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The Purchase CEMA

By Rosemary Liuzzo Mohamed


For years a Consolidation, Extension and Modification Agreement (CEMA) has allowed NY State homeowners to save thousands of dollars on New York State Mortgage tax when refinancing.

Recently, Adam Leitman Bailey, PC has been teaming up with major Lenders to extend the benefits of a CEMA to borrowers who are purchasing.  The Purchase CEMA is great way for the borrowing purchaser to save thousands of dollars in mortgage tax and for sellers to increase the sales of their homes in NY State.

The amount of mortgage tax paid in NY State differs in each county.  For example in the 5 boroughs on a mortgage in the amount of $450,000.00 a purchaser would pay $8,070.00 in mortgage tax.  By utilizing a Purchase CEMA the purchaser could pay an extremely smaller amount in tax or no tax at all.  How does this work?

If the seller of a home has a mortgage balance of $350,000.00 the purchaser would only pay mortgage tax on the difference between the new loan amount ($450,000.00) and the sellers unpaid balance ($350,000.00) which is $100,000.00.  Now, instead of paying $8,070.00 in mortgage tax the purchaser pays only $1,770.00.

Even better, if the seller’s current mortgage balance is $500,000.00 the purchaser would pay $0.00 mortgage tax since the new loan amount of $450,000.00 is lower than the unpaid balance of the seller’s loan.

There are extra closing costs associated with a Purchase CEMA ranging from $1,000.00 to $1,500.00.  A purchaser’s attorney will analyze these costs against the savings and if it is still beneficial we will move forward.

As long as all parties are on board, the purchaser’s new lender, seller’s current lender, and the title company, a Purchase CEMA can be a great way for purchasers to save money and for seller’s to increase their sales.

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS