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

                                  3233

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 22, 2015
                               ___________

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 PROPERTY.
  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-
MENTAL FUNCTION IN CARRYING OUT ITS PURPOSES AND IN EXERCISING THE
POWERS GRANTED BY THIS TITLE.

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

                                                           LBD05791-01-5

A. 3233                             2

  (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 DEPARTMENT OF FINANCIAL SERVICES,
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) THE MORTGAGE WAS NOT MADE IN SATISFACTION OF AN OBLIGATION OF THE
BANK UNDER SECTION TWENTY-FOUR HUNDRED FIVE OF THIS PART;

A. 3233                             3

  (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 FINANCIAL SERVICES TO ISSUE SUCH
POLICIES IN THE STATE OF NEW YORK AND PROVIDING FIRE AND EXTENDED COVER-
AGE 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.
  S 3. This act shall take effect on the one hundred twentieth day after
it shall have become a law.