If you are refinancing in New York, your lender or attorney may mention a CEMA. It is a New York structure that does not come up in most other states, and it changes what your signing looks like.
What CEMA stands for
Consolidation, Extension and Modification Agreement. Instead of paying off your old mortgage and recording a brand-new one, your old lender assigns the existing mortgage to your new lender. The new lender then consolidates it with a mortgage for any additional money you are borrowing, and the two are modified into a single loan on new terms.
Why borrowers do it
New York charges a mortgage recording tax when a mortgage is recorded. With a CEMA, the tax is generally owed only on the new money, not on the balance you are carrying over from the existing mortgage. On a large balance that can be a meaningful saving. Rates vary by county, so the size of the saving depends on where the property is.
Whether a CEMA is worth it for you is a question for your attorney and lender. Old lenders charge fees to assign the mortgage, attorneys charge for the extra work, and it takes longer to arrange.
What it does to the signing
A CEMA package carries documents a standard refinance does not have, such as:
- The consolidation agreement itself, with the consolidated note and mortgage attached
- A gap note and gap mortgage for the new money, when there is any
- Affidavits supporting the recording tax treatment
- Assignment documents tracing the old mortgage to the new lender
More documents means more signatures, more notarizations, and more places for something to be missed. Expect the appointment to run longer than a standard refinance, and expect your signing agent to be slower and more deliberate than you might like. That is the job.
How to make a CEMA signing go smoothly
- Block extra time. Do not schedule it for the half hour before you leave for work.
- Have every borrower present with current ID.
- Review your Closing Disclosure beforehand and send questions to your loan officer or attorney before the appointment.
- Sign exactly as your name is printed. Recording offices are particular.
For title companies and attorneys
CEMA packages are quoted rather than billed at the base signing rate because of their size. If you need a signing agent who has the patience for them, see the loan signing agent page or the page for title companies and law firms.
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