What Is New York CEMA Loan And What Are Its Requirements

By: ROS Team

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New York City is dubbed as the cultural, financial as well as political capital of the global world. It is among the most populous megacities of the world and is the densest city in the United States. No matter where you belong, you dream to set your feet in the streets of New York and no one doubts the credibility when it is described as the land of opportunities.

Unlike many cities, New York is not the tax haven for investors. While contrary to it, it is one of the heavily taxed surrounding in America.  Though there are several tax benefits for home buyers.

New York State levy Mortgage Recording Tax on purchasing a property or refinancing it. Given the facts, for loans under $500k, the rate is 2.05% and it reaches 2.175% for loans higher than $500K.

To own a home in New York City is a real treat and to get around the tax is certainly not possible. However, CEMA comes to help people who aim to get some relief in the tax and have a breathing space.

Do you Know What a CEMA Loan Is?

CEMA is an acronym for the Consolidation, Extension, and Modification Agreement. These words pretty much tell the whole story about CEMA. CEMA loan works in a way as it offset your previous loan by taking a new loan.

In exceptional cases, a CEMA loan may be used to purchase a property.

Who Can Benefit From CEMA?

The opportunity is only available to the new Yorkers and only they can take full advantage of it. As the CEMA is dealing with Recording Tax, therefore, it does not apply to the co-ops, because co-ops are not considered as real property.

Additionally, if you have a VA loan, then you do not qualify for CEMA.

Advantages of CEMA Loan?

The advantage of CEMA loans comes into play when you are planning to refinance your property. You may ask your existing lender or even a new lender to refinance your property. When you refinance it through CEMA you save full or partial tax by consolidating both the loans and paying tax only on the difference of both.

Requirements for the CEMA Loan:

CEMA loan applies to those who own a property and planning to refinance it. In other words, you have to own a property to avail of CEMA.

The first step to moving forward is the willingness of your existing lender. It is subject to its consent that you may pursue the loan further.

And if you get the approval, the next step is to take the acceptance of your new lender, in case you are not working with the existing lender. And working with a new lender may cost you an additional fee, as well.

Another prerequisite is to get your seller to agree to your idea of getting benefits from CEMA.

Working with the existing lender for refinancing saves you a lot of trouble as getting a new financer and taking their consent for CEMA is sometimes becomes a cumbersome process.

So, it is advised to those who aim to seek this opportunity that let your lender know at the earliest so you may save up your time.

The Flip Side of CEMA:

The flip side of CEMA is the long process of getting this offer. It may take longer to get your process complete with CEMA than a conventional loan.

Another limitation is that co-op shareholders are not eligible for CEM loans. They can’t take advantage of it as they are not the real owners of their property rather just shareholders.

It may take from 30 to 90 days to see the culmination of your CEMA loan. If time is the issue, then you might reconsider your idea.

In case of confusion, it is suggested to consult the layer or a professional firm when considering to avail CEMA.


In nutshell, the idea behind the CEMA is to save property owners from more taxes. CEMA helps in a way that it adds your existing loan with the new loan and the difference of both the loans is subject to tax only. All property owners can take benefit from it. The only drawback is the long process it takes to complete the whole process. But the advantage of CEMA outweighs the disadvantage and you are in a win-win situation.

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