S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7670
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 8, 2017
                                ___________
 
 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.
   § 2. The public authorities law is amended by  adding  a  new  section
 2405-g to read as follows:
   §  2405-G. 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.
              

                                                            LBD11114-01-7

 A. 7670                             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. 7670                             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.
   § 3. This act shall take effect on the one hundred twentieth day after
 it shall have become a law.