Bill Text: NY A03839 | 2017-2018 | General Assembly | Introduced
Bill Title: Authorizes the state of New York mortgage agency to purchase construction 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 2-0)
Status: (Introduced - Dead) 2018-01-03 - referred to corporations, authorities and commissions [A03839 Detail]
Download: New_York-2017-A03839-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 3839 2017-2018 Regular Sessions IN ASSEMBLY January 30, 2017 ___________ Introduced by M. of A. FITZPATRICK, McKEVITT, GIGLIO -- read once and referred to the Committee on Corporations, Authorities and Commissions AN ACT to amend the public authorities law, in relation to authorizing the state of New York mortgage agency to purchase construction 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 a new subdivision 18 to read as follows: 3 (18) "Construction mortgage". A loan extended by a bank secured by a 4 mortgage on real property improved by a residential structure for the 5 construction of such structure. 6 § 2. The public authorities law is amended by adding a new section 7 2405-g to read as follows: 8 § 2405-g. Purchase of construction mortgages. (1) A purpose of the 9 agency shall be to purchase construction mortgages from banks within the 10 state during periods when there is an inadequate supply of credit avail- 11 able for new residential mortgages or available for such loans at carry- 12 ing charges within the financial means of persons and families of low 13 and moderate income. 14 It is hereby found and declared that such activities by the agency 15 will alleviate a condition in this state which is contrary to the public 16 health, safety and general welfare and which has constituted in the past 17 and from time to time in the future can be expected to constitute a 18 public emergency. It is further found and declared that such purposes 19 are in all respects for the benefit of the people of the state of New 20 York and the agency shall be regarded as performing an essential govern- 21 mental function in carrying out its purposes and in exercising the 22 powers granted by this title. 23 (2) (a) The agency shall require construction mortgages provide that 24 the estimated cost of the construction must be at least fifty percent of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD05778-01-7A. 3839 2 1 the mortgagor's adjusted basis in the residential real property (includ- 2 ing land). 3 (b) Such construction mortgages shall also provide that the purchase 4 price of the real property plus the estimated cost of the construction 5 must fall within current agency regulations pertaining to maximum 6 purchase price. Any commitment issued by a bank for such construction 7 mortgage shall provide that the bank shall certify the cost of the 8 construction of the residential structure and that the bank shall moni- 9 tor ongoing construction through periodic inspections and shall perform 10 a final inspection. 11 (3) The agency shall purchase construction mortgages from banks at 12 such prices and upon such terms and conditions as it shall determine; 13 provided, however, that the total purchase price, exclusive of any 14 amounts representing a refund of commitment or other fees paid by a bank 15 to the agency, for all mortgages which the agency commits to purchase 16 from a bank at any one time shall in no event be more than the total of 17 the unpaid principal balances thereof, plus accrued interest thereon. 18 (4) In conducting its program of purchasing construction mortgages, 19 the agency shall be governed by the provisions of paragraph (b) of 20 subdivision three of section twenty-four hundred five of this part. 21 (5) The agency shall require as a condition of purchase of 22 construction mortgages from banks that each such bank certify that each 23 such construction mortgage is to an individual borrower and is in addi- 24 tion to the mortgages such certifying bank otherwise would have made. 25 (6) Notwithstanding the maximum interest rate, if any, fixed by 26 section 5-501 of the general obligations law or any other law not 27 specifically amending or applicable to this section, the agency may set 28 the interest rate to be borne by construction mortgages purchased by the 29 agency from banks at a rate or rates which the agency from time to time 30 shall determine to be at least sufficient, together with any other 31 available monies, to provide for the payment of its bonds and notes, and 32 construction mortgages bearing such interest rate shall not be deemed to 33 violate any such law or to be unenforceable if originated by a bank in 34 good faith pursuant to an undertaking with the agency with respect to 35 the sale thereof notwithstanding any subsequent failure of the agency to 36 purchase the mortgage or any subsequent sale or disposition of the mort- 37 gage by the agency to such bank or any other person. 38 (7) The agency shall require the submission to it by each bank from 39 which the agency has purchased construction mortgages evidence satisfac- 40 tory to the agency of the making, and if applicable, the servicing, of 41 such construction mortgages in conformity with such bank's undertaking 42 with the agency and in connection therewith may, through its employees 43 or agents or those of the department of financial services, inspect the 44 books and records of any such bank. 45 (8) Compliance by any bank with the terms of its agreement with or 46 undertaking to the agency with respect to the sale, and if applicable, 47 the servicing, of construction mortgages may be enforced by decree of 48 the supreme court. The agency may require as a condition of purchase of 49 construction mortgages from any bank the consent of such bank to the 50 jurisdiction of the supreme court over any such proceeding. The agency 51 may also require agreement by any bank, as a condition of the agency's 52 purchase of construction mortgages from such bank, to the payment of 53 penalties to the agency for violation by the bank of its undertakings to 54 the agency, and such penalties shall be recoverable at the suit of the 55 agency.A. 3839 3 1 (9) The agency shall require as a condition of purchase of any 2 construction mortgage from a bank that the bank represent and warrant to 3 the agency that: 4 (a) the mortgage was not made in satisfaction of an obligation of the 5 bank under section twenty-four hundred five of this part; 6 (b) the unpaid principal balance of the mortgage and the interest rate 7 thereon have been accurately stated to the agency; 8 (c) the amount of the unpaid principal balance is justly due and 9 owing; 10 (d) the bank has no notice of the existence of any counterclaim, 11 offset or defense asserted by the mortgagor or any successor in inter- 12 est; 13 (e) the mortgage is evidenced by a bond or promissory note and a mort- 14 gage document which has been properly recorded with the appropriate 15 public official; 16 (f) the mortgage constitutes a valid first lien on the real property 17 described to the agency subject only to real property taxes not yet due, 18 installments of assessments not yet due, and easements and restrictions 19 of record which do not adversely affect, to a material degree, the use 20 or value of the real property or improvements thereon; 21 (g) the mortgagor is not now in default in the payment of any install- 22 ment of principal or interest, escrow funds, real property taxes or 23 otherwise in the performance of his obligations under the mortgage docu- 24 ments and has not to the knowledge of the bank been in default in the 25 performance of any such obligation for a period of longer than sixty 26 days during the life of the mortgage; and 27 (h) the improvements to the mortgaged real property are covered by a 28 valid and subsisting policy of insurance issued by a company authorized 29 by the superintendent of financial services to issue such policies in 30 the state and providing fire and extended coverage to an amount not less 31 than eighty percent of the insurable value of the improvements to the 32 mortgaged real property. 33 (10) Each bank shall be liable to the agency for any damages suffered 34 by the agency by reason of the untruth of any representation or the 35 breach of any warranty and, in the event that any representation shall 36 prove to be untrue when made or in the event of any breach of warranty, 37 the bank shall, at the option of the agency, repurchase the mortgage for 38 the original purchase price adjusted for amounts subsequently paid ther- 39 eon, as the agency shall determine. 40 (11) The agency need not require the recording of an assignment of any 41 construction mortgage purchased by it from a bank pursuant to this 42 section and shall not be required to notify the mortgagor of its 43 purchase of the mortgage. The agency shall not be required to inspect or 44 take possession of the mortgage documents if the bank from which the 45 construction mortgage is purchased by the agency shall enter a contract 46 to service such mortgage and account to the agency therefor. 47 (12) Notwithstanding any other provision of law, the agency is author- 48 ized to require, as a condition to the purchase from banks of any 49 construction mortgage, such restrictions upon assumability of the mort- 50 gage, default provisions, rights to accelerate, and other terms applica- 51 ble to such construction mortgages made by the bank pursuant to under- 52 takings with the agency with respect to the sale thereof as the agency 53 may determine to be necessary or desirable to assure the repayment of 54 its bonds and notes and the exemption from federal income taxes of the 55 interest payable on its bonds and notes. All such terms shall be 56 enforceable by the originating bank, the agency, and any successor hold-A. 3839 4 1 er of the mortgage unless expressly waived in writing by or on behalf of 2 the agency. 3 § 3. This act shall take effect on the one hundred twentieth day after 4 it shall have become a law, except that any rules and regulations neces- 5 sary for the timely implementation of this act on its effective date 6 shall be promulgated on or before such effective date.
