The expert says it is a securities agency that wants to promote a mortgage tax product and recommend to potential refinancing clients in New York, what the agency calls a „mortgage tax guarantee.“ In particular, the proceeds would ensure that a homeowner who refinances his or her home loan but is not eligible for consolidation, modification or extension of the loan would only pay mortgage tax on an additional mortgage amount borrowed by a lender. The expert provides the following example: Before blocking your rate, we recommend that you speak to your credit officer to confirm that a CEMA is right for you and to evaluate your options. Our bank lawyer will send documents to your current lender for verification and approval, a precondition for obtaining a CEMA Finally, the type of transaction proposed here is inherently suspect, since the new lender and securities agent would probably be aware at the time of approval of the loan by the new lender, but before the conclusion of the loan. Mortgagor is allowed to consolidate or not. modify or extend an existing mortgage. In other words, both the securities agent and the lender would probably know, prior to the closing of the loan, whether or not Mortgagor is subject to full mortgage tax under the New York Tax Act. As a result, the legal representative, the lender and the security company could perhaps only propose the proceeds of the mortgage tax to mortgage agents eligible for mortgages under Tax Act 255, thereby ensuring that the third-party guarantee company would never pay a debt. Once you have completed a refinancing application with Better Mortgage, your application will automatically be converted to CEMA. At first, the product is called a „guarantee,“ but the product is actually a guarantee. A warranty is somehow about the nature or effectiveness of a given product sold and does not cover a hazard that has nothing to do with the manufacture or quality of such a product. On the other hand, a guarantee is the obligation that the amount payable be paid or that the guaranteed services are provided.
A warranty relates directly to the content and purpose of the transaction. Ollendorff Watch Co. v. Pink, 279 N.Y. 32 (1938). This publication is intended to provide general information. It is not intended to provide tax, legal or other advice and should not be used. The expert also indicated that consumers would be informed of the new lender about the product and that the new lender would recommend a securities agency and the Agency`s ability to offer the product to the third-party guarantee company. If the consumer chooses to purchase the warranty, they would pay a single non-refundable service fee to the third-party warranty company. This fee would be due at the time of purchase of the guarantee and not to the conclusion of the loan. Example: Mary owns a $1,000,000 home and owes $200,000 for her mortgage. She wants to access $50,000 of her own equity and get a repayment refinancing, so her new credit balance is 250k.
Assuming Mary`s mortgage tax is 2%, she will only pay with a CEMA mortgage tax on 50k (or $1,000 in tax).