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.
                                                                   LBD08428-01-3

        A. 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 this

        A. 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.
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