Posted by Shoshana/AZ on 1/8/13 4:07pm
Msg #449461

CEMA Loans

For all those non-NY notaries, if you ever get a loan that has a CEMA document, be sure to look it over and ask questions of the hiring party. There are some nuances that you should be aware of. I didn't know and they didn't fully explain it, so I made an error. The reason they forgot to explain it is because they don't often send these out of NY.

Reply by MikeC/TX on 1/8/13 4:28pm
Msg #449462

Just curious, what kind of error did you make? As I recall, the only real difference was that there were two notes, a mortgage, and the CEMA document.

Reply by CentralNY on 1/8/13 6:21pm
Msg #449478

Shoshana it would really help if you were more specific?????

I do them all the time. Being vague cannot help the others that may do them.

Reply by MikeC/TX on 1/8/13 6:34pm
Msg #449482

For those unfamiliar with a CEMA (including NY notaries)

CEMA means Consolidation and Extension of Mortgage Agreement. As far as I know, it is unique to NY - the purpose is to legally get around NY's real estate tax laws.

NY has a tax on mortgages. If you take out a $300,000 mortgage to buy a home, you pay a tax on that amount. If you later refinance, you are expected to pay that same tax on the full amount again.

Enter the CEMA - it is designed to limit the tax you have to pay on a refinance to only the difference between the original mortgage and the amount you are refinancing. In order to do this, however, there are some financial gymnastics required that are worthy of Cirque de Soleil....

As a result, the package includes multiple mortgages and notes with conflicting dollar amounts, and the CEMA. Do not panic. The BO doesn't have two different loans - the CEMA ties everything together.

If you are a NY notary who has never seen a CEMA, do yourself a favor - do some research and educate yourself on these, because if you are actively signing loans you WILL see one of these puppies eventually. I handled two dozen or so while I was in NY, so they are not uncommon.

Notaries outside NY could probably benefit from a little research also, because it's possible you may be signing someone with property in NY who is trying to take advantage of the tax benefits that a CEMA provides. It is definitely not pretty and very confusing, but if you understand the purpose and the process, it's easier to explain to a BO.

Reply by Saul Leibowitz on 1/8/13 8:18pm
Msg #449501

Re: For those unfamiliar with a CEMA (including NY notaries)

Last summer I got a call for GNW and part of it involved CEMA and tax forms for a partial sale of an interest [or is it really a sale of a partial interest] between parties in a NY State investment property and also a residence. IT WAS NOT FUN!
The sellers, relocated to Illinois previously, were very nice, we, as a friend of mine would say, "doped it out," and had a small glass of wine before I left.
Fortunately there were some instructions and the buyers were handling everything else when they got the package back.
Mike, thanks for the nice explanation.

Reply by Yoli/CA on 1/8/13 9:25pm
Msg #449512

Re: For those unfamiliar with a CEMA (including NY notaries)

That's a great description, Mike!

Had one about 4 years ago. Like Saul said, "NOT FUN!!" That's been the only 1. But, it was a learning experience. Thankfully, signers were very nice and understanding.

Hiring company was of NO help. Looking at SC now, guess I should be happy they paid me and never called me again.

Reply by VT_Syrup on 1/8/13 9:13pm
Msg #449511

Re: For those unfamiliar with a CEMA (including NY notaries)

Thanks. If I climb the hill across the street, I can see NY State, so this information might come in handy.

Reply by Shoshana/AZ on 1/8/13 9:30pm
Msg #449514

Thanke, Mike

I will research this further.