Bill Text: NY A04678 | 2023-2024 | General Assembly | Introduced
Bill Title: Authorizes the state of New York mortgage agency to purchase rehabilitation mortgages from banks within the state during periods when there is an inadequate supply of credit available for new residential mortgages or available for such loans at carrying charges within the financial means of persons and families of low and moderate income.
Spectrum: Partisan Bill (Republican 9-0)
Status: (Introduced) 2024-01-03 - referred to housing [A04678 Detail]
Download: New_York-2023-A04678-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 4678 2023-2024 Regular Sessions IN ASSEMBLY February 22, 2023 ___________ Introduced by M. of A. FITZPATRICK, BLANKENBUSH, J. M. GIGLIO, MIKULIN, TAGUE -- Multi-Sponsored by -- M. of A. BARCLAY, DeSTEFANO, MANKTELOW, McDONOUGH -- read once and referred to the Committee on Housing AN ACT to amend the public authorities law, in relation to authorizing the state of New York mortgage agency to purchase rehabilitation mort- gages The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 2402 of the public authorities law is amended by 2 adding two new subdivisions 18 and 19 to read as follows: 3 (18) "Rehabilitation". Repairs, alterations or improvements of a hous- 4 ing accommodation designed to raise the housing standards therein. 5 (19) "Rehabilitation mortgage". A loan extended by a bank, secured by 6 a mortgage on real property improved by a residential structure for the 7 financing and rehabilitation of such residential structure which other- 8 wise complies with the conditions established by section twenty-four 9 hundred five-g of this part. 10 § 2. The public authorities law is amended by adding a new section 11 2405-g to read as follows: 12 § 2405-g. Purchase of rehabilitation mortgages. (1) A purpose of the 13 agency shall be to purchase rehabilitation mortgages from banks within 14 the state during periods when there is an inadequate supply of credit 15 available for new residential mortgages or available for such loans at 16 carrying charges within the financial means of persons and families of 17 low and moderate income. 18 It is hereby found and declared that such activities by the agency 19 will alleviate a condition in this state which is contrary to the public 20 health, safety and general welfare and which has constituted in the past 21 and from time to time in the future can be expected to constitute a 22 public emergency. It is further found and declared that such purposes 23 are in all respects for the benefit of the people of the state of New EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08428-01-3A. 4678 2 1 York and the agency shall be regarded as performing an essential govern- 2 mental function in carrying out its purposes and in exercising the 3 powers granted by this title. 4 (2) (a) The agency shall require that rehabilitation mortgages provide 5 that the estimated cost of the repairs must be at least twenty-five 6 percent of the mortgagor's adjusted basis in the residential real prop- 7 erty (including land). 8 (b) Such rehabilitation mortgages shall also provide that the purchase 9 price plus the estimated cost of the repairs must fall within current 10 agency regulations pertaining to maximum purchase price. To be eligible 11 for such mortgages at least twenty years must have elapsed between the 12 date the residential real property was first used and the commencement 13 of physical work on such rehabilitation. To be eligible for such mort- 14 gages, (i) at least fifty percent of the existing external walls of the 15 residential structure must be retained in place as external walls, (ii) 16 at least seventy-five percent of the existing walls are retained in 17 place as internal or external walls, and (iii) at least seventy-five 18 percent of the existing internal structural framework must remain 19 intact. Any commitment issued by a bank for such rehabilitation mort- 20 gages shall provide that the bank shall certify the cost and feasibility 21 of the proposed repairs or rehabilitation to the residential structure 22 and that the bank shall monitor ongoing repairs and rehabilitation 23 through periodic inspections and shall perform a final inspection. Such 24 mortgages shall also provide that the borrower must occupy the residen- 25 tial structure as his or her principal residence within sixty days of 26 the completion of the repair or rehabilitation work. 27 (3) The agency shall purchase rehabilitation mortgages from banks at 28 such prices and upon such terms and conditions as it shall determine; 29 provided, however, that the total purchase price, exclusive of any 30 amounts representing a refund of commitment or other fees paid by a bank 31 to the agency, for all mortgages which the agency commits to purchase 32 from a bank at any one time shall in no event be more than the total of 33 the unpaid principal balances thereof, plus accrued interest thereon. 34 (4) In conducting its program of purchasing rehabilitation mortgages, 35 the agency shall be governed by the provisions of paragraph (b) of 36 subdivision three of section twenty-four hundred five of this part. 37 (5) The agency shall require as a condition of purchase of rehabili- 38 tation mortgages from banks that each such bank certify that each such 39 rehabilitation mortgage is to an individual borrower and is in addition 40 to the mortgages such certifying bank otherwise would have made. 41 (6) Notwithstanding the maximum interest rate, if any, fixed by 42 section 5-501 of the general obligations law or any other law not 43 specifically amending or applicable to this section, the agency may set 44 the interest rate to be borne by rehabilitation mortgages purchased by 45 the agency from banks at a rate or rates which the agency from time to 46 time shall determine to be at least sufficient, together with any other 47 available monies, to provide for the payment of its bonds and notes, and 48 rehabilitation mortgages bearing such interest rate shall not be deemed 49 to violate any such law or to be unenforceable if originated by a bank 50 in good faith pursuant to an undertaking with the agency with respect to 51 the sale thereof notwithstanding any subsequent failure of the agency to 52 purchase the mortgage or any subsequent sale or disposition of the mort- 53 gage by the agency to such bank or any other person. 54 (7) The agency shall require the submission to it by each bank from 55 which the agency has purchased rehabilitation mortgages evidence satis- 56 factory to the agency of the making, and if applicable, the servicing,A. 4678 3 1 of such rehabilitation mortgages in conformity with such bank's under- 2 taking with the agency and in connection therewith may, through its 3 employees or agents or those of the department of financial services, 4 inspect the books and records of any such bank. 5 (8) Compliance by any bank with the terms of its agreement with or 6 undertaking to the agency with respect to the sale and, if applicable, 7 the servicing of rehabilitation mortgages may be enforced by decree of 8 the supreme court. The agency may require as a condition of purchase of 9 rehabilitation mortgages from any bank the consent of such bank to the 10 jurisdiction of the supreme court over any such proceeding. The agency 11 may also require agreement by any bank, as a condition of the agency's 12 purchase of rehabilitation mortgages from such bank, to the payment of 13 penalties to the agency for violation by the bank of its undertakings to 14 the agency, and such penalties shall be recoverable at the suit of the 15 agency. 16 (9) The agency shall require as a condition of purchase of any reha- 17 bilitation mortgage from a bank that the bank represent and warrant to 18 the agency that: 19 (a) the mortgage was not made in satisfaction of an obligation of the 20 bank under section twenty-four hundred five of this part; 21 (b) the unpaid principal balance of the mortgage and the interest rate 22 thereon have been accurately stated to the agency; 23 (c) the amount of the unpaid principal balance is justly due and 24 owing; 25 (d) the bank has no notice of the existence of any counterclaim, 26 offset or defense asserted by the mortgagor or any successor in inter- 27 est; 28 (e) the mortgage is evidenced by a bond or promissory note and a mort- 29 gage document which has been properly recorded with the appropriate 30 public official; 31 (f) the mortgage constitutes a valid first lien on the real property 32 described to the agency subject only to real property taxes not yet due, 33 installments of assessments not yet due, and easements and restrictions 34 of record which do not adversely affect, to a material degree, the use 35 or value of the real property or improvements thereon; 36 (g) the mortgagor is not now in default in the payment of any install- 37 ment of principal or interest, escrow funds, real property taxes or 38 otherwise in the performance of his obligations under the mortgage docu- 39 ments and has not to the knowledge of the bank been in default in the 40 performance of any such obligation for a period of longer than sixty 41 days during the life of the mortgage; and 42 (h) the improvements to the mortgaged real property are covered by a 43 valid and subsisting policy of insurance issued by a company authorized 44 by the superintendent of financial services to issue such policies in 45 the state and providing fire and extended coverage to an amount not less 46 than eighty percent of the insurable value of the improvements to the 47 mortgaged real property. 48 (10) Each bank shall be liable to the agency for any damages suffered 49 by the agency by reason of the untruth of any representation or the 50 breach of any warranty and, in the event that any representation shall 51 prove to be untrue when made or in the event of any breach of warranty, 52 the bank shall, at the option of the agency, repurchase the mortgage for 53 the original purchase price adjusted for amounts subsequently paid ther- 54 eon, as the agency shall determine. 55 (11) The agency need not require the recording of an assignment of any 56 rehabilitation mortgage purchased by it from a bank pursuant to thisA. 4678 4 1 section and shall not be required to notify the mortgagor of its 2 purchase of the mortgage. The agency shall not be required to inspect or 3 take possession of the mortgage documents if the bank from which the 4 rehabilitation mortgage is purchased by the agency shall enter a 5 contract to service such mortgage and account to the agency therefor. 6 (12) Notwithstanding any other provision of law, the agency is author- 7 ized to require, as a condition to the purchase from banks of any reha- 8 bilitation mortgage, such restrictions upon assumability of the mort- 9 gage, default provisions, rights to accelerate, and other terms 10 applicable to such rehabilitation mortgages made by the bank pursuant to 11 undertakings with the agency with respect to the sale thereof as the 12 agency may determine to be necessary or desirable to assure the repay- 13 ment of its bonds and notes and the exemption from federal income taxes 14 of the interest payable on its bonds and notes. All such terms shall be 15 enforceable by the originating bank, the agency, and any successor hold- 16 er of the mortgage unless expressly waived in writing by or on behalf of 17 the agency. 18 § 3. This act shall take effect on the one hundred twentieth day after 19 it shall have become a law. Effective immediately, the addition, amend- 20 ment and/or repeal of any rule or regulation necessary for the implemen- 21 tation of this act on its effective date are authorized to be made on or 22 before such date.
