N.Y. Real Prop. Acts. Law § 275

§ 275. Certificate of discharge of mortgage required. 1. Whenever a\nmortgage upon real property is due and payable, and the full amount of\nprincipal and interest due on the mortgage is paid, a certificate of\ndischarge of mortgage shall be given to the mortgagor or person\ndesignated by him or her, signed by the person or persons specified in\nsection three hundred twenty-one of this chapter. The person signing the\ncertificate shall, within thirty days thereafter, arrange to have the\ncertificate presented for recording to the recording officer of the\ncounty where the mortgage is recorded. Failure by a mortgagee to present\na certificate of discharge for recording shall result in the mortgagee\nbeing liable to the mortgagor in the amount of five hundred dollars if\nhe or she fails to present such certificate within thirty days, shall\nresult in the mortgagee being liable to the mortgagor in the amount of\none thousand dollars if he or she fails to present a certificate of\ndischarge for recording within sixty days and shall result in the\nmortgagee being liable to the mortgagor in the amount of one thousand\nfive hundred dollars if he or she fails to present a certificate of\ndischarge for recording within ninety days. For the purposes of such\nliability under this subdivision, the term "mortgagee" shall not include\na person, partnership, association, corporation or other entity which\nmakes less than five mortgage loans in any calendar year. The provisions\nof this section shall not apply to any mortgage granted to or made by\nthe state of New York, or any agency or instrumentality thereof or any\npolitical subdivision of the state or any agency or instrumentality\nthereof.\n 2. (a) For purposes of this section, the full amount of principal and\ninterest due on a mortgage shall not be considered to be paid whenever\nsuch mortgage continues to secure a bona fide debt and an enforceable\nlien continues to exist, such as may occur in the following situations:\n (i) the commercial practice of lenders trading or selling mortgages on\nthe secondary market;\n (ii) the replacement of a construction loan with permanent financing;\n (iii) the refinancing of an existing loan with a new lender, such as\nwhere the original lender assigns a note and the mortgage securing its\npayment to another lender in return for consideration and such mortgage\nis consolidated with another mortgage which secures any funds advanced\nby the new lender to the mortgagor;\n (iv) the modification of the terms of a loan by a mortgagor and\nmortgagee in order to avoid foreclosure; and\n (v) a refinancing that occurs in conjunction with the sale of property\nsuch that the seller conveys property to the purchaser subject to the\nlien of the mortgage and the original lender assigns its note and\nmortgage on the property to the purchaser's lender.\n (b) No mortgagee shall return, destroy, or otherwise refuse to accept\na payment made pursuant to the terms of a payoff letter, including but\nnot limited to terms regarding the location and the manner of payment\nspecified by the mortgagee, even if such payment does not cover the full\namount of principal, interest, and any other amounts due and owing under\nthe mortgage, provided, however, if there is a defect with the payment\nthat prevents the mortgagee from identifying with reasonable diligence\nthe mortgage for which such payment is made, the mortgagee may refuse to\naccept such payment and return the payment to the remitter. The\nmortgagee shall apply such payment to the unpaid principal, interest or\nany other amounts due under the mortgage, provided that a payment made\npursuant to a payoff statement shall not result in the issuance of a\ncertificate of discharge of mortgage pursuant to subdivision one of this\nsection or in the execution of a satisfaction of mortgage pursuant to\nsubdivision one of section nineteen hundred twenty-one of the real\nproperty actions and proceedings law unless the payment covers the full\namount of principal, interest, and any other amounts due and owing under\nthe mortgage.\n 3. Except with respect to the assignment of a mortgage in connection\nwith a transaction described in subparagraph (i) of paragraph (a) of\nsubdivision two of this section, in order to record an assignment of a\nmortgage there must be set forth in the assignment document or attached\nthereto and recorded as part thereof a statement under oath signed by\nthe mortgagor or any other party to the transaction having knowledge of\nthe facts (provided such other party asserts such knowledge), that the\nassignee is not acting as a nominee of the mortgagor and that the\nmortgage continues to secure a bona fide obligation. With respect to the\nassignment of a mortgage in connection with a transaction described in\nsubparagraph (i) of paragraph (a) of subdivision two of this section,\nsuch assignment shall contain the following statement: "This assignment\nis not subject to the requirements of section two hundred seventy-five\nof the Real Property Law because it is an assignment within the\nsecondary mortgage market."\n