Bill Text: NY A06949 | 2019-2020 | General Assembly | Introduced

Bill Title: Relates to the purchase of community land mortgages; defines a community land mortgage as a mortgage that is secured by a first lien on a leasehold estate in real property that is improved by a residential structure wherein title to the real property is retained by a not-for-profit housing company or housing development fund company; authorizes the state of New York mortgage agency to purchase community land mortgages from banks within the state; ensures not-for-profit housing remains as affordable housing.

Spectrum: Partisan Bill (Republican 4-0)

Status: (Introduced) 2019-03-27 - referred to housing [A06949 Detail]

Download: New_York-2019-A06949-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                     March 27, 2019
        Introduced  by M. of A. FITZPATRICK, MONTESANO, TAGUE -- Multi-Sponsored
          by -- M. of A.  MANKTELOW -- read once and referred to  the  Committee
          on Housing
        AN  ACT to amend the public authorities law, in relation to the purchase
          of community land mortgages
          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) "Community land mortgage". A mortgage secured by a first lien  on
     4  a  leasehold  estate  in real property that is improved by a residential
     5  structure wherein title to the real property is retained by  a  not-for-
     6  profit  housing  company  or  housing  development  fund company and the
     7  improvements thereon are sold to persons or families of low or  moderate
     8  income who also execute a long-term lease for the real property.
     9    §  2.  The  public  authorities law is amended by adding a new section
    10  2405-g to read as follows:
    11    § 2405-g. Purchase of community land mortgages.  (1) A purpose of  the
    12  agency  shall  be to purchase community land mortgages from banks within
    13  the state during periods when there is an inadequate  supply  of  credit
    14  available  for  new residential mortgages or available for such loans at
    15  carrying charges within the financial means of persons and  families  of
    16  low and moderate income.
    17    It  is  hereby  found  and declared that such activities by the agency
    18  will alleviate a condition in this state which is contrary to the public
    19  health, safety and general welfare and which has constituted in the past
    20  and from time to time in the future can  be  expected  to  constitute  a
    21  public  emergency.  It  is further found and declared that such purposes
    22  are in all respects for the benefit of the people of the  state  of  New
    23  York and the agency shall be regarded as performing an essential govern-
    24  mental  function  in  carrying  out  its  purposes and in exercising the
    25  powers granted by this title.
    26    (2) The agency shall purchase community land mortgages from  banks  at
    27  such  prices  and  upon such terms and conditions as it shall determine;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 6949                             2
     1  provided, however, that the  total  purchase  price,  exclusive  of  any
     2  amounts representing a refund of commitment or other fees paid by a bank
     3  to  the  agency,  for all mortgages which the agency commits to purchase
     4  from  a bank at any one time shall in no event be more than the total of
     5  the unpaid principal balances thereof, plus accrued interest thereon.
     6    (3) In conducting its program of purchasing community land  mortgages,
     7  the  agency  shall  be  governed  by  the provisions of paragraph (b) of
     8  subdivision three of section twenty-four hundred five of this part.
     9    (4) The agency shall require as a condition of purchase  of  community
    10  land  mortgages  from  banks  that each such bank certify that each such
    11  community land mortgage is to an individual borrower and is in  addition
    12  to the mortgages such certifying bank otherwise would have made.
    13    (4-a)  The agency must approve the ground lease used by the lessor for
    14  the lease of the real property to the lessee.  Such  lease  may  contain
    15  certain resale provisions limiting future eligible buyers and/or maximum
    16  sales  price  provided that such provisions are recorded with the appro-
    17  priate public official and  that  they  terminate  upon  foreclosure  or
    18  assignment in lieu of foreclosure of the first leasehold mortgage.
    19    (5)  Notwithstanding  the  maximum  interest  rate,  if  any, fixed by
    20  section 5-501 of the general  obligations  law  or  any  other  law  not
    21  specifically  amending or applicable to this section, the agency may set
    22  the interest rate to be borne by community land mortgages  purchased  by
    23  the  agency  from banks at a rate or rates which the agency from time to
    24  time shall determine to be at least sufficient, together with any  other
    25  available monies, to provide for the payment of its bonds and notes, and
    26  community  land mortgages bearing such interest rate shall not be deemed
    27  to violate any such law or to be unenforceable if originated by  a  bank
    28  in good faith pursuant to an undertaking with the agency with respect to
    29  the sale thereof notwithstanding any subsequent failure of the agency to
    30  purchase the mortgage or any subsequent sale or disposition of the mort-
    31  gage by the agency to such bank or any other person.
    32    (6)  The  agency  shall require the submission to it by each bank from
    33  which the agency has purchased community land mortgages evidence  satis-
    34  factory  to  the agency of the making, and if applicable, the servicing,
    35  of such community land mortgages in conformity with such  bank's  under-
    36  taking  with  the  agency  and  in connection therewith may, through its
    37  employees or agents or those of the department  of  financial  services,
    38  inspect the books and records of any such bank.
    39    (7)  Compliance  by  any  bank with the terms of its agreement with or
    40  undertaking to the agency with respect to the sale, and  if  applicable,
    41  the  servicing, of community land mortgages may be enforced by decree of
    42  the supreme court. The agency may require as a condition of purchase  of
    43  community  land  mortgages from any bank the consent of such bank to the
    44  jurisdiction of the supreme court over any such proceeding.  The  agency
    45  may  also  require agreement by any bank, as a condition of the agency's
    46  purchase of community land mortgages from such bank, to the  payment  of
    47  penalties to the agency for violation by the bank of its undertakings to
    48  the  agency,  and such penalties shall be recoverable at the suit of the
    49  agency.
    50    (8) The agency shall require as a condition of purchase of any  commu-
    51  nity  land  mortgage  from a bank that the bank represent and warrant to
    52  the agency that:
    53    (a) the mortgage was not made in satisfaction of an obligation of  the
    54  bank under section twenty-four hundred five of this part;
    55    (b) the unpaid principal balance of the mortgage and the interest rate
    56  thereon have been accurately stated to the agency;

        A. 6949                             3
     1    (c)  the  amount  of  the  unpaid  principal balance is justly due and
     2  owing;
     3    (d)  the  bank  has  no  notice  of the existence of any counterclaim,
     4  offset or defense asserted by the mortgagor or any successor  in  inter-
     5  est;
     6    (e) the mortgage is evidenced by a bond or promissory note and a mort-
     7  gage  document  which  has  been  properly recorded with the appropriate
     8  public official;
     9    (f) the mortgage constitutes a valid first lien on the  real  property
    10  leasehold  described  to  the agency subject only to real property taxes
    11  not yet due, installments of assessments not yet due, and easements  and
    12  restrictions  of  record  which  do  not adversely affect, to a material
    13  degree, the use or value of the real property or improvements thereon;
    14    (g) the mortgagor is not now in default in the payment of any install-
    15  ment of principal or interest, escrow  funds,  real  property  taxes  or
    16  otherwise in the performance of his obligations under the mortgage docu-
    17  ments  and  has  not to the knowledge of the bank been in default in the
    18  performance of any such obligation for a period  of  longer  than  sixty
    19  days during the life of the mortgage; and
    20    (h)  the  improvements  to  the  mortgaged real property leasehold are
    21  covered by a valid and subsisting policy of insurance issued by a compa-
    22  ny authorized by the superintendent of financial services to issue  such
    23  policies in the state of New York and providing fire and extended cover-
    24  age  to an amount not less than eighty percent of the insurable value of
    25  the improvements to the mortgaged real property.
    26    (9) Each bank shall be liable to the agency for any  damages  suffered
    27  by  the  agency  by  reason  of the untruth of any representation or the
    28  breach of any warranty and, in the event that any  representation  shall
    29  prove  to be untrue when made or in the event of any breach of warranty,
    30  the bank shall, at the option of the agency, repurchase the mortgage for
    31  the original purchase price adjusted for amounts subsequently paid ther-
    32  eon, as the agency shall determine.
    33    (10) The agency need not require the recording of an assignment of any
    34  community land mortgage purchased by it from a  bank  pursuant  to  this
    35  section  and  shall  not  be  required  to  notify  the mortgagor of its
    36  purchase of the mortgage. The agency shall not be required to inspect or
    37  take possession of the mortgage documents if the  bank  from  which  the
    38  community  land  mortgage  is  purchased  by  the  agency  shall enter a
    39  contract to service such mortgage and account to the agency therefor.
    40    (11) Notwithstanding any other provision of law, the agency is author-
    41  ized to require, as a condition to the purchase from banks of any commu-
    42  nity land mortgage, such restrictions upon assumability of the mortgage,
    43  default provisions, rights to accelerate, and other terms applicable  to
    44  such  community land mortgages made by the bank pursuant to undertakings
    45  with the agency with respect to the  sale  thereof  as  the  agency  may
    46  determine  to  be  necessary or desirable to assure the repayment of its
    47  bonds and notes and the exemption  from  federal  income  taxes  of  the
    48  interest  payable  on  its  bonds  and  notes.  All  such terms shall be
    49  enforceable by the originating bank, the agency, and any successor hold-
    50  er of the mortgage unless expressly waived in writing by or on behalf of
    51  the agency.
    52    § 3. This act shall take effect on the one hundred twentieth day after
    53  it shall have become a law.