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For years, each time a client in New York State decided to refinance their home, they would pay a state mortgage recording tax on the entire new loan amount.

But living in the Empire State shouldn’t have to mean paying a lot of taxes to refinance your empire. Thankfully for residents of New York, there’s a workaround when it comes to refinancing. It’s called a CEMA loan.

CEMA Meaning

Instead of paying thousands of dollars in taxes, clients can obtain a Consolidation, Extension and Modification Agreement, or CEMA, loan. Rocket Mortgage® is pleased to offer CEMA loans to residents of New York State because clients only have to pay taxes on the amount of the new loan that is above and beyond their current unpaid principal balance, such as closing costs or cash-out.

What Is A CEMA Loan?

CEMA loans are only available on conventional, jumbo and FHA refinances. VA loans are not available.

The CEMA loan can help to reduce the amount of money a borrower pays in New York State mortgage taxes. Here’s an example:

  • Loan amount = $300,000
  • Financed closing costs = $8,000
  • County tax rate = 2.05%

Without CEMA: Loan amount of $300,000 x 2.05% tax rate = $6,150 total tax

With CEMA: Financed closing costs of $8,000 x 2.05% = $164 total tax + CEMA fees

Qualifying For A CEMA Loan

The most immediate requirement for a CEMA loan is to be a New York State resident. CEMA loans are also primarily used for refinancing, but it is possible to buy with one as well in some circumstances.

Most types of houses and living situations can qualify for a CEMA loan, except for co-ops. New York State doesn’t collect mortgage taxes on co-ops, as co-op personal shares aren’t considered real estate.

Finding a lender that offers CEMA refinancing can be difficult, and you should make sure that the lender you choose offers it.

As mentioned above, Rocket Mortgage offers CEMA refinancing for those who qualify.

What You Need to Know About CEMA

A CEMA loan can save you a lot of money in refinance costs in New York State. However, it’s important to know what to expect in terms of fees and closing times.

Understanding CEMA Fees

One thing to note is that CEMA loans have some additional fees involved that could make it less advantageous. Fees vary for individual loans, but can range from a few hundred to a few thousand dollars, which typically covers CEMA assignment fees, closing fees and processing fees. If the CEMA fees totaled $1,120 in the example above, the homeowner would clearly benefit from using a CEMA loan.

However, it’s important to note that CEMA loans may not always be a good fit, as tax rates and attorney fees vary, meaning that a non-CEMA loan may be less expensive in the long run. But most clients looking for cost-effective refinancing should find that a CEMA loan makes perfect sense.

Longer Closing Times

While a CEMA loan does save you money in many cases, it’s not necessarily the quickest process. The state of New York, and any previous lender, must do some special signing off in order to get the mortgage and title transfers processed under CEMA regulations, allowing you to pay taxes only on the new money in the transaction rather than the full principal balance.

This means that CEMA refinances are going to require a little more patience than your typical refinance. It may take 60 – 90 days to close your loan. However, they’ll keep you updated throughout the process.

If for some reason you really need your loan to close quickly, you can take a look at other refinance types. Just be aware that you could pay additional taxes in exchange for that speed.

The Bottom Line: Is A CEMA Mortgage Right For You?

If the Empire State is your home, and you’d like to keep it that way, a CEMA loan could save you some valuable cash when refinancing. It may take some additional steps and the process may last a little longer than a traditional refinance, but the savings in the end can more than make up for that.

Whether you’re choosing a CEMA loan or another refinancing option, get started today with Rocket Mortgage or call (800) 442-4383.

This Post Has 21 Comments

  1. Hello
    Could you please provide the name and email or tel# of the attorney or a person who deals with CEMA? Thank You.

    Vasant Raja

    1. Hello Vasant,

      If you want to inquire about a CEMA loan, I suggest contacting one of our Home Loan Experts at (800) 785-4788. If that’s not what you’re looking for, please let me know and I will see if can point you in the right direction.

      Thank you.

      1. I called the number as above. The mortgage expert could not tell me for sure if CEMA can be done. But she insisted on submitting an application. I want to submit but after I get full assurances that CEMA is possible.

        1. Hi Vasant:

          I’m going to get this to our Client Relations team to look into what you were told on your call in order to further research your situation. Thanks for reaching out!

  2. If my current mortgage is with another company, but I want to refinance through Quicken Loans, is a CEMA Loan still possible, or does it only apply when using the same mortgage company that provided the original loan?

  3. Let’s get something straight —- QUICKEN LOANS is not the entity that is offering the program. It’s the state of NY, and this is handled by title companies as long as they know how to calculate the fees accurately. The lender has nothing to do with it. All mortgage companies should be submitting their customers’ loans for CEMA review so that title fees (which includes transfer taxes) can be reduced. It’s all based on the loan amount as well. Thanks!

    1. Hi Anna:

      I understand what you’re saying. While it’s possible for every lender and title company to offer this program, they may not all do it. These loans can add time to the closing and some lenders and title companies are not set up to deal with that. We are merely saying this is an option we offer for our clients.

  4. If I don’t have enough time to wait for cema to process can I claim the amount I shouldn’t have paid on my taxes or is there something I could do? It doesn’t make sense I have to be penalized because of a slow turn around time. thank you

  5. Two questions:

    1. Does the mortgage tax exemption apply to outstanding HELOC balances, or only mortgage balances? Does it make any difference if the HELOC was used for construction of improvements to the residential structure?

    2. In order to obtain the CEMA mortgage interest exemption, does the CEMA/refinance have to be with the same lender who hold the current mortgage, or does it apply to any new lender?

    Thank you.

    1. Hi George, I’ve shared your inquiry with one of our home loan experts who will contact you soon to answer your questions. Thanks and have a great day!

  6. Are CEMA refinances used only for cases where the new loan is greater than the existing loan? I plan to refinance my current mortgage and pay down the existing balance, reducing the loan amount by $30k. Additionally, I plan to pay for my closing cost out of pocket to further reduce the principal amount.
    Thank you for your advice.

    1. Hi Lynda, thanks for reaching out to us, I have forwarded your inquiry to one of our home loan experts who will contact you to answer your questions and see if we can be of assistance. Have a great day.

  7. I was recently turned down for an equity loan from Quicken Loans®. Would I possibly qualify for a CEMA loan? I’d appreciate it if you could review the recent application that was submitted for the equity loan, and let me know if you would fund a CEMA loan instead.


    Nicholas Dianto

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