NY Priv Hous Fin L § 654-D (2021)
2021 New York Laws PVH - Private Housing Finance Article 12 - New York City Housing Development Corporation 654-D - Residential Mortgage Insurance Corporation.

§  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.