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New Law Makes the Rules regarding Welfare Mortgages Clear and Provides Transparency and Accountability

September 9, 2014

Author: Susan C. Antos

The 2014-15 New York State budget contains Article VII legislation that amends SSL 106 to clearly state that HEAP, child care and SNAP cannot be charged against welfare mortgages.  Although this was true before the law was amended, the rules appeared only in regulation and sub-regulatory materials resulting in errors in the calculation of these mortgages.  The errors have been particularly egregious since there is no right to a fair hearing to challenge erroneous liens. 18 NYCRR 358-3.1(f)(5).  Effective May 30, 2014, the bill requires a signed acknowledgement from all applicants who are asked to sign a welfare mortgage that

  • HEAP, child care and food stamps cannot be charged against the mortgage;
  • Child support retained by the district, as well as any other payment (lottery winnings, etc.), must be applied to reduce the mortgage;
  • That a person can refuse to sign a mortgage and still get a grant for their children.

On June 2, 2014, the Office of Temporary and Disability Assistance promulgated 14 GIS/DC019, which provides all Social Services Districts with this acknowledgement form.  The form can be found at

The bill will require biennial accountings for welfare mortgages and a prohibition against recovery for that period if no accounting is provided.  If the person is no longer on assistance, the penalty will be applied against the last two years that the person was on public assistance.  The accounting provision will not be effective until February 1, 2016.

The language, which appears as part of the large budget bill (A.8556-D/S.6356-D) is below.      
21                                     PART S
22      Section 1. Section 106 of the social services law, as amended by chap-
23    ter 200 of the laws of 1946, the section heading  as  amended,  subpara-
24    graph  5  of paragraph (a) of subdivision 2 as renumbered and paragraphs
25    (e) and (f) of subdivision 2 as added by chapter 1080  of  the  laws  of
26    1974,  subdivision  1  and  paragraph (a) of subdivision 2 as amended by
27    chapter 764 of the laws of 1972,  paragraph  (b)  of  subdivision  2  as
28    amended by chapter 150 of the laws of 1955, paragraph (c) of subdivision
29    2 as amended by chapter 310 of the laws of 1962, paragraph (d) of subdi-
30    vision  2  as  added by chapter 43 of the laws of 1952, subdivision 3 as
31    amended by chapter 271 of the laws of 1948 and subdivision 4 as added by
32    chapter 340 of the laws of 2003, is amended to read as follows:
33      § 106. Powers of social services official to receive and dispose of  a
34    deed,  mortgage,  or lien. 1. A social services official responsible, by
35    or pursuant to any provision of this chapter, for the administration  of
36    assistance  or  care  granted  or  applied for may accept a deed of real
37    property and/or a mortgage thereon on behalf  of  the  [public  welfare]
38    social  services  district  for  the  assistance and care of a person at
39    public expense but such property shall not be considered as public prop-
40    erty and shall remain on the tax rolls and such deed or  mortgage  shall
41    be  subject  to  redemption  as provided in paragraph (a) of subdivision
42    [two] six hereof.
43      2. A social services official may  not  assert  any  claim  under  any
44    provision  of  this  section to recover payments made as part of Supple-
45    mental Nutrition Assistance Program (SNAP), child care  services,  Emer-
46    gency Assistance to Adults or the Home Energy Assistance Program (HEAP).
47      3.  A  social  services  official  may  not assert any claim under any
48    provision of this section to recover payments of  public  assistance  if
49    such payments were reimbursed by child support collections.
50      4.  A  social  services  official  may  not assert any claim under any
51    provision of this section  to  recover  payments  of  public  assistance
52    unless,  before  it has accepted a deed or mortgage from an applicant or
        S. 6356--D                         48                         A. 8556--D
  1    recipient, it has first received a signed acknowledgment from the appli-
  2    cant or recipient acknowledging that:
  3      (a)  benefits  provided  as  part of Supplemental Nutrition Assistance
  4    Program (SNAP), child care services, Emergency Assistance to  Adults  or
  5    the Home Energy Assistance Program (HEAP) may not be included as part of
  6    the recovery to be made under the mortgage or lien; and
  7      (b)  if  the  applicant  or  recipient declines to provide the lien or
  8    mortgage the children  in  the  household  remain  eligible  for  public
  9    assistance.
10      5. (a) Until a deed, mortgage, or lien, accepted prior to or after the
11    effective  date  of this act, is satisfied or otherwise disposed of, the
12    social services district shall issue and mail to the last known  address
13    of  the  person  giving  such  deed or mortgage, or his or her estate or
14    those entitled thereto, a biennial accounting of the  public  assistance
15    incurred  and  repairs  and taxes paid on property.  The social services
16    district shall provide such accounting no later than February first, two
17    thousand sixteen and biennially thereafter.
18      (b) Such accounting shall include information regarding the debt  owed
19    as  of  the end of the district's most recent fiscal year including, but
20    not limited to:
21      (1) an enumeration of all public assistance  incurred  by  the  person
22    giving such deed or mortgage or his or her household to date;
23      (2) the current amount of recoverable public assistance under the deed
24    or mortgage;
25      (3)  the amount of any credits against public assistance including but
26    not limited to:
27      A. the amount of child support collected and retained  by  the  social
28    services district as reimbursement for public assistance;
29      B. recoveries made under section one hundred four of this title;
30      C.  recoveries  made  under  section  one hundred thirty-one-r of this
31    chapter.
32      (4) Said accounting  shall  also  provide  information  regarding  the
33    manner  in which payments may be made to the social services district to
34    reduce the amount of the mortgage or lien.
35      (c) In the event that a biennial accounting is not issued  and  mailed
36    to  the last known address of the person giving such deed or mortgage or
37    his or her estate or those entitled  thereto,  within  the  time  period
38    required  in  paragraph  (a)  of  this subdivision, no public assistance
39    shall be recoverable under this section  for  the  previous  two  fiscal
40    years.  In the event that a biennial accounting is not issued and mailed
41    to the last known address of the person giving such deed or mortgage  or
42    his  or  her  estate  or  those entitled thereto, within the time period
43    required in paragraph (a) of  this  subdivision,  and  such  person  has
44    received  no recoverable public assistance in the district's most recent
45    fiscal year, no  public  assistance  shall  be  recoverable  under  this
46    section  for  the  most  recent two fiscal years where public assistance
47    remains recoverable.
48      6. (a) (1) Until such property or mortgage is sold, assigned or  fore-
49    closed  pursuant  to  law  by  the  social services official, the person
50    giving such deed or mortgage, or his estate or those  entitled  thereto,
51    may  redeem  the  same  by  the payment of all expenses incurred for the
52    support of the person, and for repairs and taxes paid on such  property,
53    provided,  however,  that  a  social  services official may enter into a
54    contract for such redemption, subject to the provisions  of  this  para-
55    graph,  and  containing  such terms and conditions, including provisions
56    for periodic payments,  [with  or]  without  interest,  [as  the  social]
        S. 6356--D                         49                         A. 8556--D
  1    [services  official  shall deem appropriate,] for an amount less than the
  2    full expenses incurred for the support of the person and for repairs and
  3    taxes paid on such property (hereinafter called a "lesser  sum"),  which
  4    lesser  sum  shall  in  no event be less than the difference between the
  5    appraised value of such property and the total of the then unpaid  prin-
  6    cipal  balance  of any recorded mortgages and the unpaid balance of sums
  7    secured by other liens against such property.
  8      (2) In the case of a redemption for a lesser sum, the social  services
  9    official  shall  obtain  (i) an appraisal of the current market value of
10    such property, by an appraiser acceptable to both parties,  and  (ii)  a
11    statement  of  the  principal balance of any recorded mortgages or other
12    liens against such property (excluding the debt  secured  by  the  deed,
13    mortgage or lien of the social services official). Any expenses incurred
14    pursuant  to  this  paragraph  shall  be audited and allowed in the same
15    manner as other official expenses.
16      (3) Every redemption contract for any lesser sum shall be approved  by
17    the  department  upon  an  application  by  the social services official
18    containing the appraisal and statement required by subparagraph  two,  a
19    statement  by  the  social services official of his reasons for entering
20    into the contract for such lesser sum and any other information required
21    by regulations of the department.
22      (4) So long as the terms  of  the  approved  redemption  contract  are
23    performed, no public sale of such property shall be held.
24      (5)  The  redemption  for  a  lesser sum shall reduce the claim of the
25    social services official against the recipient on the  implied  contract
26    under  section  one hundred four of this chapter or under any other law,
27    to the extent of all sums paid in redemption.
28      (b) In order to allow a minimum period  for  redemption,  the  [public
29    welfare]  social  services official shall not sell the property or mort-
30    gage until after the expiration of one year from the  date  he  received
31    the  deed  or mortgage, but if unoccupied property has not been redeemed
32    within six months from the date of death of the person who  conveyed  it
33    to  him by deed the [public welfare] social services official may there-
34    after, and before the expiration of such year, sell the property.
35      (c) Except as otherwise provided in this chapter, upon  the  death  of
36    the  person or his receiving institutional care, if the mortgage has not
37    been redeemed, sold or assigned, the [public  welfare]  social  services
38    official  may  enforce  collection  of  the  mortgage debt in the manner
39    provided for the foreclosure of mortgages by action.
40      (d) Provided the department shall have given its approval in  writing,
41    the  [public welfare] social services official may, when in his judgment
42    it is advisable and in the public interest, release a part of the  prop-
43    erty  from  the lien of the mortgage to permit, and in consideration of,
44    the sale of such part by the owner and the application of  the  proceeds
45    to reduce said mortgage or to satisfy and discharge or reduce a prior or
46    superior mortgage.
47      (e)  While real property covered by a deed or mortgage is occupied, in
48    whole or in part, by an aged, blind or disabled person who executed such
49    deed or mortgage to the social services official for old age assistance,
50    assistance to the blind or aid to the disabled granted  to  such  person
51    before January first, nineteen hundred seventy-four, the social services
52    official  shall  not sell the property or assign or enforce the mortgage
53    unless it appears reasonably certain that the sale or other  disposition
54    of the property will not materially adversely affect the welfare of such
55    person.  After  the death of such person no claim for assistance granted
        S. 6356--D                         50                         A. 8556--D
  1    him shall be enforced against any real property while it is occupied  by
  2    the surviving spouse.
  3      (f)  Except  as  otherwise  provided,  upon  the death of a person who
  4    executed a lien to the social services official in return  for  old  age
  5    assistance, assistance to the blind or aid to the disabled granted prior
  6    to  January first, nineteen hundred seventy-four, or before the death of
  7    such person if it appears reasonably certain  that  the  sale  or  other
  8    disposition  of  the  property  will not materially adversely affect the
  9    welfare of such person, the social services official  may  enforce  such
10    lien  in the manner provided by article three of the lien law. After the
11    death of such person the lien may not be enforced against real  property
12    while it is occupied by the surviving spouse.
13      [3.]  7.  The  sale of any parcel of real property or mortgage on real
14    property by the [public welfare] social  services  official,  under  the
15    provisions  of  this  section,  shall  be made at a public sale, held at
16    least two weeks after notice thereof shall  have  been  published  in  a
17    newspaper  having a general circulation in that section of the county in
18    which the real property is located. Such notice shall specify  the  time
19    and  place  of such public sale and shall contain a brief description of
20    the premises to be sold, or upon which the mortgage is a  lien,  as  the
21    case  may  be.  Unless  in  the  judgment of the [public welfare] social
22    services official, it shall be in the  public  interest  to  reject  all
23    bids,  such  parcel or mortgage shall be sold to the highest responsible
24    bidder.
25      [4. Any inconsistent provision of this chapter or  of  any  other  law
26    notwithstanding,  a  social  services  official may not assert any claim
27    under any provision of  this  chapter  to  recover  payments  of  public
28    assistance   if   such   payments   were  reimbursed  by  child  support
29    collections.]
30      8. It is permissible for social services officials  to  subordinate  a
31    mortgage  taken  on  behalf  of the social services district pursuant to
32    this section.  In the event that a social services  official  determines
33    to  subordinate a mortgage, or lien, he or she shall do so within thirty
34    days of receipt of written notice that the mortgagor  is  attempting  to
35    modify  their  mortgage  that  is held by a mortgagee with superior lien
36    rights and subordination of the social services district's  mortgage  is
37    required  by  such  mortgagee in order for it to approve or complete the
38    modification.
39      § 2. This act shall take effect on the sixtieth  day  after  it  shall
40    have become a law.


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