Our firm has recently begun representing a lender based out of Florida State for residential mortgage closings.  The first refinance we closed with this new lender was for a $1.2 million dollar mortgage which at the time was held by the same lender.

Our firm requested we close this mortgage with a Consolidation, Extension and Modification Agreement (CEMA).  A CEMA would allow the borrower to avoid paying mortgage tax by modifying a mortgage note to become an extension of the original note for which mortgage tax was previously paid.  When a CEMA is completed, the customer will only pay mortgage tax on the difference between the existing mortgage and the new mortgage (the new money) and not the tax on the entire amount of the new loan.

In this particular case, the borrower was paying down his old loan; therefore there was no new money.  A CEMA would allow the borrower to close and pay $0 New York State mortgage tax.  If we did not close with a CEMA the borrower would pay $23,070.00 in New York State mortgage tax.

Since this particular lender was not familiar with New York State law concerning mortgage tax they were apprehensive to close as a CEMA and initially denied this request.  Without a CEMA, the borrower was going to close with another lender or not close at all.

Adam Leitman Bailey, P.C. worked with the lender’s legal team to prepare all of the correct CEMA documents.  We explained the entire process in depth and advised the lender that this is a common New York tansaction which would benefit their customer.  Our main goal was to assure our client that there would be no negative effects to this transaction and that they could proceed with comfort.

Adam Leitman Bailey, P.C.’s efforts enabled the borrower to close without paying the mortgage tax and introduced the benefits of CEMA to the lender, who can now offer the CEMA process at future closings.  Both our client and the borrower were extremely grateful for this opportunity.