S T A T E   O F   N E W   Y O R K
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                                  5753

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            February 19, 2009
                               ___________

Introduced  by  M.  of  A.  V. LOPEZ, AUBRY, SWEENEY, HOYT, ENGLEBRIGHT,
  FIELDS, WRIGHT, RAMOS, CAHILL, KAVANAGH, ROSENTHAL --  Multi-Sponsored
  by  -- M. of A. BING, CLARK, COOK, CYMBROWITZ, GLICK, MARKEY, MILLMAN,
  PHEFFER -- read once and referred to the Committee on Housing

AN ACT to amend the public authorities law, in relation to the powers of
  the state of New York mortgage agency

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

  Section  1.  Subdivision  5  of section 2402 of the public authorities
law, as amended by chapter 353 of the laws of 1984, is amended  to  read
as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United States of America or any agency thereof.  THE TERM
"MORTGAGE" SHALL ALSO INCLUDE A LOAN OWED TO A BANK SECURED BY A  SECOND
LIEN ON A FEE SIMPLE OR LEASEHOLD ESTATE IN REAL PROPERTY LOCATED IN THE
STATE AND IMPROVED BY A RESIDENTIAL STRUCTURE, WHETHER OR NOT INSURED OR
GUARANTEED  BY  THE  UNITED  STATES  OF  AMERICA  OR ANY AGENCY THEREOF,
PROVIDED, HOWEVER, THAT SUCH SECOND LIEN: (A) SECURES A  LOAN  PURCHASED
BY THE AGENCY, AND (B) IS MADE AT THE SAME TIME AS A FIRST LIEN SECURING
A  LOAN  PURCHASED  BY THE AGENCY PURSUANT TO ITS PROGRAMS OR IS MADE AT
THE SAME TIME AS A NEW HOUSING LOAN PURCHASED BY THE AGENCY PURSUANT  TO
SECTION  TWENTY-FOUR  HUNDRED FIVE-C OF THIS PART, PROVIDED THAT, IN THE
CASE OF ANY SECOND LIEN, THE MORTGAGOR SHALL BE OBLIGATED TO  CONTRIBUTE
FROM  HIS  OR  HER  OWN  VERIFIABLE  FUNDS  AN AMOUNT NOT LESS THAN SUCH
PERCENTAGE AS THE AGENCY SHALL DETERMINE, OF THE LOWER OF  THE  PURCHASE
PRICE  OR  APPRAISED  VALUE  OF  THE PROPERTY SUBJECT TO THE FIRST LIEN.
"Real property" as used in this subdivision shall include air rights.
  For the purposes of this title and of section one hundred  ninety  and
subsection [a] (A) of section one thousand four hundred fifty-six of the
tax law, "mortgage" shall include housing loans as defined below. Except
for  the  purposes  of  subdivision  seven  of section two thousand four
hundred five and subdivision eight of section two thousand four  hundred

              

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08856-01-9

A. 5753                             2

five-b  of  this [title] PART, "mortgage" shall also include a loan owed
to a bank by an individual borrower incurred for the purpose of  financ-
ing the purchase of certificates of stock or other evidence of ownership
of  an  interest in, and a proprietary lease from, a cooperative housing
corporation formed for the purpose of the cooperative ownership of resi-
dential real estate in the state, secured by an assignment  or  transfer
of the benefits of such cooperative ownership, and containing such terms
and conditions as the agency may approve.
  S  2.  Subdivision 5 of section 2402 of the public authorities law, as
separately amended by chapters 376 and 1023 of  the  laws  of  1971,  is
amended to read as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United States of America or any agency thereof.  THE TERM
"MORTGAGE" SHALL ALSO INCLUDE A LOAN OWED TO A BANK SECURED BY A  SECOND
LIEN ON A FEE SIMPLE OR LEASEHOLD ESTATE IN REAL PROPERTY LOCATED IN THE
STATE AND IMPROVED BY A RESIDENTIAL STRUCTURE, WHETHER OR NOT INSURED OR
GUARANTEED  BY  THE  UNITED  STATES  OF  AMERICA  OR ANY AGENCY THEREOF,
PROVIDED, HOWEVER, THAT SUCH SECOND LIEN: (A) SECURES A  LOAN  PURCHASED
BY THE AGENCY, AND (B) IS MADE AT THE SAME TIME AS A FIRST LIEN SECURING
A  LOAN  PURCHASED  BY THE AGENCY PURSUANT TO ITS PROGRAMS OR IS MADE AT
THE SAME TIME AS A NEW HOUSING LOAN PURCHASED BY THE AGENCY PURSUANT  TO
SECTION  TWENTY-FOUR  HUNDRED FIVE-C OF THIS PART, PROVIDED THAT, IN THE
CASE OF ANY SECOND LIEN, THE MORTGAGOR SHALL BE OBLIGATED TO  CONTRIBUTE
FROM  HIS  OR  HER  OWN  VERIFIABLE  FUNDS  AN AMOUNT NOT LESS THAN SUCH
PERCENTAGE AS THE AGENCY SHALL DETERMINE, OF THE LOWER OF  THE  PURCHASE
PRICE  OR  APPRAISED  VALUE  OF  THE PROPERTY SUBJECT TO THE FIRST LIEN.
"Real property" as used in this subdivision shall include air rights.
  Except for the purposes of subdivision seven of section  two  thousand
four  hundred  five  OF  THIS PART, "mortgage" shall also include a loan
owed to a bank by an individual borrower incurred  for  the  purpose  of
financing  the  purchase  of  certificates of stock or other evidence of
ownership of an interest in, and a proprietary lease from, a cooperative
housing corporation formed for the purpose of the cooperative  ownership
of  residential  real  estate  in the state, secured by an assignment or
transfer of the benefits of such cooperative ownership,  and  containing
such terms and conditions as the agency may approve.
  S  3.  Paragraph  (e)  of  subdivision 7 of section 2405 of the public
authorities law, as amended by chapter 915  of  the  laws  of  1982,  is
amended to read as follows:
  (e)  the mortgage constitutes a valid first lien OR SECOND LIEN on the
real property described to the agency  IN  ACCORDANCE  WITH  SUBDIVISION
FIVE  OF  SECTION  TWENTY-FOUR  HUNDRED TWO OF THIS PART subject only to
real property taxes not yet due, installments  of  assessments  not  yet
due,  and  easements  and  restrictions of record which do not adversely
affect, to a material degree, the use or value of the real  property  or
improvements thereon;
  S  4.  Paragraph  (e)  of  subdivision 7 of section 2405 of the public
authorities law, as amended by chapter 1023 of  the  laws  of  1971,  is
amended to read as follows:
  (e)  the mortgage constitutes a valid first lien OR SECOND LIEN on the
real property described to the agency  IN  ACCORDANCE  WITH  SUBDIVISION
FIVE  OF  SECTION  TWENTY-FOUR  HUNDRED TWO OF THIS PART subject only to
real property taxes not yet due, installments  of  assessments  not  yet
due,  and  easements  and  restrictions of record which do not adversely

A. 5753                             3

affect, to a material degree, the use or value of the real  property  or
improvements thereon;
  S  5.  Paragraph  (f) of subdivision 8 of section 2405-b of the public
authorities law, as added by chapter 915 of the laws of 1982, is amended
to read as follows:
  (f) the mortgage constitutes a valid first lien OR SECOND LIEN on  the
real  property  described  to  the agency IN ACCORDANCE WITH SUBDIVISION
FIVE OF SECTION TWENTY-FOUR HUNDRED TWO OF THIS  PART  subject  only  to
real  property  taxes  not  yet due, installments of assessments not yet
due, and easements and restrictions of record  which  do  not  adversely
affect, to a material degree, the use or value [or] OF the real property
or improvements thereon;
  S  6.  Subdivision 4 of section 2428 of the public authorities law, as
amended by chapter 555 of the laws  of  1989,  is  amended  to  read  as
follows:
  4.  To  be  eligible for insurance under this article, a mortgage loan
shall (a) (i) be a first lien of the kind which  is  commonly  given  to
secure advances on, or the unpaid purchase price of, real property under
the laws of the state together with any credit instrument secured there-
by, PROVIDED, HOWEVER, THAT A MORTGAGE LOAN MAY BE A SECOND LIEN IF SUCH
MORTGAGE  LOAN  WAS  PURCHASED  BY  THE  AGENCY or (ii) be secured by an
assignment or transfer of stock certificates or other evidence of owner-
ship interest of the borrower in, and a proprietary lease from, a corpo-
ration formed for the purpose of the cooperative ownership  of  residen-
tial   real  estate  in  the  state;  (b)  secure  a  rehabilitation  or
preservation loan on real property held in fee simple or on a  leasehold
under  a proprietary lease or a lease having a period of years to run at
the time the mortgage is insured under this article of at  least  twenty
per centum greater duration than the remaining term of the mortgage; (c)
contain  terms  with  respect  to prepayment, insurance, repairs, alter-
ations, payment of taxes, special assessments, service [charge] CHARGES,
default reserves, delinquency charges,  foreclosure  proceedings,  addi-
tional  and secondary liens, and such other matters as the agency may in
its discretion prescribe; (d) be accompanied by certificates, issued  by
such  officers  of  the  mortgage  financial  institutions,  independent
appraisers or other persons as the agency may require,  certifying  that
(i) where appropriate, the annual income to be derived from the property
equals  not  less  than  one  hundred  and five per centum of the annual
charges and expenses, including provision for reserves, satisfactory  to
the  agency, for the amortization of subordinate mortgage loans over the
remaining terms of such loans notwithstanding  the  provisions  thereof;
(ii)  the remaining useful life of the property is greater than the term
of the mortgage; and (iii) the property does not contain any substantial
violations of local building maintenance and construction codes,  except
that  in  the  case of a loan made to the owner of a property containing
any such violations, the agency may insure or commit to insure such loan
if the mortgagee and the owner have submitted a  plan,  satisfactory  to
the  agency to eliminate such violations and the issuance of such insur-
ance shall be conditioned on removal of such violations to the satisfac-
tion of the local code enforcement agency; and (e)  satisfy  such  addi-
tional  terms  and  conditions  as  the  agency  may prescribe. For pool
insurance, the requirements of paragraph (b) of this  subdivision  shall
not be applicable.
  S  7.  Subdivision 4 of section 2428 of the public authorities law, as
amended by chapter 354 of the laws  of  1984,  is  amended  to  read  as
follows:

A. 5753                             4

  4.  To  be  eligible for insurance under this article, a mortgage loan
shall (a) (i) be a first lien of the kind which  is  commonly  given  to
secure advances on, or the unpaid purchase price of, real property under
the laws of the state together with any credit instrument secured there-
by, PROVIDED, HOWEVER, THAT A MORTGAGE LOAN MAY BE A SECOND LIEN IF SUCH
MORTGAGE  LOAN  WAS  PURCHASED  BY  THE  AGENCY or (ii) be secured by an
assignment or transfer of stock certificates or other evidence of owner-
ship interest of the borrower in, and a proprietary lease from, a corpo-
ration formed for the purpose of the cooperative ownership  of  residen-
tial   real  estate  in  the  state;  (b)  secure  a  rehabilitation  or
preservation loan on real property held in fee simple or on a  leasehold
under  a proprietary lease or a lease having a period of years to run at
the time the mortgage is insured under this article of at  least  twenty
per centum greater duration than the remaining term of the mortgage; (c)
contain  terms  with  respect  to prepayment, insurance, repairs, alter-
ations, payment of taxes, special assessments, service [charge] CHARGES,
default reserves, delinquency charges,  foreclosure  proceedings,  addi-
tional  and secondary liens, and such other matters as the agency may in
its discretion prescribe; (d) be accompanied by certificates, issued  by
such  officers  of  the  mortgage  financial  institutions,  independent
appraisers or other persons as the agency may require,  certifying  that
(i) where appropriate, the annual income to be derived from the property
equals  not  less  than  one  hundred  and five per centum of the annual
charges and expenses, including provision for reserves, satisfactory  to
the  agency, for the amortization of subordinate mortgage loans over the
remaining terms of such loans notwithstanding  the  provisions  thereof;
(ii)  the remaining useful life of the property is greater than the term
of the mortgage; and (iii) the property does not contain any substantial
violations of local building maintenance and construction codes,  except
that  in  the  case of a loan made to the owner of a property containing
any such violations, the agency may insure or commit to insure such loan
if the mortgagee and the owner have submitted a  plan,  satisfactory  to
the  agency to eliminate such violations and the issuance of such insur-
ance shall be conditioned on removal of such violations to the satisfac-
tion of the local code enforcement agency; and (e)  satisfy  such  addi-
tional terms and conditions as the agency may prescribe.
  S 8. This act shall take effect immediately, provided that:
  (a)  the  amendments  to  subdivision  5 of section 2402 of the public
authorities law made by section one of this act shall be subject to  the
expiration  and  reversion of such subdivision pursuant to section 16 of
chapter 915 of the laws of 1982, as amended, when  upon  such  date  the
provisions of section two of this act shall take effect;
  (b)  the  amendments to paragraph (e) of subdivision 7 of section 2405
of the public authorities law made by section three of this act shall be
subject to the expiration and reversion of such subdivision pursuant  to
section  16  of  chapter  915 of the laws of 1982, as amended, when upon
such date the provisions of section four of this act shall take effect;
  (c) the amendments to paragraph (f) of subdivision 8 of section 2405-b
of the public authorities law made by section five of this act shall not
affect the repeal of such section and shall be  deemed  repealed  there-
with; and
  (d)  the  amendments  to  subdivision  4 of section 2428 of the public
authorities law made by section six of this act shall be subject to  the
expiration  and  reversion of such subdivision pursuant to section 19 of
chapter 555 of the laws of 1989, as amended, when  upon  such  date  the
provisions of section seven of this act shall take effect.