse
mortgage loan shall be made unless it conforms to the requirements of this section and
such rules and regulations as the banking board may adopt except those reverse mortgage
loans made pursuant to section two hundred eighty-a of this article. A reverse mortgage
loan made by any authorized lender, national banking association, federal savings and
loan association or federal credit union in conformity with applicable federal laws and
regulations specifically regulating reverse mortgage loans shall be deemed to conform to
the requirements of this section unless such reverse mortgage loan fails to conform to
such rules and regulations as the banking board has expressly declared to be neither
preempted by, nor otherwise inconsistent with such federal laws or regulations.
Section 644.1(b) of the Mortgage Recording Tax Regulations (the “Regulations”)
provides, in part:
The recording of the following mortgages is exempt from the taxes described in
Part 642 of this Title by reason of express statutory provision relating to such taxes.
*

*

*

(17) reverse mortgages recorded on or after December 2, 1993, which conform to
the provisions of section 280 or section 280-a of the Real Property Law.
Section 644.1(c)(2) of the Regulations provides:

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Whenever an exemption is claimed pursuant to the provisions of paragraph
(b)(17) of this section, at the time the mortgage is presented for recording, the following
documentation must be submitted to the recording officer:
(i) for a reverse mortgage made pursuant to the provisions of section 280 of the
Real Property Law, an affidavit, made in duplicate, signed by the mortgagee, setting forth
the following:
(a) the mortgage is a reverse mortgage given by a mortgagor who is or
mortgagors all of whom are at least 60 years of age;
(b) the reverse mortgage is of real property improved by a one- to four­
family residence or condominium unit that is the residence of the mortgagor or
mortgagors; and
(c) the reverse mortgage conforms to all other provisions of section 280 of
the Real Property Law; and
(ii) for a reverse mortgage made pursuant to the provisions of section 280-a of the
Real Property Law, an affidavit, made in duplicate, signed by the mortgagee, setting forth
the following:
(a) the mortgage is a reverse mortgage given by a mortgagor who is or
mortgagors all of whom are at least seventy years of age;
(b) the reverse mortgage is of real property improved by a one- to four­
family residence or condominium unit that is the residence of the mortgagor or
mortgagors; and
(c) the reverse mortgage conforms to all other provisions of section 280-a
of the Real Property Law.
Section 654.1 of the Regulations provides, in part:
(a) (1) A mortgagor or mortgagee may claim a refund of any of the
mortgage recording taxes paid by them where:
(i) taxes were erroneously paid;…
(2) refund can be claimed by filing an application for refund with the appropriate
documentation attached to such refund claim as described in section 654.2 of this Part.
Such application for refund must be filed within the times set forth below:

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(i) where a refund is claimed for taxes erroneously paid, within two years
of the date the erroneous payment was received by the recording officer ; …
Section 79.1(b) of the General Regulations of the Banking Board (3 NYCRR Part
79), which governs reverse mortgages, provides:
Neither this Part nor Parts 38, 39, 80 or 82 shall apply to any loan which conforms
to the requirements of the Demonstration Program of Insurance of Home Equity
Conversion Mortgages for Elderly Homeowners, also known as the "HUD/HECM"
reverse mortgage loan program, 12 USC §1715z-20.
12 USC §1715z-20 provides, in part:
Insurance of home equity conversion mortgages for elderly homeowners
(a) Purpose. The purpose of this section is to authorize the Secretary to carry out
a program of mortgage insurance designed—
(1) to meet the special needs of elderly homeowners by reducing the effect of the
economic hardship caused by the increasing costs of meeting health, housing, and
subsistence needs at a time of reduced income, through the insurance of home equity
conversion mortgages to permit the conversion of a portion of accumulated home equity
into liquid assets; and
(2) to encourage and increase the involvement of mortgagees and participants in
the mortgage markets in the making and servicing of home equity conversion mortgages
for elderly homeowners.
*

*

*

(c) Insurance authority. The Secretary may, upon application by a mortgagee,
insure any home equity conversion mortgage eligible for insurance under this section
and, upon such terms and conditions as the Secretary may prescribe, make commitments
for the insurance of such mortgages prior to the date of their execution or disbursement to
the extent that the Secretary determines such mortgages—
(1) have promise for improving the financial situation or otherwise meeting the
special needs of elderly homeowners;
(2) will include appropriate safeguards for mortgagors to offset the special risks of
such mortgages; and

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(3) have a potential for acceptance in the mortgage market.
Paragraph 4-4A of section 4235.1 of the HUD Handbook-Revision No. 1 (the
“Handbook”), which covers the HUD approved Reverse Mortgage Program, provides:
A. The borrower’s age. All borrowers must be at least 62 years old when they
sign the Uniform Residential Loan Application (URLA) and the HUD/VA Addendum
(Form HUD 92900-A). The lender should request evidence of the ages of all borrowers,
and accept all reasonable forms of evidence.
Paragraph 4-4C of the Handbook provides, in part:
C. The borrower’s principal residence. The property must be the principal
residence of each borrower, as defined in Paragraph 4-7A of this chapter....
Paragraph 6-6 of the Handbook provides, in part:
Preparation of Security Instruments. The lender must prepare the following legal
instruments (see appendices at the end of this Handbook for mandatory model forms), as
needed for a particular case:
A. Mortgage and note. The lender must provide a copy of the first mortgage and
the appropriate first note (fixed or adjustable rate) for review by the borrower during the
application process (see Paragraph 4-7), but not later than when the borrower signs the
Uniform Residential Loan Application (URLA).
B. Second mortgage and note. The lender must complete a second mortgage and
second note (fixed or adjustable rate) to secure any payments made by HUD to the
borrower. . . . The second mortgage and second note secure any mortgage payment which
might be made by HUD to the borrower in the event that the lender fails to make the
payments under the loan Agreement.
Paragraph 6-10 of the Handbook provides, in part:
Post-Closing Responsibilities. After closing, the lender must:

1. The lender is responsible for ensuring that the first and second mortgages are
   the first and second liens of record, and that other liens do not intervene between the first
   and second mortgage.
2. The second mortgage is not subject to any State or local recording taxes, or
   stamp taxes, because the second mortgage is a mortgage to the Federal government.

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Taxation of the property of the Federal government violates the supremacy clause of the
U. S. Constitution.
However, fees are distinguished from taxes. Recording fees, which are a charge
for a service, may be imposed by the local recording office. Customary and reasonable
fees to record the second mortgage may be collected from the borrower by the
mortgagee.
Opinion
As provided by section 252-a.2 of the Tax Law, reverse mortgages that conform to the
provisions of section 280 or 280-a of the Real Property Law that secure obligations of
mortgagors or are exempt from those provisions pursuant to section 280(4) or 280-a(4) of the
Real Property Law are exempt from the mortgage recording taxes imposed by Article 11 of the
Tax Law.
The Edna Huff Trust, Adv Op Comm T&F, May 22, 1996, TSB-A-96(4)R, addressed the
reverse mortgage exemption pursuant to section 252-a.2 of the Tax Law related to the provisions
of section 280-a of the Real Property Law. The relevant provisions of section 280-a are
substantively the same as section 280, but cover reverse mortgages by persons at least 70 rather
than 60 years of age.
The Edna Huff Trust opinion concluded that, if a mortgage was in conformity with
federal law and regulations addressing reverse mortgages and not inconsistent with any
regulations of the Banking Board, it would be deemed to conform with the requirements of
section 280-a of the Real Property Law and be exempt from the mortgage recording tax under
section 252-a.2 of the Tax Law.
William H. Bradt, Adv Op Comm T&F, July 19, 2004, TSB-A-04(2)R, addressed the
reverse mortgage exemption pursuant to section 252-a.2 of the Tax Law related to the provisions
of section 280 of the Real Property Law. As in the present case, the William H. Bradt opinion
dealt with a reverse mortgage borrower over the age of 60, who deeded the property to her two
children, who were under the age of 60, and retained a life estate in the property. The advisory
opinion found that based on the facts provided, the reverse mortgage did not appear to meet the
federal HUD requirements and it concluded:
Unless it can be demonstrated that the mortgage in this case does actually qualify
under the HUD/HECM reverse mortgage loan program, it would not appear to comply
with section 280 of the Real Property Law. Moreover, since the statements required
under clauses (a) and (c) on the affidavit required by section 644.1(c)(2)(i) of the
Regulations would not be satisfied, the reverse mortgage exemption provided under
section 252-a.2 of the Tax Law would not be available.

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In the present case, the facts and supporting documents submitted by Petitioner
demonstrate that the mortgage does qualify under the HUD/HECM reverse mortgage loan
program. In addition to the first mortgage executed to secure payments advanced by Lender
under the reverse mortgage, a second mortgage was executed referencing the Home Equity
Conversion Loan Agreement and naming the Secretary of Housing and Urban Development as
mortgagee to secure any payments that may be made by HUD to Ms. M. The second mortgage
confirms that the reverse mortgage in question is covered under the HUD/HECM reverse
mortgage loan program pursuant to 12 USC §1715z-20. Since the reverse mortgage is in
conformity with federal law and regulations addressing reverse mortgages and not inconsistent
with any regulations of the Banking Board, it is deemed to conform with the requirements of
section 280 of the Real Property Law and is exempt from the mortgage recording tax under
section 252-a.2 of the Tax Law.
Section 252-a.2 of the Tax Law provides that to claim this exemption the lender should
provide documentation to enable recording officers to affirmatively determine when a mortgage
being presented for recording is a reverse mortgage conforming to section 280 or section 280-a
of the Real Property Law and entitled to an exemption. Section 644.1(c)(2) of the Regulations
outlines the contents required for an affidavit for a mortgage when an exemption is claimed
pursuant to regulation section 644.1(b)(17) and applies to reverse mortgages "which conform to
the provisions of section 280 or section 280-a of the Real Property Law." Therefore, to record a
reverse mortgage that qualifies for exemption because it conforms to the provisions of section
280 or 280-a of the Real Property Law, the affidavits described in section 644.1(c)(2)(i) must be
presented at the time the mortgage is recorded.
However, the provisions of section 644.1(b)(17) and 644.1(c)(2) of the Regulations are
silent with regard to a reverse mortgage that qualifies for exemption because it meets the federal
requirements and is exempt from the provisions of section 280 or 280-a of the Real Property Law
pursuant to section 280(4) or 280-a(4) of the Real Property Law. Accordingly, pursuant to
section 252-a.2 of the Tax Law, other documentation should be submitted to the recording
officer to establish the exemption for a reverse mortgage that is exempt because it meets the
federal requirements. In general, the following documentation is sufficient to establish the
exemption:
1) an affidavit, signed by the mortgagee, affirming that the mortgage is a reverse
mortgage that conforms to the applicable federal law and regulations under 12 USC
§1715z-20 and, therefore, is exempt pursuant to section 280(4) (or, if applicable, section
280-a(4)) of the Real Property Law and exempt from the mortgage recording taxes
pursuant to section 252-a.2 of the Tax Law, and
2) a second mortgage referencing the Home Equity Conversion Loan Agreement
and naming the Secretary of Housing and Urban Development as mortgagee should be
recorded at the same time the reverse mortgage is recorded.

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If this documentation is not submitted at the time of recording, the appropriate mortgage
recording taxes are based on the proceeds of the loan that Lender is obligated to lend the
borrower at the execution of the mortgage plus the amount Lender is obligated to lend the
borrower at any time thereafter as determined pursuant to section 252-a.2 of the Tax Law. As
provided by section 654.1 of the Regulations, a claim for refund of the actual mortgage recording
taxes paid may be submitted to the Tax Department, along with the documentation necessary to
establish the exemption described above, within two years from the date the mortgage recording
taxes were paid to the recording officer.

DATED: October 18, 2007

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.