Bill Text: NY A06165 | 2019-2020 | 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: Strong Partisan Bill (Republican 13-1)

Status: (Introduced) 2019-02-28 - referred to housing [A06165 Detail]

Download: New_York-2019-A06165-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    February 28, 2019
          MIKULIN -- Multi-Sponsored by -- M. of A. BARCLAY, CROUCH,  DeSTEFANO,
          KOLB,  MANKTELOW, McDONOUGH, RAIA, THIELE -- 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-
          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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 6165                             2
     1  are in all respects for the benefit of the people of the  state  of  New
     2  York and the agency shall be regarded as performing an essential govern-
     3  mental  function  in  carrying  out  its  purposes and in exercising the
     4  powers granted by this title.
     5    (2) (a) The agency shall require that rehabilitation mortgages provide
     6  that  the  estimated  cost  of  the repairs must be at least twenty-five
     7  percent of the mortgagor's adjusted basis in the residential real  prop-
     8  erty (including land).
     9    (b) Such rehabilitation mortgages shall also provide that the purchase
    10  price  plus  the  estimated cost of the repairs must fall within current
    11  agency regulations pertaining to maximum purchase price. To be  eligible
    12  for  such  mortgages at least twenty years must have elapsed between the
    13  date the residential real property was first used and  the  commencement
    14  of  physical  work on such rehabilitation. To be eligible for such mort-
    15  gages, (i) at least fifty percent of the existing external walls of  the
    16  residential  structure must be retained in place as external walls, (ii)
    17  at least seventy-five percent of the  existing  walls  are  retained  in
    18  place  as  internal  or  external walls, and (iii) at least seventy-five
    19  percent of  the  existing  internal  structural  framework  must  remain
    20  intact.  Any  commitment  issued by a bank for such rehabilitation mort-
    21  gages shall provide that the bank shall certify the cost and feasibility
    22  of the proposed repairs or rehabilitation to the  residential  structure
    23  and  that  the  bank  shall  monitor  ongoing repairs and rehabilitation
    24  through periodic inspections and shall perform a final inspection.  Such
    25  mortgages  shall also provide that the borrower must occupy the residen-
    26  tial structure as his or her principal residence within  sixty  days  of
    27  the completion of the repair or rehabilitation work.
    28    (3)  The  agency shall purchase rehabilitation mortgages from banks at
    29  such prices and upon such terms and conditions as  it  shall  determine;
    30  provided,  however,  that  the  total  purchase  price, exclusive of any
    31  amounts representing a refund of commitment or other fees paid by a bank
    32  to the agency, for all mortgages which the agency  commits  to  purchase
    33  from  a bank at any one time shall in no event be more than the total of
    34  the unpaid principal balances thereof, plus accrued interest thereon.
    35    (4) In conducting its program of purchasing rehabilitation  mortgages,
    36  the  agency  shall  be  governed  by  the provisions of paragraph (b) of
    37  subdivision three of section twenty-four hundred five of this part.
    38    (5) The agency shall require as a condition of purchase  of  rehabili-
    39  tation  mortgages  from banks that each such bank certify that each such
    40  rehabilitation mortgage is to an individual borrower and is in  addition
    41  to the mortgages such certifying bank otherwise would have made.
    42    (6)  Notwithstanding  the  maximum  interest  rate,  if  any, fixed by
    43  section 5-501 of the general  obligations  law  or  any  other  law  not
    44  specifically  amending or applicable to this section, the agency may set
    45  the interest rate to be borne by rehabilitation mortgages  purchased  by
    46  the  agency  from banks at a rate or rates which the agency from time to
    47  time shall determine to be at least sufficient, together with any  other
    48  available monies, to provide for the payment of its bonds and notes, and
    49  rehabilitation  mortgages bearing such interest rate shall not be deemed
    50  to violate any such law or to be unenforceable if originated by  a  bank
    51  in good faith pursuant to an undertaking with the agency with respect to
    52  the sale thereof notwithstanding any subsequent failure of the agency to
    53  purchase the mortgage or any subsequent sale or disposition of the mort-
    54  gage by the agency to such bank or any other person.
    55    (7)  The  agency  shall require the submission to it by each bank from
    56  which the agency has purchased rehabilitation mortgages evidence  satis-

        A. 6165                             3
     1  factory  to  the agency of the making, and if applicable, the servicing,
     2  of such rehabilitation mortgages in conformity with such  bank's  under-
     3  taking  with  the  agency  and  in connection therewith may, through its
     4  employees  or  agents  or those of the department of financial services,
     5  inspect the books and records of any such bank.
     6    (8) Compliance by any bank with the terms of  its  agreement  with  or
     7  undertaking  to  the agency with respect to the sale and, if applicable,
     8  the servicing of rehabilitation mortgages may be enforced by  decree  of
     9  the  supreme court. The agency may require as a condition of purchase of
    10  rehabilitation mortgages from any bank the consent of such bank  to  the
    11  jurisdiction  of  the supreme court over any such proceeding. The agency
    12  may also require agreement by any bank, as a condition of  the  agency's
    13  purchase  of  rehabilitation mortgages from such bank, to the payment of
    14  penalties to the agency for violation by the bank of its undertakings to
    15  the agency, and such penalties shall be recoverable at the suit  of  the
    16  agency.
    17    (9)  The  agency shall require as a condition of purchase of any reha-
    18  bilitation mortgage from a bank that the bank represent and  warrant  to
    19  the agency that:
    20    (a)  the mortgage was not made in satisfaction of an obligation of the
    21  bank under section twenty-four hundred five of this part;
    22    (b) the unpaid principal balance of the mortgage and the interest rate
    23  thereon have been accurately stated to the agency;
    24    (c) the amount of the unpaid  principal  balance  is  justly  due  and
    25  owing;
    26    (d)  the  bank  has  no  notice  of the existence of any counterclaim,
    27  offset or defense asserted by the mortgagor or any successor  in  inter-
    28  est;
    29    (e) the mortgage is evidenced by a bond or promissory note and a mort-
    30  gage  document  which  has  been  properly recorded with the appropriate
    31  public official;
    32    (f) the mortgage constitutes a valid first lien on the  real  property
    33  described to the agency subject only to real property taxes not yet due,
    34  installments  of assessments not yet due, and easements and restrictions
    35  of record which do not adversely affect, to a material degree,  the  use
    36  or value of the real property or improvements thereon;
    37    (g) the mortgagor is not now in default in the payment of any install-
    38  ment  of  principal  or  interest,  escrow funds, real property taxes or
    39  otherwise in the performance of his obligations under the mortgage docu-
    40  ments and has not to the knowledge of the bank been in  default  in  the
    41  performance  of  any  such  obligation for a period of longer than sixty
    42  days during the life of the mortgage; and
    43    (h) the improvements to the mortgaged real property are covered  by  a
    44  valid  and subsisting policy of insurance issued by a company authorized
    45  by the superintendent of financial services to issue  such  policies  in
    46  the state and providing fire and extended coverage to an amount not less
    47  than  eighty  percent  of the insurable value of the improvements to the
    48  mortgaged real property.
    49    (10) Each bank shall be liable to the agency for any damages  suffered
    50  by  the  agency  by  reason  of the untruth of any representation or the
    51  breach of any warranty and, in the event that any  representation  shall
    52  prove  to be untrue when made or in the event of any breach of warranty,
    53  the bank shall, at the option of the agency, repurchase the mortgage for
    54  the original purchase price adjusted for amounts subsequently paid ther-
    55  eon, as the agency shall determine.

        A. 6165                             4
     1    (11) The agency need not require the recording of an assignment of any
     2  rehabilitation mortgage purchased by it from a  bank  pursuant  to  this
     3  section  and  shall  not  be  required  to  notify  the mortgagor of its
     4  purchase of the mortgage. The agency shall not be required to inspect or
     5  take  possession  of  the  mortgage documents if the bank from which the
     6  rehabilitation mortgage  is  purchased  by  the  agency  shall  enter  a
     7  contract to service such mortgage and account to the agency therefor.
     8    (12) Notwithstanding any other provision of law, the agency is author-
     9  ized  to require, as a condition to the purchase from banks of any reha-
    10  bilitation mortgage, such restrictions upon assumability  of  the  mort-
    11  gage,   default  provisions,  rights  to  accelerate,  and  other  terms
    12  applicable to such rehabilitation mortgages made by the bank pursuant to
    13  undertakings with the agency with respect to the  sale  thereof  as  the
    14  agency  may  determine to be necessary or desirable to assure the repay-
    15  ment of its bonds and notes and the exemption from federal income  taxes
    16  of  the interest payable on its bonds and notes. All such terms shall be
    17  enforceable by the originating bank, the agency, and any successor hold-
    18  er of the mortgage unless expressly waived in writing by or on behalf of
    19  the agency.
    20    § 3. This act shall take effect on the one hundred twentieth day after
    21  it shall have become a law, except that any rules and regulations neces-
    22  sary for the timely implementation of this act  on  its  effective  date
    23  shall be promulgated on or before such date.