Explanation

• New York State imposes a mortgage tax on borrowers purchasing a home. According to Title 11, Chapter 26 of the Administrative Code in New York, a tax of a specified percent of the borrowed amount is charged. This tax is imposed on any home purchased in the state, and the percent of tax varies by county.
  
  

Purpose

• A Consolidation and Modification Agreement is designed to avoid the payment of this imposed tax. Not all banks in New York, though, honor this agreement.
  
  

Options

• Borrowers avoid this tax several ways. The first option is through an exemption from Title 11, Chapter 26 of the Administrative Code, allowing borrowers the option of paying the mortgage tax on only the difference between the new loan amount and the principal of the old loan. This is used when a borrower sells a house and purchases a new one. The other option is through CEMA. This method consolidates the new loan with the previous one. It also extends the term of the new loan and modifies terms of the previous loan.