S T A T E O F N E W Y O R K
________________________________________________________________________
5551
2009-2010 Regular Sessions
I N S E N A T E
May 15, 2009
___________
Introduced by Sen. ESPADA -- read twice and ordered printed, and when
printed to be committed to the Committee on Corporations, Authorities
and Commissions
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
five-b of this [title] PART, "mortgage" shall also include a loan owed
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08856-01-9
S. 5551 2
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
S. 5551 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:
S. 5551 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.