Sec. 4.6. Escalation provisions in amortization loans

For the purpose of General Obligations Law, section 5-501(3) and (4), if a loan or forbearance secured primarily by an interest in real property improved by a one- or two-family residence occupied by the owner, providing for regular payments of principal and interest designed fully or partially to amortize the principal amount thereof, is extended or a new loan substituted therefor by the original lender or a subsequent assignee as a consequence of:

(a) the exercise or forbearance from exercising an option to declare the loan due and payable prior to its normal maturity date; or

(b) the loan, by its terms, becoming due and payable prior to its normal maturity date, the original loan or forbearance together with such extended or substituted loan shall constitute a single loan or forbearance, provided that this section shall not apply in the event:

(1) exercise of the option, forbearance from exercising the option or accelerated maturity of the loan results from the obligor's act or default; or

(2) the extended or new loan or forbearance is made in consideration for additional funds, a release of a portion of the mortgaged property or other change in the terms of the loan or forbearance specifically requested in writing by the obligor.

As used in this section, the term normal maturity date shall mean the date on which the principal amount of the loan would be fully amortized by regular payments of principal and interest each substantially equal to the first required regular payment.