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CEMA Loans: Everything You Need To Know

March 09, 2024 4-minute read

Author: Victoria Araj


There are some loan options that only apply to where you live. For example, if you live in New York, you may have heard of CEMA loans. This is a great mortgage option for those looking to refinance their mortgage loan.

Let’s define CEMA loans, talk about what makes them special and go over how to determine whether this type of loan is the right option for you.

What Is CEMA?

A Consolidation, Extension and Modification Agreement (CEMA) is a loan option available to New Yorkers that can drastically reduce the cost to refinance a mortgage. CEMA loans allow borrowers to pay mortgage recording taxes on only the difference between their current principal balance and their new loan amount.

In New York, taxes are collected for recording any new mortgage with the state during the home buying process. New York City, Yonkers and several counties apply a local tax on recording a mortgage, along with the state tax. In NYC, this tax can be 1.8% – 1.925% of the mortgage.

If you’re refinancing in New York, you could avoid paying mortgage recording tax and save yourself a large sum of money.

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What Are The Pros And Cons Of CEMA Loans?

Let’s discuss some of the advantages and disadvantages that come with CEMA loans.


  • Save money: Since you’re only paying mortgage recording taxes on the difference between your current principal balance and your new loan amount, you’ll be able to save a large amount of money.
  • Refinancing benefits: Just like with a traditional mortgage refinance, you might even be able to obtain a lower interest rate on your loan, change your loan terms or access cash with a cash-out refinance.


  • Lender fees: Depending on your lender, you might have to pay a fee in order to assign your loan to a new lender. You could also end up paying legal fees during this process as well.
  • Long processing time: A CEMA loan can take anywhere from 30 – 90 days to officially be completed.

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When Is A CEMA Refinance The Best Choice?

A CEMA refinance makes sense over other traditional mortgage refinances in areas with high mortgage recording tax. They also make more sense when refinancing loans with a higher remaining balance.

Another thing to consider is whether you’re switching banks. If that’s the case, you may have to pay extra transaction or legal fees to take out the CEMA mortgage.

What Are The Qualifications For A CEMA Loan?

CEMA loans have a few qualifications. First, they’re exclusive to the state of New York. While there is a possibility to buy with a CEMA, the majority of CEMA loans are refinanced mortgages.

CEMA Lenders

The biggest hurdle you will have to clear is finding a lender that does CEMA loans. It’s best if this is your current lender, as changing lenders can cost more and take longer. If you’re considering refinancing to a CEMA, speak with your lender about it as soon as possible.

CEMA Loans And Co-Ops

Co-ops do not qualify for CEMA because New York doesn’t collect mortgage recording tax on co-op ownership. That’s because personal shares in a co-op aren’t considered real estate.

Important CEMA Mortgage Considerations

There are two key aspects of CEMA mortgage applications to consider. We touched on these earlier, but let’s expand on them a bit.


There are several fees that can be applied to a CEMA refinance. These heavily depend on your lender. If your lender works with CEMA loans and has agreed to process the loan, your fees will be significantly less.

However, if you’re working with a new lender, expect more fees. Your current lender may charge a fee to assign the loan to a new lender. They may also charge a legal fee on top of that. These vary from lender to lender, ranging from a flat fee to a percentage of the loan.

On top of CEMA fees, if you’re paying more upfront closing costs, you may find a refinance option like a no-closing-cost refinance to be the better one for you.

Time To Completion

The other main thing to consider with a CEMA loan is the time it takes to complete. You may have to switch lenders, plus New York regulations may slow down the process even further.

It may take 30 – 90 days from application for your CEMA loan to be completed. If you’re in a situation when you need the refinance sooner, a conventional loan might be a better option.

The Bottom Line: CEMA Loans Could Save You Money

It’s already expensive to live in New York, especially in NYC. On top of closing costs, you’ll face a significant mortgage recording tax when refinancing. This is where CEMA loans come in.

If you’re refinancing, it may make more financial sense to apply for a CEMA loan. You may have to jump through more hoops, and it may take more time, but it could end up saving you thousands by reducing the amount of mortgage recording tax you’ll need to pay.

If you’re looking for a CEMA lender, or for another mortgage solution, apply for a mortgage refinance with Rocket Mortgage®.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.