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CEMA Mortgage: What You Should Know

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For most homeowners and home buyers, CEMA may look like another acronym floating around in the alphabet soup that is real estate lingo.

If you’re not a New Yorker, you may have never heard of CEMA because it’s only available to New York homeowners and home buyers. If you are a New Yorker, whether you’ve heard of it or not, a Consolidation, Extension and Modification Agreement (CEMA) can potentially help you save a significant amount of money on your mortgage costs.

Whether you’re looking to refinance your home or you’re an aspiring home buyer looking for answers, we’ll take a deep dive into CEMA and how you can use it to your financial advantage.

What Is a CEMA Mortgage Loan?

A Consolidation, Extension and Modification Agreement (CEMA) loan is only available to residents of New York State and is used to pay less on mortgage recording taxes. When you refinance your property with a CEMA loan instead of a traditional loan, you can potentially save thousands of dollars.

A CEMA loan involves transferring an existing mortgage from one lender to another lender. And rather than paying mortgage recording taxes on the new mortgage, home buyers only pay mortgage recording taxes on the difference between the unpaid principal balance of the existing mortgage and the amount of the new loan, often resulting in considerable savings.

So, what’s the mortgage recording tax?

New York State applies mortgage recording taxes when you register or record a mortgage on a new or existing property purchase.

The mortgage recording tax rate is a percentage of the loan amount. The rate ranges from 0.75% in some counties to 2.175% for mortgages over $500,000 in New York City.[1] The rate depends on the county the property is in and whether the property is in New York City or Yonkers.

A CEMA loan can be used by new home buyers, but it’s more commonly used by homeowners who want to refinance their existing mortgages (more on that later).

How Does CEMA Work?

If a borrower traditionally refinanced, paying off one mortgage to take out another mortgage, they would pay mortgage recording taxes on the entire amount of the new mortgage. A CEMA loan consolidates an existing mortgage with a new mortgage, and the borrower only pays taxes on the remaining principal. In short, CEMA saves the borrower on taxes.

It’s also important to understand what types of loans qualify for CEMA. Federal Housing Administration (FHA) jumbo loans and conventional mortgages qualify for CEMA. You can use CEMA to get a break on mortgage recording taxes for houses, townhomes and condos, but not co-ops. Some loans, like Department of Veterans Affairs (VA) mortgages, don’t qualify for CEMA.

How much money can you save with CEMA?

Let’s look at how much you can save with a CEMA loan.

Let’s say you have a principal balance of $200,000 on your existing mortgage and use a CEMA loan to refinance with a new lender for $300,000. You’d only pay the mortgage recording taxes on the $100,000 difference.

  • Existing mortgage: $200,000
  • New mortgage: $300,000
  • County tax rate: 1.8%
  • Mortgage recording taxes with CEMA: $100,000 x 1.8% = $1,800 + CEMA fees[2]
  • Mortgage recording taxes without CEMA: $300,000 x 1.8% = $5,400

In our fictional scenario, using a CEMA loan results in $3,600 in savings on mortgage recording taxes. Keep in mind that you’ll also be responsible for any applicable closing and CEMA fees, which can vary based on the loan.[2]

How Do You Qualify for a CEMA Loan?

To qualify for a CEMA loan:

  • You must be a New York State resident, and the property must be located in New York State.
  • The property can’t be a co-op because co-ops aren’t subject to mortgage recording taxes.
  • You must find a lender that offers CEMA loan refinancing.
  • If you’re buying a new home with an existing mortgage, the seller (whose mortgage you’re assuming), the existing lender and the new lender must agree to the CEMA.

What Are the Pros of CEMAs?

The main pro of a CEMA loan is its cost-saving benefit. Because you only pay mortgage recording taxes on the unpaid principal balance minus the new loan amount, and not the entire mortgage loan amount, you can potentially save thousands of dollars.

In New York City, the mortgage recording tax rate increases for mortgages over $500,000. The larger your new mortgage is, the more money you’ll save.

In Q4 of 2021, the median home price in the New York-Newark-Jersey City metropolitan area was around $561,000, and homes over $1 million can be the norm, not the exception.[3] If you’re purchasing a home with a lot of equity (for example, a home is worth $2 million and the remaining mortgage balance is $1.8 million), you can save a lot of money using a CEMA loan to purchase or refinance the property.

When used strategically, CEMAs can accomplish goals that are similar to traditional refinancing. When you refinance your property with CEMA, you can lower the interest rate, access extra cash from the property’s equity with a cash-out refinance or adjust the loan’s terms to better suit your needs.

CEMA can also help you save money when you’re buying a new home. In some cases, the seller can reassign their mortgage to you and your lender. This buying option, also known as a purchase CEMA or mortgage assignment, allows you to pay a reduced mortgage recording fee for the new property.

Does CEMA Have Any Cons?

While CEMA can save you money on taxes, it does come with drawbacks.

The process is less straightforward than the traditional refinancing process because you’ll need to get approved to transfer the mortgage (sometimes called a reassignment approval).

The original lender has to approve the transfer, and depending on the lender, this (as well as other parts of the CEMA process) could result in fees. Lenders may charge a flat amount or a percentage of the loan amount for any fees, so it’s worth looking into the cost of fees before you decide on a CEMA loan.

Spoiler alert: Lenders that offer CEMA are hard to find. And it can take anywhere from 30 – 90 days to get a CEMA loan.[4]

When Should You Refinance with CEMA?

The average amount of time it takes to close on a CEMA is about 6 weeks, so budget for plenty of flexibility in your schedule when you refinance with a CEMA. Talk to your lender as soon as possible to get started on the CEMA application and approval process.

Before committing to a CEMA loan, it’s important to keep the loan’s fees in mind, but you should also consider how much you’d save with a CEMA loan versus a traditional refinance. If you’re refinancing with a significant portion of unpaid mortgage principal, you may not save enough money to justify paying the lender and other fees.

If you have questions about fees, savings or anything else related to your mortgage, check in with your lender.

See More Savings With CEMA

If you’re living in New York State and are looking to refinance your home, a CEMA loan might be just the thing to help you avoid costly mortgage recording taxes and get better terms or rates on your new mortgage.

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The Short Version

  • A Consolidation, Extension and Modification Agreement (CEMA) loan is only available to New York State residents and is used to save on mortgage recording taxes
  • New York State applies mortgage recording taxes when you register or record a mortgage on a new or existing property purchase
  • When you refinance your property with a CEMA loan instead of a traditional loan, you can potentially save thousands of dollars
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  1. New York State Department of Taxation and Finance. “Mortgage recording tax.” Retrieved March 2022 from

  2. New York State Department of Taxation and Finance. “Mortgage recording tax return.” Retrieved March 2022 from

  3. National Association of REALTORS®. “Median Sales Price of Existing Single-Family Homes for Metropolitan Areas” Retrieved March 2022 from

  4. Rocket Mortgage®. “CEMA Loans: Everything You Need To Know.” Retrieved March 2022 from

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