§ 654-d. Residential mortgage insurance corporation. 1. Definitions.
As used in this section, the following words and terms shall have the
following meanings unless the context shall indicate another or
different meaning or intent:

(a) "Cash equivalent". A letter of credit, insurance policy, surety,
guarantee, indemnity or other security arrangement.

(b) "Financial institution". (i) Any bank, trust company, national
bank, state or federal savings bank, state or federal savings and loan
association, or state or federal credit union, insurance company,
pension fund or retirement system of any corporation, association, any
other entity which is owned or controlled by any one or more of the
above, provided such bank, trust company, national bank, state or
federal savings bank, state or federal savings and loan association, or
state or federal credit union, insurance company, pension fund or
retirement system of any corporation or association, and, if an entity
which is owned by one or more of the above, such entity, is supervised
by or responsible to any agency of the federal government, the state,
any department thereof or the governing body of any city, town or
village of the state, or (ii) any other entity approved by the
subsidiary corporation, or (iii) any one or more of the above when
lawfully acting as a trustee or otherwise in a fiduciary capacity. The
term "financial institution" shall also include the New York state
housing finance agency, the New York state medical care facilities
finance agency, the state of New York mortgage agency, the New York
state urban development corporation, the corporation, the New York city
department of housing preservation and development, the community
preservation corporation, any governmental agency of the United States
which customarily makes, purchases or holds residential mortgages and
any person who is approved as a mortgage lender by the federal housing
administration for purposes of insurance issued by such administration
or licensed by the state of New York as a mortgage banker.

(c) "Housing accommodation". Any existing building, structure, unit
thereof (including an owner-occupied unit in a condominium and a
lessee-occupied dwelling unit in which the lessee retains a proprietary
lease with respect to such dwelling unit and has an allocable ownership
interest in a cooperative housing corporation) or unimproved real
property, which is used or occupied, or is intended to be used or
occupied as the home or residence of one or more persons, a portion of
which may also be used for commercial and other community facilities
ancillary to such residence provided that, in the case of any housing
accommodation consisting of more than six dwelling units, the floor area
of above-ground commercial facilities shall not exceed one-quarter of
the above-ground floor area of such housing accommodation (inclusive of
such commercial facilities).

(d) "Housing insurance contracts". All contracts entered into by the
subsidiary corporation to insure mortgages pursuant to this section, but
not including (i) any contracts to insure mortgages entered into by the
predecessor corporation which are imposed upon and assumed by the
subsidiary corporation pursuant to paragraph (d) of subdivision two of
this section, or (ii) any contracts to insure mortgages entered into by
the subsidiary corporation with respect to which a commitment to insure
was issued by the predecessor corporation.

(e) "Housing insurance fund". The housing insurance fund as
established pursuant to subdivision twelve of this section.

(f) "Housing insurance fund requirement". As of any particular date of
computation, an amount equal to the aggregate of (i) one hundred per
centum of the insured amounts due and payable by the subsidiary
corporation pursuant to housing insurance contracts, plus (ii) twenty
per centum of the insured amounts under housing insurance contracts
other than insured amounts which are due and payable pursuant to (i)
above, plus (iii) twenty per centum of the amounts to be insured under
housing insurance contracts pursuant to the subsidiary corporation's
commitments to insure.

(g) "Mortgage". A first mortgage on real property located within the
city of New York, securing a preservation loan or a rehabilitation loan,
with a term not to exceed forty years, on real estate, held in fee
simple or on a leasehold under a lease having a period of years to run
at the time a mortgage is insured under this section of at least twenty
per centum greater duration than the remaining term of such mortgage;
the term "first mortgage" means such first liens as are commonly given
to secure advances on, or the unpaid purchase price of, real estate
under the laws of the state, together with the credit instruments, if
any, secured thereby.

(h) "Mortgage insurance contracts". All contracts to insure mortgages
entered into by the predecessor corporation that are imposed upon and
assumed by the subsidiary corporation pursuant to paragraph (d) of
subdivision two of this section and all contracts to insure mortgages
entered into by the subsidiary corporation with respect to which a
commitment to insure was issued by the predecessor corporation.

(i) "Mortgage insurance fund". The mortgage insurance fund as
established pursuant to subdivision twelve of this section.

(j) "Mortgage insurance fund requirement". As of any particular date
of computation, an amount equal to the aggregate of (i) one hundred per
centum of the insured amounts due and payable by the subsidiary
corporation pursuant to mortgage insurance contracts, plus (ii) an
amount equal to the greater of (A) seven million five hundred thousand
dollars or (B) twenty per centum of the insured amounts under mortgage
insurance contracts other than insured amounts which are due and payable
under subparagraph (i) of this paragraph, plus (iii) twenty per centum
of the amounts to be insured under the predecessor corporation's
commitments to insure; provided, however, that notwithstanding the
foregoing, at no time shall the mortgage insurance fund requirement
exceed the aggregate of (1) insured amounts due and payable by the
subsidiary corporation pursuant to mortgage insurance contracts, plus
(2) one hundred per centum of the insured amounts under mortgage
insurance contracts other than insured amounts which are due and payable
under clause (1) of this paragraph, plus (3) one hundred per centum of
the amounts to be insured under the predecessor corporation's
commitments to insure.

(k) "Mortgagee". The mortgage lender under a mortgage insured by the
predecessor corporation or insured pursuant to subdivision ten of this
section, and its successors and assigns.

(l) "Mortgage loan". A mortgage loan secured by a mortgage.

(m) "Mortgagor". The original borrower under a mortgage loan insured
by the predecessor corporation or insured pursuant to subdivision ten of
this section, and its successors and assigns.

(n) "Multi-family housing accommodation". A housing accommodation with
five or more dwelling units.

(o) "Operating expenses". All costs of administering the subsidiary
corporation, including, but not limited to, salaries and wages, expenses
of administering staff functions, fees of professional consultants,
legal fees, charges incurred for servicing of mortgage loans, money
management fees, office rents, utility charges, costs of supplies,
furnishings, equipment, machinery and apparatus, maintenance and repair
of property, payment to the corporation for services rendered, amounts
due and owing under contracts validly entered into by the predecessor
corporation or the subsidiary corporation, other than mortgage insurance
contracts and housing insurance contracts, respectively, and other
expenses incurred in connection with any of the foregoing.

(p) "Other real property". Any building, structure or unimproved
property which is used or occupied, or is intended to be used or
occupied, primarily for emergency, transitional or shelter housing, a
portion of which may also be used for commercial and other community
facilities ancillary to such use provided that, the floor area of
above-ground commercial facilities shall not exceed one-quarter of the
above-ground floor area of such other real property (inclusive of such
commercial facilities).

(q) "Predecessor corporation". The New York city rehabilitation
mortgage insurance corporation created by section one of chapter nine
hundred twenty-four of the laws of nineteen hundred seventy-three,
being, prior to repeal, article fourteen of the private housing finance
law.

(r) "Preservation loan". A mortgage loan extended by a financial
institution with a term not to exceed forty years for the purposes of
refinancing existing indebtedness secured by one or more mortgages on a
housing accommodation or other real property located within the city of
New York and/or financing the acquisition of a housing accommodation or
other real property located within the city of New York and which
otherwise complies with the conditions established pursuant to
subdivision ten of this section.

(s) "Rehabilitation". Repairs, alterations or improvements of a
housing accommodation or other real property designed to raise the
housing standards therein or, in the case of other real property,
designed to provide needed improvements therein. Rehabilitation shall
also include the construction of a housing accommodation or other real
property.

(t) "Rehabilitation loan". A mortgage loan extended by a financial
institution with a term not to exceed forty years which may include the
refinancing of existing indebtedness, if any, secured by one or more
mortgages on the housing accommodation or other real property to be
rehabilitated, or financing the acquisition of the housing accommodation
or other real property to be rehabilitated, which housing accommodation
or other real property shall be located within the city of New York and
which otherwise complies with the conditions established pursuant to
subdivision ten of this section, provided, however, that a sum equal to
at least twenty-five percent of the amount of the mortgage loan shall be
used for the cost of rehabilitation of, or construction of improvements
on, a housing accommodation or other real property.

2. New York city residential mortgage insurance corporation. (a) There
is hereby established a public benefit corporation known as the "New
York city residential mortgage insurance corporation" as a subsidiary
corporation of the corporation. The purpose of such subsidiary
corporation shall be to insure mortgage loans in order to promote the
preservation of neighborhoods which are blighted, are becoming blighted
or may become blighted, to discourage disinvestment and encourage the
investment of mortgage capital in such neighborhoods and to provide
safe, sanitary and affordable housing accommodations to persons and
families for whom the ordinary operations of private enterprise cannot
supply such accommodations.

(b) The subsidiary corporation shall be the successor to the
predecessor corporation.

(c) All property and rights of the predecessor corporation (other than
moneys of the predecessor corporation) are hereby passed to and vested
in the subsidiary corporation, subject, however, to all outstanding
contracts of insurance, commitments to insure mortgages, and all
outstanding obligations of the predecessor corporation. All moneys of
the predecessor corporation (including, but not limited to, amounts held
in the mortgage insurance fund established pursuant to section seven
hundred nine of this chapter, prior to said section being repealed) and
all moneys held in the remic premium reserve fund established pursuant
to said section seven hundred nine shall be transferred to the city;
provided that as a condition to said transfer, a like amount of money
shall be transferred from the corporation to the subsidiary corporation
to be deposited into the mortgage insurance fund, the housing insurance
fund and the remic premium reserve fund (all established pursuant to
subdivision twelve of this section) in such amounts as shall be
determined by the subsidiary corporation, subject to the provisions of
paragraph (a) of subdivision twelve of this section.

(d) All debts, liabilities, obligations, contracts, agreements, and
covenants of the predecessor corporation (including, but not limited to,
contracts of insurance and commitments to insure mortgages) are hereby
imposed upon and shall be assumed by the subsidiary corporation. All
persons having claims under any contracts of insurance or commitments to
insure mortgages entered into with the predecessor corporation may
enforce those claims against the subsidiary corporation in the same
manner as they might have against the predecessor corporation, and the
rights and remedies of such persons shall not be limited or restricted
in any manner by this section. The foregoing notwithstanding, the debts,
liabilities, obligations, contracts, agreements and covenants of the
predecessor corporation shall not be imposed upon the corporation. All
persons having claims under any contracts of insurance or commitments to
insure mortgages entered into with the predecessor corporation shall
have no right to enforce those claims in any manner against the
corporation.

(e) In continuing the functions and carrying out the contracts,
obligations and duties of the predecessor corporation, the subsidiary
corporation is hereby authorized to act in its own name or in the name
of the predecessor corporation as may be convenient or advisable.

(f) All regulations of the predecessor corporation shall continue to
be in effect as the regulations of the subsidiary corporation until
amended, supplemented or rescinded by the subsidiary corporation in
accordance with law.

3. Assistance; privileges. (a) The subsidiary corporation may receive
moneys from the corporation, the state, any public benefit corporation,
the city, the federal government or any other source for public purposes
set forth in this section.

(b) The subsidiary corporation may contract for and accept any gifts
or grants or loans of funds or property or financial or other aid in any
form from the federal government or any agency or instrumentality
thereof, or from the state or any agency or instrumentality thereof,
including the city and the corporation, or from any other source, public
or private, and to comply, subject to the provisions of this section,
with the terms and conditions thereof.

(c) The city and the corporation are each hereby authorized to, but
neither is required to, make gifts, grants or loans of funds or property
or financial or other aid in any form to the subsidiary corporation and
to enter into any contracts or other agreements with the subsidiary
corporation, on such terms and conditions as the city or the
corporation, as applicable, and the subsidiary corporation may agree
upon, all in furtherance of the public purposes set forth in this
section.

(d) All domestic corporations or associations organized for the
purpose of carrying on business in this state, public benefit
corporations, public employee pension funds and any other persons,
corporations or associations are hereby authorized to make contributions
to the subsidiary corporation.

(e) The subsidiary corporation shall have all the privileges,
immunities, tax exemptions and other exemptions of the corporation to
the extent the same are not inconsistent with this section.

4. Membership. The membership of such subsidiary corporation shall
consist of nine members, seven of whom shall be members of the
corporation and two of whom shall be appointed by the mayor. The members
who are not members of the corporation shall serve for terms ending two
and four years respectively from January first next succeeding the date
of their appointment. The successors of the members who are not members
of the corporation shall serve for terms of four years each. A member
who is not a member of the corporation shall continue in office until
his or her successor has been appointed and qualified. With respect to
any member who is not a member of the corporation, the mayor shall fill
any vacancy which may occur by reason of death, resignation or otherwise
for the remaining unexpired term of such member. A member who is not a
member of the corporation may be removed by the mayor for cause, but not
without an opportunity to be heard in person or by counsel, in such
member's defense, upon not less than ten days' notice. The powers of the
subsidiary corporation shall be vested in and exercised by no less than
five of the members thereof then in office. The subsidiary corporation
may delegate to one or more of its members, or its officers, agents and
employees, such duties and powers as it may deem proper. The
commissioner of the department of housing preservation and development
shall serve as chairperson of the subsidiary corporation. The president
of the corporation shall serve as president of the subsidiary
corporation.

5. Compensation. Notwithstanding any inconsistent provisions of this
or any other general, special or local law, no officer or employee of
the corporation, the city or the state, or of any public corporation, as
defined in the general construction law, shall be deemed to have
forfeited or shall forfeit such person's office or employment or any
benefits provided under the retirement and social security law or under
any public retirement system maintained by the state or by the civil
divisions thereof by reason of such person's acceptance of membership on
or by virtue of such person's being an officer, employee or agent of the
subsidiary corporation. The members may engage in private employment or
in a profession or business, unless otherwise prohibited from doing so
by virtue of holding another public office, subject to the provisions of
article eighteen of the general municipal law. For the purposes of such
article eighteen, the subsidiary corporation shall be a "municipality"
and a member shall be a "municipal officer". No member of the subsidiary
corporation shall receive additional compensation, either direct or
indirect, other than reimbursement for actual and necessary expenses
incurred in the performance of such person's duties, by reason of such
person serving as a member of the subsidiary corporation.

6. Transfer of resources. The city and the corporation shall have the
power to, but shall not be obligated to, transfer to the subsidiary
corporation such agents, employees and facilities, including any real
and/or personal property, in order to carry out the purposes of this
section.

7. Termination. The subsidiary corporation and its corporate existence
shall continue until terminated by law; provided, however, that no such
law shall take effect so long as the subsidiary corporation shall have
contracts to insure mortgages (including mortgage insurance contracts
and housing insurance contracts), commitments to insure, notes, bonds,
or other obligations outstanding, unless adequate provision has been
made for the payment thereof. Upon termination of the existence of the
subsidiary corporation all of its rights and properties shall pass to
and be vested in the corporation.

8. Powers. The subsidiary corporation shall have the power:

(a) To sue and be sued;

(b) To have a seal and alter the same at pleasure;

(c) To make and alter by-laws for its organization;

(d) To adopt, amend or rescind rules and regulations appropriate to
carry out its corporate purposes, including rules and regulations
governing the use of its property and facilities and to establish such
requirements and enter into such agreements to achieve the objectives of
this section;

(e) To make and execute contracts and all other instruments necessary
or convenient for the exercise of its powers and functions under this
section;

(f) To acquire, hold and dispose of real and/or personal property for
its corporate purposes;

(g) To engage the services of private consultants on a contract basis
for rendering professional and technical assistance and advice;

(h) To appoint officers, agents and employees, prescribe their duties
and qualifications and fix their compensation;

(i) To invest any funds, or other moneys under its custody and control
in the same manner as the corporation;

(j) To establish and levy fees and charges in connection with the
processing of applications for mortgage insurance and fix premium
charges for mortgage insurance;

(k) To enter into commitments to insure mortgages and contracts of
insurance and enter into any additional agreements as the subsidiary
corporation deems appropriate to further the objectives of this section;

(l) To fulfill its obligations and enforce its rights under any
contract of insurance, or commitment to insure so furnished as provided
in this section and such rules and regulations as may be adopted by the
subsidiary corporation;

(m) To pay, pursue to final collection, compromise, waive or release
any right, title, claim, lien or demand, however acquired, including any
equity or right of redemption;

(n) To foreclose any mortgage in default or commence any action to
protect or enforce any right conferred upon it by any law, mortgage,
contract or other agreement, and to bid for and purchase such property
at any foreclosure or at any other sale, or otherwise to acquire or take
possession of any such property;

(o) To deal with, hold, administer, manage, rent, repair, insure or
sell, lease or otherwise dispose of any property conveyed to or acquired
by the subsidiary corporation and to enter into agreements with the
state, the city, or any person, firm, entity, partnership or
corporation, either public or private, with regard thereto;

(p) To procure insurance against any loss in connection with its
property and other assets and to procure reinsurance in connection with
its obligations, all in such amounts and from such insurers as it deems
necessary or desirable;

(q) To consent to the modification, with respect to rate of interest,
time of payment of any installment of principal or interest, security or
any other term, of any mortgage, mortgage loan, contract or agreement of
any kind which the subsidiary corporation has insured or to which the
subsidiary corporation is a party;

(r) To sell, at public or private sale, any mortgage, mortgage
participation or other obligation held by the subsidiary corporation;

(s) To procure cash equivalents for deposit in its funds;

(t) To enter into co-insurance agreements with any entity authorized
by law to provide mortgage insurance with respect to property located
within the city of New York, including, but not limited to the state of
New York mortgage agency and the United States department of housing and
urban development;

(u) To do any and all things necessary or convenient to carry out its
purposes and exercise the powers expressly given and granted in this
section.

9. Classification of housing accommodations. The subsidiary
corporation may classify housing accommodations within the city and
approve any of such classes as eligible for insurance pursuant to this
section and enact separate guidelines dealing with the provision and
extent of such insurance.

10. Insurance of mortgage loans. (a) The subsidiary corporation is
authorized, subject to the provisions of this section, to make
commitments to insure and to contract to insure mortgage loans eligible
for insurance hereunder.

(b) The subsidiary corporation shall limit its insurance on a
rehabilitation or preservation loan to an amount not in excess of fifty
per centum of the outstanding principal indebtedness, provided, however,
that the subsidiary corporation may insure an amount not in excess of
seventy-five per centum of the outstanding principal indebtedness of a
rehabilitation loan if it shall find that the extent of rehabilitation
is sufficient to justify such additional insurance, provided further,
however, that the subsidiary corporation may insure an amount not to
exceed the full outstanding principal indebtedness of a rehabilitation
or preservation loan when such mortgage loan has been made by a public
benefit corporation of the state of New York which public benefit
corporation has issued or will issue bonds or notes, some or all of the
proceeds of which bonds or notes were used or will be used to make such
mortgage loan, or when the mortgage loan has been made by a public
employee pension fund. The foregoing notwithstanding, the sum of the
percentage of any mortgage loan insured by the subsidiary corporation
and the percentage of such loan insured or to be insured by any other
party shall not exceed one hundred per centum of the outstanding
principal indebtedness of such mortgage loan.

(c) The subsidiary corporation shall not issue a commitment to insure
or a housing insurance contract unless upon the issuance thereof amounts
on deposit in the housing insurance fund will at least equal the housing
insurance fund requirement.

(d) Except for mortgage insurance contracts and except as otherwise
provided in paragraph (e) of this subdivision, the subsidiary
corporation shall not issue a commitment to insure nor shall it insure
any mortgage loan unless it shall first find (i) that the property which
is the security for such mortgage loan is located in a neighborhood
within the city of New York characterized by a deficiency of available
mortgage financing; (ii) that such deficiency has caused or threatens to
cause undermaintained and deteriorating housing accommodations and
substandard and unsanitary neighborhoods; (iii) that the granting of
such mortgage loan will aid in the preservation or rehabilitation of the
neighborhood in which such property is located; (iv) that, if the
property which is the security for such mortgage loan is other real
property, the granting of such mortgage loan will assist in preventing
the deterioration of residential housing in the neighborhood in which
such property is located; and (v) that the property which is the
security for such loan meets such other requirements as the subsidiary
corporation may from time to time establish by guidelines adopted by the
subsidiary corporation. Any such determination by the subsidiary
corporation shall be conclusive and final and shall not be subject to
review of any kind or nature or in any manner whatsoever and shall not
give rise to any liability on the part of the subsidiary corporation.

(e) The subsidiary corporation may issue a commitment to insure and
may insure any mortgage loans, notwithstanding the criteria set forth in
subparagraph (i), (ii), (iii) or (iv) of paragraph (d) of this
subdivision provided that it shall find the property which is the
security for such mortgage loan or mortgage loans is either: (i) located
within the city of New York in an empire zone designated pursuant to
article eighteen-B of the general municipal law, or (ii) will provide
safe, sanitary and affordable housing for persons and families for whom
the ordinary operations of private enterprise cannot supply such
housing, or (iii) the entity providing the mortgage financing was or is
created by local, state or federal legislation and certifies to the
subsidiary corporation that the housing accommodations or other real
property are located within the city of New York and meet the program
criteria applicable to such entity. In addition, the subsidiary
corporation may enter into any mortgage insurance contract,
notwithstanding the criteria set forth in subparagraph (i), (ii), (iii)
or (iv) of paragraph (d) of this subdivision provided that with respect
to such mortgage insurance contract, a commitment to insure shall have
been previously issued by the predecessor corporation.

(f) The subsidiary corporation may issue a commitment to insure and
may insure an existing mortgage loan, when an application for such
mortgage insurance has been submitted prior to the making of such
mortgage loan, and significant circumstances beyond the reasonable
control of the mortgagor and mortgagee necessitate the making of the
mortgage loan prior to the issuance of the commitment to insure and when
it is determined by the subsidiary corporation that such mortgage loan
would not have been made except for the reasonable expectation that the
subsidiary corporation would insure the mortgage loan.

(g) To be eligible for insurance under this section, a mortgage loan
shall be a preservation loan and/or a rehabilitation loan and (i) bear
interest, exclusive of premium charges fixed by the subsidiary
corporation, at a rate not in excess of the rate of interest authorized
by law and not in excess of a maximum rate of interest established by
the subsidiary corporation from time to time. In making its
determination of appropriate maximum interest rate, the subsidiary
corporation shall take into account the rates of interest prevalent in
the mortgage market, current data on secondary market yields and
discount and/or premium levels; (ii) unless the subsidiary corporation
in its sole discretion shall otherwise determine, provide for
substantially equal and constant periodic payments of principal and
interest in amounts sufficient to pay all interest and effect full
repayment of principal within the term of the mortgage loan; (iii)
contain terms with respect to the prepayment, insurance, repairs,
alterations, payment of taxes, special assessments, service charges,
default reserves, delinquency charges, foreclosure proceedings,
additional and secondary liens, and such other matters as the subsidiary
corporation may in its discretion prescribe; (iv) be accompanied by
certificates, issued by such officers of the mortgagee, independent
appraisers or other persons as the subsidiary corporation may require,
certifying that: (A) where appropriate, the annual income to be derived
from the property equals not less than one hundred five per centum of
the annual charges and expenses, including provision for reserves,
satisfactory to the subsidiary corporation, for the amortization of
subordinate mortgage loans over the remaining terms of such mortgage
loans regardless of whether the terms of such subordinate mortgage loans
include scheduled amortization of principal; (B) the remaining useful
life of the property is greater than the term of the mortgage; and (C)
the housing accommodation or other real property does not contain any
substantial violations of the housing maintenance code or the multiple
dwelling law, except that in the case of a mortgage loan made to the
owner of a housing accommodation or other real property containing any
such violations, the subsidiary corporation may insure or commit to
insure such mortgage loan if the mortgagee and the owner have submitted
a plan, satisfactory to the subsidiary corporation to eliminate such
violations; and (v) satisfy such additional terms and conditions as the
subsidiary corporation may prescribe.

(h) In addition to the conditions set forth in paragraphs (d) through
(g) in this subdivision, the subsidiary corporation shall not insure nor
issue a commitment to insure any rehabilitation loan unless it shall
find (i) that rehabilitation is necessary to upgrade the property, (ii)
that rehabilitation will not necessitate more than a minimum amount of
relocation of the residents of any housing accommodation and (iii) that
the rehabilitation undertaken with the proceeds of the rehabilitation
loan has been completed.

(i) A financial institution may request insurance by written
application to the subsidiary corporation in such form and manner,
together with such information and documents, as the subsidiary
corporation may prescribe. No application shall be complete unless and
until the financial institution has paid such processing fees and other
charges as the subsidiary corporation may impose in connection
therewith. The subsidiary corporation shall signify its acceptance of
such application for insurance by issuance of a commitment to insure or
a contract of insurance.

(j) The subsidiary corporation shall not issue a commitment to insure
a mortgage loan extended by the corporation unless such commitment to
insure is approved by at least two members of a committee composed of
the chairperson of the subsidiary corporation and the members of the
subsidiary corporation who are not members of the corporation.

11. Payment of insurance. The subsidiary corporation shall establish
procedures to be followed by a mortgagee in the event of a default under
the terms of any mortgage insured by the subsidiary corporation,
provided, however, any modification to such procedures (other than to
cure any ambiguity, defect or omission) shall apply only to mortgages
for which commitments have been issued after the effective date of such
modification. The subsidiary corporation may establish prerequisites for
payment of an insurance claim, including, but not limited to, requiring
the mortgagee to take such actions with respect to the property securing
the defaulted mortgage as may be specified by the subsidiary corporation
to be satisfactory evidence of a continuing default, including but not
limited to the following actions: (i) becoming lawfully the mortgagee in
possession thereof; (ii) causing a receiver to be appointed of such
property; (iii) obtaining voluntary conveyance of the mortgagor's right
and title to such property; or (iv) obtaining by foreclosure clear and
unencumbered title to such property, all in such manner as the
subsidiary corporation may require. Following submission of a valid
claim, the subsidiary corporation shall pay an amount which shall not
exceed the lesser of: (A) the then outstanding principal amount of the
mortgage multiplied by the per centum of such outstanding amount insured
by the subsidiary corporation plus that per centum of the mortgagee's
cost arising from the default, inclusive of public liens and delinquent
and unpaid interest, all as the subsidiary corporation may from time to
time allow, which per centum shall not exceed the per centum of the
outstanding principal indebtedness insured by the subsidiary corporation
or (B) the insured amount of the mortgage loan at the date of execution
of the contract of insurance or its latest amendment, if any, except
that the subsidiary corporation shall pay the greater of the two amounts
on claims by a public employee pension fund or by a public benefit
corporation from mortgage loans financed by the sale of notes or bonds
issued by said corporation and such amount payable may, if so provided
in the contract of insurance, include accrued interest to the date of
redemption for such bonds or notes and any cost associated with such
redemption, provided that no more than the actual loss suffered by such
public benefit corporation or public employee pension fund shall be
paid. Such payment may be made by the subsidiary corporation in a lump
sum, or in partial payments made within such period of time, not in
excess of two years, as may be agreed to between the subsidiary
corporation and the mortgagee, all in accordance with procedures to be
established by the subsidiary corporation. The subsidiary corporation
shall have the power to bid for and purchase the property securing the
defaulted mortgage at any foreclosure or other sale of such property, or
to otherwise acquire or take possession of such property in accordance
with other provisions of law. In the event of any such purchase,
acquisition, or taking of possession, the subsidiary corporation shall
have the power to complete, administer, sell, dispose of, and otherwise
deal with such property, in such manner as may be necessary or desirable
to protect the interests of the subsidiary corporation.

12. Mortgage insurance fund, housing insurance fund and remic premium
reserve fund. (a) The subsidiary corporation shall create and establish
a fund to be known as the "mortgage insurance fund" which shall be used
as a revolving fund for carrying out the provisions of this section with
respect to mortgage insurance contracts and shall, upon its creation,
pay into such fund moneys made available to the subsidiary corporation
from the corporation in an amount equal to the mortgage insurance fund
requirement as of such date for the purpose of such fund, and shall
thereafter, pay into such fund, upon receipt, (i) such portion of
mortgage insurance contract premium payments in an amount equal to the
amount necessary to be transferred to the mortgage insurance fund in
order that the amount on deposit therein be equal to the mortgage
insurance fund requirement (or such lesser amount as may be available);
(ii) such portion of the proceeds received by the subsidiary corporation
in connection with the exercise of such subsidiary corporation's rights
under any mortgage insurance contract in an amount equal to the amount
necessary to be transferred to the mortgage insurance fund in order that
the amount on deposit therein be equal to the mortgage insurance fund
requirement (or such lesser amount as may be available); (iii) any
moneys appropriated, paid or otherwise made available by the city or the
corporation for the purpose of such fund; and (iv) any other moneys
which may be made available to the subsidiary corporation for the
purpose of such fund from any other source. All moneys held in the
mortgage insurance fund, except as hereinafter provided, shall be used,
as required, solely for the payment of the subsidiary corporation's
liabilities arising from mortgage insurance contracts; provided,
however, that moneys in such fund shall not be withdrawn therefrom at
any time in such amount as would reduce the amount of such fund to less
than the mortgage insurance fund requirement, except for the purposes of
paying such liabilities, as the same become due and for the payment of
which other moneys of the subsidiary corporation are not available. Any
income or interest earned by, or increment to, the mortgage insurance
fund due to the investment thereof or any amount in excess of the
mortgage insurance fund requirement shall be transferred at least
annually by the subsidiary corporation to the remic premium reserve fund
or, at the written direction of the chairperson, to such other funds or
accounts of the subsidiary corporation to the extent it does not reduce
the amount of the mortgage insurance fund below the mortgage insurance
fund requirement.

(b) The subsidiary corporation shall create and establish a fund to be
known as the "housing insurance fund" which shall be used as a revolving
fund for carrying out the provisions of this section with respect to
housing insurance contracts and shall, upon its creation, pay into such
fund any moneys or cash equivalents made available to the subsidiary
corporation from the corporation for the purpose of such fund, and shall
thereafter, pay into such fund, upon receipt, (i) such portion of
housing insurance contract premium payments in an amount equal to the
amount necessary to be transferred to the housing insurance fund in
order that the amount on deposit therein be equal to the housing
insurance fund requirement (or such lesser amount as may be available);
(ii) such portion of the proceeds received by the subsidiary corporation
in connection with the exercise of such subsidiary corporation's rights
under any housing insurance contract in an amount equal to the amount
necessary to be transferred to the housing insurance fund in order that
the amount on deposit therein be equal to the housing insurance fund
requirement (or such lesser amount as may be available); (iii) any
moneys or cash equivalents appropriated, paid or otherwise made
available by the city, the federal government or the corporation for the
purpose of such fund; and (iv) any other moneys or cash equivalents
which may be made available to the subsidiary corporation for the
purpose of such fund from any other source. All moneys or cash
equivalents held in the housing insurance fund, except as hereinafter
provided, shall be used, as required, solely for the payment of the
subsidiary corporation's liabilities arising from housing insurance
contracts; provided, however, that moneys or cash equivalents in such
fund shall not be withdrawn therefrom at any time in such amount as
would reduce the amount of such fund to less than the housing insurance
fund requirement, except for the purpose of paying such liabilities, as
the same become due and for the payment of which other moneys of the
subsidiary corporation are not available. Any income or interest earned
by, or increment to, the housing insurance fund due to the investment
thereof or any amount in excess of the housing insurance fund
requirement shall be transferred at least annually by the subsidiary
corporation to the remic premium reserve fund or at the written
direction of the chairperson, to such other funds or accounts of the
subsidiary corporation to the extent it does not reduce the amount of
the housing insurance fund below the housing insurance fund requirement.

(c) The subsidiary corporation shall create and establish such
accounts within the housing insurance fund as may be necessary or
desirable for its corporate purposes.

(d) The subsidiary corporation shall create and establish a fund to be
known as the "remic premium reserve fund" for the purpose of providing
for payment of the subsidiary corporation's liabilities arising from its
operations, its mortgage insurance contracts and its housing insurance
contracts and shall, upon its creation, pay into such fund moneys or
cash equivalents made available to the subsidiary corporation from the
corporation for the purpose of such fund, and shall thereafter, pay into
such fund, upon receipt, (i) the balance of the premium payments, if
any, received by the subsidiary corporation with respect to mortgage
insurance contracts and housing insurance contracts after making the
deposits described in subparagraph (i) of paragraph (a) and subparagraph
(i) of paragraph (b) respectively, of this subdivision; (ii) the balance
of any proceeds received by the subsidiary corporation in connection
with the exercise of such subsidiary corporation's rights under any
mortgage insurance contract or housing insurance contract after making
the deposits described in subparagraph (ii) of paragraph (a) and
subparagraph (ii) of paragraph (b) respectively of this subdivision;
(iii) any moneys or cash equivalents appropriated, paid or otherwise
made available by the city, the federal government or the corporation
for the purpose of such fund; and (iv) any other moneys or cash
equivalents which may be made available to the subsidiary corporation
for the purpose of such fund from any other source.

(e) The subsidiary corporation shall create and establish such
accounts within the remic premium reserve fund as may be necessary for
its corporate purposes.

(f) Except as otherwise provided in this section, all moneys received
by the subsidiary corporation shall be deposited in the remic premium
reserve fund.

(g) If the remic premium reserve fund is funded in whole or in part
with cash, the moneys in such fund shall be deposited in one or more
banks or trust companies designated, in manner provided by law, as
depositories of the funds of the subsidiary corporation. The subsidiary
corporation may invest any moneys in such fund in the same manner as
moneys of the corporation may be invested, provided that such
obligations shall be payable within such time as the proceeds may be
needed to meet expenditures estimated to be incurred by the subsidiary
corporation. Any interest earned or capital gain realized on the money
so deposited or invested shall accrue to and become part of such fund.
The separate indentity of such fund shall be maintained whether its
assets consist of cash or investments or both.

(h) The subsidiary corporation shall transfer from the remic premium
reserve fund such moneys as the subsidiary corporation, by its
chairperson, shall certify are required for the subsidiary corporation
to pay its operating expenses, to pay any liabilities arising from the
subsidiary corporation's mortgage insurance contracts and housing
insurance contracts, and to restore the mortgage insurance fund and the
housing insurance fund to the mortgage insurance fund requirement and
housing insurance fund requirement, respectively.

(i) The subsidiary corporation shall keep a separate account for the
remic premium reserve fund. Such account shall show (i) the date and
amount of each sum paid into the fund, (ii) the interest earned by the
fund, (iii) the capital gains or losses resulting from the sale of
investments of the fund, (iv) the interest or capital gains which have
accrued to the fund, (v) the amount and date of each withdrawal from the
fund, and (vi) the assets of the fund indicating the cash balance
therein and a schedule of the amounts invested.

(j) In computing the amount of the mortgage insurance fund, the
housing insurance fund and the remic premium reserve fund for the
purposes of this section, securities in which all or a portion of such
funds shall be invested shall be valued at par, if purchased at par, or
if purchased at other than par, at amortized value. Amortized value,
when used with respect to securities purchased at a premium above or a
discount below par or if purchased at par, or if purchased at other than
par, shall mean the value as of any given date obtained by dividing the
total premiums or discount at which such securities were purchased by
the number of interest payments remaining to maturity on such securities
after such purchase and by multiplying the amount so calculated by the
number of interest payment dates having passed since the date of such
purchase; and (i) in the case of securities purchased at a premium by
deducting the product thus obtained from the purchase price, and (ii) in
the case of securities purchased at a discount by adding the product
thus obtained to the purchase price.

(k) The subsidiary corporation shall create and establish such other
fund or funds as may be necessary or desirable for its corporate
purposes.

13. Charges and fees. (a) The subsidiary corporation shall fix a
premium charge for its insurance of mortgages pursuant to this section
which shall not be less than the minimum amount nor more than the
maximum amount that the state of New York mortgage agency is permitted
to charge pursuant to applicable provisions of law.

(b) The subsidiary corporation may establish and levy such other
charges and fees in connection with applications for mortgage insurance
and insurance commitments as it may deem appropriate and necessary.

(c) Such premium charges and other charges shall be payable by the
mortgagor in cash in such manner as may be prescribed by the subsidiary
corporation.

(d) Such premium charges and other charges and fees shall not be
deemed to be interest for the purposes of section 5-501 of the general
obligations law.

14. Assistance by the corporation. The corporation is hereby
authorized to perform such functions and services in connection with any
lawful corporate purpose of the subsidiary corporation as shall be
requested by the subsidiary corporation. The subsidiary corporation
shall pay to the corporation from any moneys of the subsidiary
corporation available for such purposes such amounts as are necessary to
pay the corporation for the services rendered by the corporation
pursuant to this section.

15. Assistance by the department of housing preservation and
development. The commissioner of housing preservation and development
and the department of housing preservation and development are hereby
authorized to perform such functions and services in connection with any
lawful corporate purpose of the subsidiary corporation as shall be
requested by the subsidiary corporation. The subsidiary corporation
shall pay to the department of housing preservation and development from
any moneys of the subsidiary corporation available for such purposes
such amounts as are necessary to reimburse the department of housing
preservation and development for the services provided pursuant to this
section.

16. Annual report. The subsidiary corporation shall submit to the
mayor, the comptroller, the director of management and budget and the
corporation within ninety days after the end of its fiscal year, a
complete and detailed report setting forth: (i) its operations and
accomplishments; (ii) its receipts and expenditures during such fiscal
year in accordance with the categories or classifications established by
the subsidiary corporation for its operating and capital outlay
purposes; and (iii) its assets and liabilities at the end of its fiscal
year, including a schedule of mortgages which have been insured during
such year, the status of the mortgage insurance fund, housing insurance
fund and other reserve or special funds established by the subsidiary
corporation.

17. Moneys of the subsidiary corporation. (a) All moneys of the
subsidiary corporation, except as otherwise authorized or provided in
this section, shall be deposited as soon as practicable in a separate
account or accounts in banks or trust companies organized under the laws
of the state or national banking association, in each case doing
business in the city. The moneys in such accounts shall be paid out on
checks signed by such officer or employee of the subsidiary corporation
as the subsidiary corporation shall authorize. All deposits of such
moneys shall, if required by the subsidiary corporation, be secured by
obligations of the United States or of the state or of the city of a
market value equal at all times to the amount of the deposit and all
banks and trust companies are authorized to give such security for such
deposits.

(b) The subsidiary corporation shall prescribe a system of accounts.

(c) The comptroller, or the comptroller's legally authorized
representative, is hereby authorized and empowered from time to time to
examine the books and accounts of the subsidiary corporation including
its receipts, disbursements, contracts, reserve funds, sinking funds,
investments, and any other matters relating to its financial standing.
Such an examination shall be conducted by the comptroller at least once
in every five years; the comptroller is authorized, however, to accept
from the subsidiary corporation, in lieu of such an examination, an
external examination of its books and accounts made at the request of
the subsidiary corporation.

(d) The subsidiary corporation shall submit to the mayor, the
comptroller and the corporation within thirty days of the receipt
thereof by the subsidiary corporation a copy of the report of every
external examination of the books and accounts of the subsidiary
corporation other than copies of the reports of such examinations made
by the comptroller.

18. Rentals. Notwithstanding the provisions of, or any regulation
promulgated pursuant to, the emergency housing rent control law, the
local emergency housing rent control act or local law enacted pursuant
thereto, all dwelling units in a multiple dwelling the rehabilitation of
which commenced after July first, nineteen hundred seventy-seven and
which is financed by a mortgage loan insured by the subsidiary
corporation (including, but not limited to, mortgage loans insured
pursuant to mortgage insurance contracts and housing insurance
contracts), except for dwelling units occupied by reason of ownership of
stock in a cooperative and except for dwelling units that constitute
condominiums, shall be subject to the rent stabilization law of nineteen
hundred sixty-nine, beginning immediately after initial rents, as
established under applicable provisions of this chapter, section four
hundred twenty-one-a of the real property tax law, section four hundred
eighty-nine of the real property tax law and/or subparagraph (m) of
paragraph one of subdivision g of section 26-405 of the administrative
code of the city of New York for such dwelling units to become effective
on the basis of such rehabilitation, provided that any occupant in
possession of a dwelling unit that first becomes subject to the rent
stabilization law of nineteen hundred sixty-nine pursuant to this
section shall be offered a two-year lease notwithstanding any contrary
provisions of, or regulations adopted pursuant to, such rent
stabilization law, at the initial rent established for such dwelling
unit and provided further that such dwelling units, other than those
dwelling units, the initial rents of which are established under
subparagraph (m) of paragraph one of subdivision g of section 26-405 of
the administrative code of the city of New York, shall remain subject to
the rent stabilization law in accordance with the provisions of this
chapter, section four hundred twenty-one-a of the real property tax law
and/or section four hundred eighty-nine of the real property tax law as
the case may be. Except to the extent to which dwelling units, which are
controlled under other provisions of law, become subject to the rent
stabilization law of nineteen hundred sixty-nine pursuant to the
preceding sentence, no dwelling unit shall become subject to the rent
stabilization law solely by reason of insurance of a mortgage loan by
the subsidiary corporation.

19. Employees of the subsidiary corporation. (a) Notwithstanding any
inconsistent provisions of this section, the appointment and promotion
of all employees of and for the subsidiary corporation shall be made in
accordance with the provisions of the civil service law under the
jurisdiction of the city civil service commission and the compensation
for such employees shall be fixed by the subsidiary corporation.

(b) The city, the corporation and the predecessor corporation shall
have the power to provide for the transfer to the subsidiary corporation
of agents, employees and facilities of the city, the corporation or the
predecessor corporation, as the case may be, to enable the subsidiary
corporation to fulfill its corporate purposes. Employees of the city,
the corporation or the predecessor corporation to be transferred to the
subsidiary corporation pursuant to this section shall be eligible for
such transfer and appointment to offices and positions of the subsidiary
corporation without further examination, and all such employees who have
been appointed to positions in city service in accordance with the
provisions of the civil service law under the rules of the city civil
service commission shall have the same status with respect thereto in
the service of the subsidiary corporation as they had in city service.
Employees who are members or beneficiaries of any existing pension or
retirement system shall continue to have such rights, privileges,
obligations or status with respect to such system or systems as are
prescribed by law on the date this section takes effect, and all such
employees who have been appointed to positions in city service in
accordance with the provisions of the civil service law under the rules
of the city civil service commission shall have the same status with
respect thereto in the service of the corporation as they had in city
service.

20. Subsidiaries; how created. (a) The subsidiary corporation by
resolution may direct any of its members, officers or employees to
organize a subsidiary of the subsidiary corporation whenever, in the
sole discretion of the subsidiary corporation, it has become necessary
to acquire one or more housing accommodations or other real property in
the case of sale under foreclosure or in lieu of foreclosure and it is
beneficial to effectuate the purpose of this chapter for the subsidiary
of the subsidiary corporation to hold title to such housing
accommodations or other real property.

(b) Each such subsidiary of the subsidiary corporation shall be wholly
owned by the subsidiary corporation and shall be organized pursuant to
the business corporation law, the not-for-profit corporation law or
article two or article eleven of this chapter.

(c) The subsidiary corporation may transfer to any subsidiary of the
subsidiary corporation any money, real and/or personal property or may
convey to it any housing accommodation or other real property in order
to carry out the purposes of this article. Each such subsidiary of the
subsidiary corporation shall have all the privileges, immunities, tax
exemptions and other exemptions of the subsidiary corporation to the
extent the same are not inconsistent with the statute or statutes
pursuant to which such subsidiary of the subsidiary corporation was
incorporated. Except as may be inconsistent with the provisions of this
article, such subsidiary, if organized pursuant to article two or
article eleven of this chapter, shall have all the rights and powers
granted to housing companies by this chapter and by any other statute
pursuant to which such subsidiary of the subsidiary corporation was
organized.

(d) No member or officer of the subsidiary corporation shall receive
any additional compensation, either direct or indirect, other than
reimbursement for actual and necessary expenses incurred in the
performance of such person's duties, by reason of such person serving as
a member, director, trustee or officer of any subsidiary of the
subsidiary corporation.