S T A T E   O F   N E W   Y O R K
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                                  4521

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            February 4, 2009
                               ___________

Introduced by M. of A. FITZPATRICK, BARCLAY, BARRA -- Multi-Sponsored by
  --  M.  of  A. ALFANO, BACALLES, BURLING, CONTE, CROUCH, GIGLIO, McDO-
  NOUGH, O'MARA, QUINN, RAIA, SALADINO, TEDISCO, THIELE, WALKER --  read
  once and referred to the Committee on Housing

AN  ACT to amend the public authorities law, in relation to establishing
  a home equity protection insurance program

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subdivision  30 of section 2404 of the public authorities
law, as renumbered by chapter 229 of the laws  of  2007,  is  renumbered
subdivision 31 and a new subdivision 30 is added to read as follows:
  (30)  TO  ESTABLISH  AND ADMINISTER A HOME EQUITY PROTECTION INSURANCE
PROGRAM IN ACCORDANCE WITH SECTION TWENTY-FOUR HUNDRED  FIVE-F  OF  THIS
PART.
  S  2.  The  public  authorities law is amended by adding a new section
2405-f to read as follows:
  S 2405-F. HOME EQUITY PROTECTION INSURANCE PROGRAM. (1) THE AGENCY  IS
HEREBY DIRECTED, TO THE EXTENT IT FINDS PRACTICABLE, TO ESTABLISH A HOME
EQUITY  PROTECTION  INSURANCE PROGRAM WHEREBY IT WILL ISSUE A COMMITMENT
TO INSURE AND INSURE THE FULL VALUE OF A ONE-TO-FOUR  FAMILY  RESIDENCE,
INCLUDING A CONDOMINIUM AND A COOPERATIVE, THAT IS OWNER-OCCUPIED BY ANY
PERSON  OR  PERSONS  WHO  MEET  THE  INCOME QUALIFICATIONS FOR A FORWARD
COMMITMENT MORTGAGE PURSUANT TO SECTION TWENTY-FOUR  HUNDRED  FIVE-B  OF
THIS  PART.  THE  FULL  VALUE  OF THE RESIDENTIAL REAL PROPERTY SHALL BE
DETERMINED BY EITHER ITS PURCHASE PRICE, THE  PURCHASE  PRICE  PLUS  THE
COST OF ANY REHABILITATION TO THE RESIDENCE, OR AN APPRAISAL. THE INSUR-
ANCE  SHALL  BE ISSUED BY THE AGENCY AFTER THE PURCHASE OR THE REHABILI-
TATION OF THE REAL PROPERTY UPON PAYMENT OF A PREMIUM  THAT  THE  AGENCY
SHALL DETERMINE.
  (2)  UPON THE SALE OF THE RESIDENTIAL REAL PROPERTY THAT IS INSURED BY
THE AGENCY THROUGH ITS HOME EQUITY INSURANCE PROGRAM, THE  AGENCY  SHALL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02957-01-9
              

A. 4521                             2

PAY THE POLICY HOLDER/OWNER THE DIFFERENCE BETWEEN THE FACE VALUE OF THE
INSURANCE  POLICY  AND  THE  SALES PRICE OF THE INSURED PREMISES IF SUCH
SALES  PRICE  IS  LESS  THAN  THE  INSURED  AMOUNT  AND  IF  THE  POLICY
HOLDER/OWNER  HAS  LIVED  IN  THE PREMISES FOR A PERIOD OF NOT LESS THAN
THREE YEARS. THE AGENCY SHALL ESTABLISH PROCEDURES TO BE FOLLOWED  BY  A
POLICY  HOLDER/OWNER  IN  THE  EVENT OF A PAYMENT UNDER THE TERMS OF ANY
HOME EQUITY  PROTECTION  INSURANCE  POLICY.  THE  AGENCY  SHALL  NOT  BE
REQUIRED  TO  PAY  ON A CLAIM FOR A LOSS OF EQUITY IF IT DETERMINES THAT
SUCH LOSS OCCURRED PREDOMINANTLY FROM THE POLICY HOLDER/OWNER'S  NEGLECT
OF THE REAL PROPERTY'S PHYSICAL CONDITION.
  (3)(A) THE AGENCY SHALL CREATE A HOME EQUITY PROTECTION INSURANCE FUND
TO  BE  USED AS A REVOLVING FUND FOR CARRYING OUT THE PROVISIONS OF THIS
SECTION WITH RESPECT TO RESIDENTIAL REAL  PROPERTY  INSURED  THEREUNDER.
THE AGENCY SHALL PAY INTO SUCH FUND ALL MONEYS WHICH MAY BE AVAILABLE TO
THE  AGENCY FOR THE PURPOSES OF SUCH FUND FROM ANY SOURCE, INCLUDING BUT
NOT LIMITED TO THE MONEYS RECEIVED FROM PREMIUMS DERIVED FROM THE  ISSU-
ANCE OF HOME EQUITY PROTECTION INSURANCE POLICIES.
  (B)  THE  AGENCY  SHALL  MAINTAIN  IN  THE  EQUITY INSURANCE FUND AS A
RESERVE AN AMOUNT OF MONEY OR CASH EQUIVALENTS EQUAL  TO  NO  LESS  THAN
TWENTY  PERCENT  OF  THE  AMOUNTS INSURED UNDER THE AGENCY'S HOME EQUITY
PROTECTION INSURANCE CONTRACTS.
  (4) MONEYS IN SUCH FUND MAY BE INVESTED (A) IN  SPECIAL  TIME  DEPOSIT
ACCOUNTS  IN, OR CERTIFICATES OF DEPOSIT ISSUED BY, A BANK, TRUST COMPA-
NY, SAVINGS BANK OR SAVINGS AND LOAN ASSOCIATION LOCATED AND  AUTHORIZED
TO  DO BUSINESS IN THIS STATE; PROVIDED, HOWEVER, THAT SUCH TIME DEPOSIT
ACCOUNT OR CERTIFICATE OF DEPOSIT SHALL BE PAYABLE WITHIN SUCH  TIME  AS
THE PROCEEDS MAY BE NEEDED TO MEET EXPENDITURES ESTIMATED TO BE INCURRED
BY  THE  AGENCY  AND  PROVIDED FURTHER THAT SUCH TIME DEPOSIT ACCOUNT OR
CERTIFICATE OF DEPOSIT BE SECURED BY A  PLEDGE  OF  OBLIGATIONS  OF  THE
UNITED  STATES  OF  AMERICA OR OBLIGATIONS OF THE STATE, ANY CITY OF THE
STATE, OR OTHER  MUNICIPAL  CORPORATION,  SCHOOL  DISTRICT  OR  DISTRICT
CORPORATION  OF  THE  STATE  OR  OBLIGATIONS  OF AGENCIES OF THE FEDERAL
GOVERNMENT; OR (B) IN OBLIGATIONS OF THE UNITED STATES OF AMERICA OR THE
STATE WHICH MAY FROM TIME TO TIME BE LEGALLY PURCHASED BY SAVINGS  BANKS
WITHIN THE STATE AS AN INVESTMENT OF FUNDS BELONGING TO THEM OR IN THEIR
CONTROL,  OR IN OBLIGATIONS OF THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
PROVIDED SUCH OBLIGATIONS SHALL BE PAYABLE OR REDEEMABLE AT  THE  OPTION
OF  THE  OWNER  WITHIN  SUCH TIMES AS THE PROCEEDS MAY BE NEEDED TO MEET
EXPENDITURES ESTIMATED TO BE INCURRED BY THE AGENCY.
  S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.