S T A T E   O F   N E W   Y O R K
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                                  2735

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                            January 20, 2011
                               ___________

Introduced  by  M.  of  A.  FITZPATRICK -- 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:

  Section 1. Section 2402 of the public authorities law  is  amended  by
adding a new subdivision 18 to read as follows:
  (18)  "COMMUNITY LAND MORTGAGE". A MORTGAGE 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  AND
THE  IMPROVEMENTS  THEREON  ARE  SOLD  TO  PERSONS OR FAMILIES OF LOW OR
MODERATE INCOME WHO ALSO EXECUTE A LONG-TERM LEASE FOR THE REAL  PROPER-
TY.
  S  2.  The  public  authorities law is amended by adding a new section
2405-f to read as follows:
  S 2405-F. PURCHASE OF COMMUNITY LAND MORTGAGES.  (1) A PURPOSE OF  THE
AGENCY  SHALL  BE TO PURCHASE COMMUNITY LAND 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.
  IT  IS  HEREBY  FOUND  AND DECLARED THAT SUCH ACTIVITIES BY THE AGENCY
WILL ALLEVIATE A CONDITION IN THIS STATE WHICH IS CONTRARY TO THE PUBLIC
HEALTH, SAFETY AND GENERAL WELFARE AND WHICH HAS CONSTITUTED IN THE PAST
AND FROM TIME TO TIME IN THE FUTURE CAN  BE  EXPECTED  TO  CONSTITUTE  A
PUBLIC  EMERGENCY.  IT  IS FURTHER FOUND AND DECLARED THAT SUCH PURPOSES
ARE IN ALL RESPECTS FOR THE BENEFIT OF THE PEOPLE OF THE  STATE  OF  NEW
YORK AND THE AGENCY SHALL BE REGARDED AS PERFORMING AN ESSENTIAL GOVERN-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03028-01-1

              

A. 2735                             2

MENTAL  FUNCTION  IN  CARRYING  OUT  ITS  PURPOSES AND IN EXERCISING THE
POWERS GRANTED BY THIS TITLE.
  (2)  THE  AGENCY SHALL PURCHASE COMMUNITY LAND MORTGAGES FROM BANKS AT
SUCH PRICES AND UPON SUCH TERMS AND CONDITIONS AS  IT  SHALL  DETERMINE;
PROVIDED,  HOWEVER,  THAT  THE  TOTAL  PURCHASE  PRICE, EXCLUSIVE OF ANY
AMOUNTS REPRESENTING A REFUND OF COMMITMENT OR OTHER FEES PAID BY A BANK
TO THE AGENCY, FOR ALL MORTGAGES WHICH THE AGENCY  COMMITS  TO  PURCHASE
FROM  A BANK AT ANY ONE TIME SHALL IN NO EVENT BE MORE THAN THE TOTAL OF
THE UNPAID PRINCIPAL BALANCES THEREOF, PLUS ACCRUED INTEREST THEREON.
  (3) IN CONDUCTING ITS PROGRAM OF PURCHASING COMMUNITY LAND  MORTGAGES,
THE  AGENCY  SHALL  BE  GOVERNED  BY  THE PROVISIONS OF PARAGRAPH (B) OF
SUBDIVISION THREE OF SECTION TWENTY-FOUR HUNDRED FIVE OF THIS PART.
  (4) THE AGENCY SHALL REQUIRE AS A CONDITION OF PURCHASE  OF  COMMUNITY
LAND  MORTGAGES  FROM  BANKS  THAT EACH SUCH BANK CERTIFY THAT EACH SUCH
COMMUNITY LAND MORTGAGE IS TO AN INDIVIDUAL BORROWER AND IS IN  ADDITION
TO THE MORTGAGES SUCH CERTIFYING BANK OTHERWISE WOULD HAVE MADE.
  (4-A)  THE AGENCY MUST APPROVE THE GROUND LEASE USED BY THE LESSOR FOR
THE LEASE OF THE REAL PROPERTY TO THE LESSEE.  SUCH  LEASE  MAY  CONTAIN
CERTAIN RESALE PROVISIONS LIMITING FUTURE ELIGIBLE BUYERS AND/OR MAXIMUM
SALES  PRICE  PROVIDED THAT SUCH PROVISIONS ARE RECORDED WITH THE APPRO-
PRIATE PUBLIC OFFICIAL AND  THAT  THEY  TERMINATE  UPON  FORECLOSURE  OR
ASSIGNMENT IN LIEU OF FORECLOSURE OF THE FIRST LEASEHOLD MORTGAGE.
  (5)  NOTWITHSTANDING  THE  MAXIMUM  INTEREST  RATE,  IF  ANY, FIXED BY
SECTION 5-501 OF THE GENERAL  OBLIGATIONS  LAW  OR  ANY  OTHER  LAW  NOT
SPECIFICALLY  AMENDING OR APPLICABLE TO THIS SECTION, THE AGENCY MAY SET
THE INTEREST RATE TO BE BORNE BY COMMUNITY LAND MORTGAGES  PURCHASED  BY
THE  AGENCY  FROM BANKS AT A RATE OR RATES WHICH THE AGENCY FROM TIME TO
TIME SHALL DETERMINE TO BE AT LEAST SUFFICIENT, TOGETHER WITH ANY  OTHER
AVAILABLE MONIES, TO PROVIDE FOR THE PAYMENT OF ITS BONDS AND NOTES, AND
COMMUNITY  LAND MORTGAGES BEARING SUCH INTEREST RATE SHALL NOT BE DEEMED
TO VIOLATE ANY SUCH LAW OR TO BE UNENFORCEABLE IF ORIGINATED BY  A  BANK
IN GOOD FAITH PURSUANT TO AN UNDERTAKING WITH THE AGENCY WITH RESPECT TO
THE SALE THEREOF NOTWITHSTANDING ANY SUBSEQUENT FAILURE OF THE AGENCY TO
PURCHASE THE MORTGAGE OR ANY SUBSEQUENT SALE OR DISPOSITION OF THE MORT-
GAGE BY THE AGENCY TO SUCH BANK OR ANY OTHER PERSON.
  (6)  THE  AGENCY  SHALL REQUIRE THE SUBMISSION TO IT BY EACH BANK FROM
WHICH THE AGENCY HAS PURCHASED COMMUNITY LAND MORTGAGES EVIDENCE  SATIS-
FACTORY  TO  THE AGENCY OF THE MAKING, AND IF APPLICABLE, THE SERVICING,
OF SUCH COMMUNITY LAND MORTGAGES IN CONFORMITY WITH SUCH  BANK'S  UNDER-
TAKING  WITH  THE  AGENCY  AND  IN CONNECTION THEREWITH MAY, THROUGH ITS
EMPLOYEES OR AGENTS OR THOSE OF  THE  BANKING  DEPARTMENT,  INSPECT  THE
BOOKS AND RECORDS OF ANY SUCH BANK.
  (7)  COMPLIANCE  BY  ANY  BANK WITH THE TERMS OF ITS AGREEMENT WITH OR
UNDERTAKING TO THE AGENCY WITH RESPECT TO THE SALE, AND  IF  APPLICABLE,
THE  SERVICING, OF COMMUNITY LAND MORTGAGES MAY BE ENFORCED BY DECREE OF
THE SUPREME COURT. THE AGENCY MAY REQUIRE AS A CONDITION OF PURCHASE  OF
COMMUNITY  LAND  MORTGAGES FROM ANY BANK THE CONSENT OF SUCH BANK TO THE
JURISDICTION OF THE SUPREME COURT OVER ANY SUCH PROCEEDING.  THE  AGENCY
MAY  ALSO  REQUIRE AGREEMENT BY ANY BANK, AS A CONDITION OF THE AGENCY'S
PURCHASE OF COMMUNITY LAND MORTGAGES FROM SUCH BANK, TO THE  PAYMENT  OF
PENALTIES TO THE AGENCY FOR VIOLATION BY THE BANK OF ITS UNDERTAKINGS TO
THE  AGENCY,  AND SUCH PENALTIES SHALL BE RECOVERABLE AT THE SUIT OF THE
AGENCY.
  (8) THE AGENCY SHALL REQUIRE AS A CONDITION OF PURCHASE OF ANY  COMMU-
NITY  LAND  MORTGAGE  FROM A BANK THAT THE BANK REPRESENT AND WARRANT TO
THE AGENCY THAT:

A. 2735                             3

  (A) THE MORTGAGE WAS NOT MADE IN SATISFACTION OF AN OBLIGATION OF  THE
BANK UNDER SECTION TWENTY-FOUR HUNDRED FIVE OF THIS PART;
  (B) THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE AND THE INTEREST RATE
THEREON HAVE BEEN ACCURATELY STATED TO THE AGENCY;
  (C)  THE  AMOUNT  OF  THE  UNPAID  PRINCIPAL BALANCE IS JUSTLY DUE AND
OWING;
  (D) THE BANK HAS NO NOTICE  OF  THE  EXISTENCE  OF  ANY  COUNTERCLAIM,
OFFSET  OR  DEFENSE ASSERTED BY THE MORTGAGOR OR ANY SUCCESSOR IN INTER-
EST;
  (E) THE MORTGAGE IS EVIDENCED BY A BOND OR PROMISSORY NOTE AND A MORT-
GAGE DOCUMENT WHICH HAS BEEN  PROPERLY  RECORDED  WITH  THE  APPROPRIATE
PUBLIC OFFICIAL;
  (F)  THE  MORTGAGE CONSTITUTES A VALID FIRST LIEN ON THE REAL PROPERTY
LEASEHOLD DESCRIBED TO THE AGENCY 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;
  (G) THE MORTGAGOR IS NOT NOW IN DEFAULT IN THE PAYMENT OF ANY INSTALL-
MENT  OF  PRINCIPAL  OR  INTEREST,  ESCROW FUNDS, REAL PROPERTY TAXES OR
OTHERWISE IN THE PERFORMANCE OF HIS OBLIGATIONS UNDER THE MORTGAGE DOCU-
MENTS AND HAS NOT TO THE KNOWLEDGE OF THE BANK BEEN IN  DEFAULT  IN  THE
PERFORMANCE  OF  ANY  SUCH  OBLIGATION FOR A PERIOD OF LONGER THAN SIXTY
DAYS DURING THE LIFE OF THE MORTGAGE; AND
  (H) THE IMPROVEMENTS TO THE  MORTGAGED  REAL  PROPERTY  LEASEHOLD  ARE
COVERED BY A VALID AND SUBSISTING POLICY OF INSURANCE ISSUED BY A COMPA-
NY  AUTHORIZED BY THE SUPERINTENDENT OF INSURANCE TO ISSUE SUCH POLICIES
IN THE STATE OF NEW YORK AND PROVIDING FIRE AND EXTENDED COVERAGE TO  AN
AMOUNT  NOT  LESS  THAN  EIGHTY  PERCENT  OF  THE INSURABLE VALUE OF THE
IMPROVEMENTS TO THE MORTGAGED REAL PROPERTY.
  (9) EACH BANK SHALL BE LIABLE TO THE AGENCY FOR ANY  DAMAGES  SUFFERED
BY  THE  AGENCY  BY  REASON  OF THE UNTRUTH OF ANY REPRESENTATION OR THE
BREACH OF ANY WARRANTY AND, IN THE EVENT THAT ANY  REPRESENTATION  SHALL
PROVE  TO BE UNTRUE WHEN MADE OR IN THE EVENT OF ANY BREACH OF WARRANTY,
THE BANK SHALL, AT THE OPTION OF THE AGENCY, REPURCHASE THE MORTGAGE FOR
THE ORIGINAL PURCHASE PRICE ADJUSTED FOR AMOUNTS SUBSEQUENTLY PAID THER-
EON, AS THE AGENCY SHALL DETERMINE.
  (10) THE AGENCY NEED NOT REQUIRE THE RECORDING OF AN ASSIGNMENT OF ANY
COMMUNITY LAND MORTGAGE PURCHASED BY IT FROM A  BANK  PURSUANT  TO  THIS
SECTION  AND  SHALL  NOT  BE  REQUIRED  TO  NOTIFY  THE MORTGAGOR OF ITS
PURCHASE OF THE MORTGAGE. THE AGENCY SHALL NOT BE REQUIRED TO INSPECT OR
TAKE POSSESSION OF THE MORTGAGE DOCUMENTS IF THE  BANK  FROM  WHICH  THE
COMMUNITY  LAND  MORTGAGE  IS  PURCHASED  BY  THE  AGENCY  SHALL ENTER A
CONTRACT TO SERVICE SUCH MORTGAGE AND ACCOUNT TO THE AGENCY THEREFOR.
  (11) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE AGENCY IS AUTHOR-
IZED TO REQUIRE, AS A CONDITION TO THE PURCHASE FROM BANKS OF ANY COMMU-
NITY LAND MORTGAGE, SUCH RESTRICTIONS UPON ASSUMABILITY OF THE MORTGAGE,
DEFAULT PROVISIONS, RIGHTS TO ACCELERATE, AND OTHER TERMS APPLICABLE  TO
SUCH  COMMUNITY LAND MORTGAGES MADE BY THE BANK PURSUANT TO UNDERTAKINGS
WITH THE AGENCY WITH RESPECT TO THE  SALE  THEREOF  AS  THE  AGENCY  MAY
DETERMINE  TO  BE  NECESSARY OR DESIRABLE TO ASSURE THE REPAYMENT OF ITS
BONDS AND NOTES AND THE EXEMPTION  FROM  FEDERAL  INCOME  TAXES  OF  THE
INTEREST  PAYABLE  ON  ITS  BONDS  AND  NOTES.  ALL  SUCH TERMS SHALL BE
ENFORCEABLE BY THE ORIGINATING BANK, THE AGENCY, AND ANY SUCCESSOR HOLD-
ER OF THE MORTGAGE UNLESS EXPRESSLY WAIVED IN WRITING BY OR ON BEHALF OF
THE AGENCY.

A. 2735                             4

  S 3. This act shall take effect on the one hundred twentieth day after
it shall have become a law.