1. Whenever a mortgage upon real property is due and payable, and the full amount of principal and interest due on the mortgage is paid, a certificate of discharge of mortgage shall be given to the mortgagor or person designated by him or her, signed by the person or persons specified in section three hundred twenty-one of this chapter. The person signing the certificate shall, within thirty days thereafter, arrange to have the certificate presented for recording to the recording officer of the county where the mortgage is recorded. Failure by a mortgagee to present a certificate of discharge for recording shall result in the mortgagee being liable to the mortgagor in the amount of five hundred dollars if he or she fails to present such certificate within thirty days, shall result in the mortgagee being liable to the mortgagor in the amount of one thousand dollars if he or she fails to present a certificate of discharge for recording within sixty days and shall result in the mortgagee being liable to the mortgagor in the amount of one thousand five hundred dollars if he or she fails to present a certificate of discharge for recording within ninety days. For the purposes of such liability under this subdivision, the term "mortgagee" shall not include a person, partnership, association, corporation or other entity which makes less than five mortgage loans in any calendar year. The provisions of this section shall not apply to any mortgage granted to or made by the state of New York, or any agency or instrumentality thereof or any political subdivision of the state or any agency or instrumentality thereof. * 2. For purposes of this section, the full amount of principal and interest due on a mortgage shall not be considered to be paid whenever such mortgage continues to secure a bona fide debt and an enforceable lien continues to exist, such as may occur in the following situations:

1. (a) the commercial practice of lenders trading or selling mortgages on the secondary market;
2. (b) the replacement of a construction loan with permanent financing;
3. (c) the refinancing of an existing loan with a new lender, such as where the original lender assigns a note and the mortgage securing its payment to another lender in return for consideration and such mortgage is consolidated with another mortgage which secures any funds advanced by the new lender to the mortgagor;
4. (d) the modification of the terms of a loan by a mortgagor and mortgagee in order to avoid foreclosure; and

5. (e) a refinancing that occurs in conjunction with the sale of property such that the seller conveys property to the purchaser subject to the lien of the mortgage and the original lender assigns its note and mortgage on the property to the purchaser's lender. * NB Effective until June 10, 2026 * 2. (a) For purposes of this section, the full amount of principal and interest due on a mortgage shall not be considered to be paid whenever such mortgage continues to secure a bona fide debt and an enforceable lien continues to exist, such as may occur in the following situations:

   1. (i) the commercial practice of lenders trading or selling mortgages on the secondary market;
   2. (ii) the replacement of a construction loan with permanent financing;
   3. (iii) the refinancing of an existing loan with a new lender, such as where the original lender assigns a note and the mortgage securing its payment to another lender in return for consideration and such mortgage is consolidated with another mortgage which secures any funds advanced by the new lender to the mortgagor;
   4. (iv) the modification of the terms of a loan by a mortgagor and mortgagee in order to avoid foreclosure; and
   5. (v) a refinancing that occurs in conjunction with the sale of property such that the seller conveys property to the purchaser subject to the lien of the mortgage and the original lender assigns its note and mortgage on the property to the purchaser's lender.
   6. (b) No mortgagee shall return, destroy, or otherwise refuse to accept a payment made pursuant to the terms of a payoff letter, including but not limited to terms regarding the location and the manner of payment specified by the mortgagee, even if such payment does not cover the full amount of principal, interest, and any other amounts due and owing under the mortgage, provided, however, if there is a defect with the payment that prevents the mortgagee from identifying with reasonable diligence the mortgage for which such payment is made, the mortgagee may refuse to accept such payment and return the payment to the remitter. The mortgagee shall apply such payment to the unpaid principal, interest or any other amounts due under the mortgage, provided that a payment made pursuant to a payoff statement shall not result in the issuance of a certificate of discharge of mortgage pursuant to subdivision one of this section or in the execution of a satisfaction of mortgage pursuant to subdivision one of section nineteen hundred twenty-one of the real property actions and proceedings law unless the payment covers the full amount of principal, interest, and any other amounts due and owing under the mortgage. * NB Effective June 10, 2026 * 3. Except with respect to the assignment of a mortgage in connection with a transaction described in paragraph (a) of subdivision two of this section, in order to record an assignment of a mortgage there must be set forth in the assignment document or attached thereto and recorded as part thereof a statement under oath signed by the mortgagor or any other party to the transaction having knowledge of the facts (provided such other party asserts such knowledge), that the assignee is not acting as a nominee of the mortgagor and that the mortgage continues to secure a bona fide obligation. With respect to the assignment of a mortgage in connection with a transaction described in paragraph (a) of subdivision two of this section, such assignment shall contain the following statement: "This assignment is not subject to the requirements of section two hundred seventy-five of the Real Property Law because it is an assignment within the secondary mortgage market." * NB Effective until June 10, 2026 * 3. Except with respect to the assignment of a mortgage in connection with a transaction described in subparagraph (i) of paragraph (a) of subdivision two of this section, in order to record an assignment of a mortgage there must be set forth in the assignment document or attached thereto and recorded as part thereof a statement under oath signed by the mortgagor or any other party to the transaction having knowledge of the facts (provided such other party asserts such knowledge), that the assignee is not acting as a nominee of the mortgagor and that the mortgage continues to secure a bona fide obligation. With respect to the assignment of a mortgage in connection with a transaction described in subparagraph (i) of paragraph (a) of subdivision two of this section, such assignment shall contain the following statement: "This assignment is not subject to the requirements of section two hundred seventy-five of the Real Property Law because it is an assignment within the secondary mortgage market." * NB Effective June 10, 2026