A Consolidation, Extension, and Modification Agreement (CEMA) represents a strategic financial maneuver in the realm of real estate transactions, particularly in New York. This agreement is initiated when your new lender assumes the mortgage from your current lender, effectively modifying the terms of your mortgage to align with your new interest rate, maturity date, and loan agreement. Navigating a CEMA is a complex process, typically requiring the expertise of a seasoned real estate attorney. However, the potential financial benefits are substantial, as this strategy can lead to significant savings by not recording these savings into the outstanding principal balance of your mortgage, thereby impacting the amount of taxes you owe.
To determine if a CEMA is a viable option for you, consider the following criteria:
If you believe a CEMA could be beneficial in your situation, it’s crucial to bring this up with the seller at the earliest opportunity. Ideally, your intention to pursue a CEMA should be included in your initial offer to circumvent protracted contract negotiations. It’s important to note that while a CEMA can reduce transfer taxes in New York, many sellers may still expect to share the mortgage recording tax savings with the buyer. If you prefer not to split these savings, ensure this is clearly stated in your offer.
Be mindful that mortgage taxes may still be applicable on the amount that exceeds the outstanding principal balance. Despite this, a CEMA can offer considerable cost savings, especially in states like New York where such savings can be significant.
Considering a CEMA for your real estate transaction? Our team at Empire is equipped with the experience and knowledge to guide you through this process. Contact us today to learn more about CEMAs or to initiate your order. Let us help you navigate this opportunity and maximize your financial benefits.
