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New York CEMA Refinances.

New York – A state like no other – The CEMA

New York likes doing everything a bit differently than other states. Refinances are no different. As a general rule, a borrower looking to refinance a mortgage in New York is required to pay a mortgage tax on the full amount of the new loan, regardless of the type of loan.

But have no fear. There is a way to lower or even eliminate the mortgage tax. Enter a CEMA. A Consolidation, Extension and Modification Agreement is the method used to only pay mortgage tax on the new portion of the loan beyond the unpaid principal balance on the existing loan. An example:

New Loan Amount: $250,000
Existing Principal Balance: $200,000
Taxable “New Money”: $50,000


Straight Refinance

$5,095 mtg tax
    • Loan Amount $250,000
    • Taxable Amount = Loan Amount
    • County: Queens
    • Borrower Pays: $4,470
    • Lender portion: $625


$995 mtg tax
    • Loan Amount $250,000 / Principal Balance $200,000
    • Taxable Amount $50,000
    • County: Queens
    • Borrower Pays: $870
    • Lender portion: $125

A CEMA is a popular, legal and legitimate method to reduce the mortgage tax on refinances. While the details of it are a bit complicated to explain in a couple of paragraphs, the overall process involves Consolidating your existing mortgage with the new one. The existing mortgage is Extended and Modified to match the terms of the new loan by way of an Agreement that is signed at the closing.

There are many variables that go into whether a CEMA can be done and what fees will be involved. Much of it depends on the type of loan taken out previously as well as what current servicer’s policy is. Please contact us today and discuss your options. We’re always happy to offer free advice.

We offer various on-site training sessions to lenders to help educate your teams on the details and intricacies of CEMA processing. The more knowledgeable your teams are, the faster and smoother the transaction will close.
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