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Question: Did New York recently enact a statute whereby mortgage servicers are now prohibited from rejecting payoff checks in certain situations?

Answer:

Yes, on December 12, 2025, Governor Kathy Hochul signed Assembly Bill A2739 into law. The law, which took immediate effect, requires mortgage servicers to accept and immediately apply mortgage payments made in reliance on a payoff statement when received at the location and in the manner specific by the servicer.  Previous to the enactment of this law, when there were technical deficiencies in the total payoff balance owed, mortgage servicers were permitted to refuse the payment(s) or hold the payment(s) in suspense without applying it to the principal balance.  Often this led to borrowers paying additional interest until the mortgage servicer received the total payoff amount due.  

Under the new law, NY mortgage servicers must now accept (and cannot return or destroy) any payments received at the location and in the manner specified by the mortgagee when made in reliance on a payoff statement.  This includes payments received in amounts that are less than the full payoff balance on the loan.  Such payments must be promptly applied to the unpaid principal, interest, or any other amounts due under the mortgage.

NY mortgage servicers must adjust their procedures and train their staff accordingly.