“I am refinancing or selling my home, what is a Mortgage CEMA?”

A CEMA, Consolidation, Extension, & Modification Agreement is an agreement between your existing Lender and your New Lender to combine two or more loans into a new, consolidated loan to save money on Mortgage Tax in New York State. A CEMA can only be completed on a first loan covering one to three-family houses, including individual condominium units, but not on coops since they are not real property (and there is no mortgage tax on a coop loan).

If the borrower is refinancing their current first mortgage and has already paid the New York State mortgage tax, doing a CEMA will allow the borrower to pay the NYS mortgage tax only on the additional loan amount exceeding what was originally borrowed. Therefore, rather than paying the full mortgage tax on your entire loan amount again, instead you are only paying the tax on the difference between your new loan amount and your original loan amount which may amount to huge savings. Note there may be some additional fees and timing considerations when requesting a CEMA that you should discuss with your attorney and lender.

Example: If you have a $300,000.00 mortgage and refinance with a $450,000.00 mortgage in Brooklyn, you would normally have to pay a tax of $8,100.00, but with a CEMA you only pay mortgage tax on the new money of $150,000.00 in the amount of $2,700.00.

If you are selling your home, and your buyer is getting financing then your loan may be able to be assigned to your buyer for a significant mortgage tax savings that the seller and buyer can split after the fees are paid for a win-win for all!

If you are interested in buying, selling, or refinancing please reach out and I would be happy to answer any questions you may have and help you get started!

• Katherine Kokkosis, Esq. is a Senior Associate in our REO/Transactions Department.  Please contact her with any questions!