Real Estate Finance
A NY mortgage device used in refinances and assumptions to reduce mortgage recording tax by paying tax only on 'new money.'
A CEMA combines a borrower's existing mortgage balance with new financing into a single consolidated mortgage. Without a CEMA, mortgage recording tax would apply to the full new loan amount. With a CEMA, tax applies only to the difference between the existing balance and the new loan (the 'new money'). Example: existing balance $300,000, new loan $400,000 — without CEMA, MRT on $400,000; with CEMA, MRT only on $100,000. CEMAs require cooperation from the existing lender (often through assignment of the original mortgage to the new lender). Widely used in NYC refinances given the high MRT rates.
Exam Tip
CEMA = save MRT on the existing balance; pay only on 'new money.' Standard practice in NYC refinances. Requires existing-lender cooperation.
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Real Estate Finance
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