S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6949
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 27, 2019
                                ___________
 
 Introduced  by M. of A. FITZPATRICK, MONTESANO, TAGUE -- Multi-Sponsored
   by -- M. of A.  MANKTELOW -- 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.
   (2) THE AGENCY SHALL PURCHASE COMMUNITY LAND MORTGAGES FROM  BANKS  AT
 SUCH  PRICES  AND  UPON SUCH TERMS AND CONDITIONS AS IT SHALL DETERMINE;
              

 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06005-01-9

 A. 6949                             2
 
 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;
   (B) THE UNPAID PRINCIPAL BALANCE OF THE MORTGAGE AND THE INTEREST RATE
 THEREON HAVE BEEN ACCURATELY STATED TO THE AGENCY;

 A. 6949                             3
 
   (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.