NY Pub Auth L § 2428 (2021)
2021 New York Laws PBA - Public Authorities Article 8 - Miscellaneous Authorities Title 17 - State of New York Mortgage Agency Act Part 2 2428 - Insurance of Mortgages.

§ 2428 Insurance of mortgages. 1. The agency is authorized, subject to the  provisions  of  this  article, to make commitments to insure and to contract to insure mortgage loans eligible for insurance hereunder.   * 1-a. The agency may issue commitments to  provide  and  may  provide pool  insurance in an amount not in excess of twenty-five percent of the outstanding principal indebtedness at the  time  of  commitment  of  any aggregate  of  mortgage loans or with respect to mortgage loans acquired pursuant  to  section  twenty-four  hundred  five-b   of   this   title, twenty-five  percent  of  the  initial  principal  indebtedness  of  any aggregate of mortgage loans.   * NB Repealed July 23, 2023   2. The agency  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  agency 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, pursuant to rules or regulations which it shall establish that the extent  of  rehabilitation  is  sufficient  to  justify  such additional insurance, provided further, however, that  the  agency  may  insure  an amount  equal  to  the  full outstanding principal indebtedness when the 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 loan, or when the loan has been made by a public employee pension fund.   However, the sum of the percentage of any mortgage loan insured by the agency 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.   * 2-a. The agency may issue a commitment to provide and may  insure  a preservation  loan  in an amount equal to the full outstanding principal indebtedness of such preservation loan if: (a) the existing indebtedness shall have been originated during the period  from  January  first,  two thousand four through December thirty-first, two thousand eight; (b) the amount  of  each  insured preservation loan shall not exceed one hundred fifty million dollars; (c) such  preservation  loan  shall  preserve  or create  affordable housing accommodations; and (d) the preservation loan shall have 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 shall have been,  or  will  be,  used  to  make  such  preservation  loan,  or  the preservation  loan  shall  have  been  made by a public employee pension fund.   * NB Repealed July 23, 2023   * 3. Except for pool insurance, and except as  otherwise  provided  in subdivision  three-a  of  this  section,  the  agency  shall not issue a commitment to insure nor shall it insure any loan unless it shall  first find  (a)  that  the  property  which  is  the security for such loan is located in a neighborhood characterized by  a  deficiency  of  available mortgage  financing; (b) that such deficiency has caused or threatens to cause  undermaintained  and  deteriorating  housing  accommodations  and substandard  and insanitary neighborhoods; (c) that the granting of such loan will aid in the preservation or rehabilitation of the  neighborhood in  which  such  property  is  located; (d) if the property which is the security for such loan is not a housing accommodation, that the granting of such loan will assist in  preventing  the  deterioration  of  housing accommodations  in  the  neighborhood in which such property is located; (e) that the sum of (i) twenty percentum or such  percentum  as  may  be  established  by the board of the agency pursuant to subdivision seven of this section, of the amount of such loan which is to  be  insured,  plus (ii)  the  amount  of  the  mortgage  insurance fund requirement for the category  of  loan  does  not exceed the amount available in the special account; and (f) that the property which is the security for  such  loan meets  such  other  requirements  as  the  agency  may from time to time establish by guidelines adopted by the agency.   The agency shall not issue a commitment to provide pool insurance  nor shall  it provide such insurance unless it shall first find (a) that the sum of (i) twenty per centum, or such per centum as may  be  established by  the  board  of  the  agency  pursuant  to  subdivision seven of this section, of the amount of such loans or aggregate of loans which  is  to be  insured,  plus  (ii)  the  amount  of  the  mortgage  insurance fund requirement for  the  category  of  loan  does  not  exceed  the  amount available in the pool insurance account; and (b) that the property which is  the security for such loan or loans meets such other requirements as the agency may from time to time establish by guidelines adopted by  the agency.   The agency may issue a commitment to insure and may insure an existing loan,  first  when an application for such mortgage insurance is pending prior to the making of a loan, when significant circumstances beyond the reasonable control of the mortgagor and mortgagee necessitate the making of the loan prior to the issuance of the commitment to insure  and  when it  is  determined by the agency that such loan would not have been made except for the reasonable expectation that the agency would  insure  the loan,  or  second,  as  part  of  a  transaction  in which the financial institution requesting insurance makes additional loan  or  loans  which qualify  for  insurance  by the agency, in accordance with provisions of this section and requirements established by  the  agency,  in  a  total amount  such that the uninsured portion of such additional loan or loans equals or exceeds the insured portion of such existing loan or loans.   * NB Effective until July 23, 2023   * 3. The agency shall not issue a commitment to insure  nor  shall  it insure  any  loan unless it shall first find (a) that the property which is the security for such loan is located in a neighborhood characterized by  a  deficiency  of  available  mortgage  financing;  (b)  that   such deficiency   has  caused  or  threatens  to  cause  undermaintained  and deteriorating housing  accommodations  and  substandard  and  insanitary neighborhoods;  (c)  that  the  granting  of  such  loan will aid in the preservation  or  rehabilitation  of  the  neighborhood  in  which  such property  is located; (d) if the property which is the security for such loan is not a housing accommodation, that the granting of such loan will assist in preventing the deterioration of housing accommodations in  the neighborhood  in which such property is located; (e) that the sum of (i) twenty percentum or such percentum as may be established by the board of the agency pursuant to subdivision seven of this section, of the  amount of  such  loan  which  is  to  be  insured,  plus (ii) the amount of the mortgage insurance fund requirement for the category of  loan  does  not exceed  the  amount  available  in the special account; and (f) that the property  which  is  the  security  for  such  loan  meets  such   other requirements  as the agency may from time to time establish by rules and regulations.   The agency may issue a commitment to insure and may insure an existing loan, first when an application for such mortgage insurance  is  pending prior to the making of a loan, when significant circumstances beyond the reasonable control of the mortgagor and mortgagee necessitate the making of  the  loan prior to the issuance of the commitment to insure and when it is determined by the agency that such loan would not have  been  made  except  for  the reasonable expectation that the agency would insure the loan, or second, as  part  of  a  transaction  in  which  the  financial institution  requesting  insurance  makes additional loan or loans which qualify  for  insurance  by the agency, in accordance with provisions of this section and requirements established by  the  agency,  in  a  total amount  such that the uninsured portion of such additional loan or loans equals or exceeds the insured portion of such existing loan or loans.   * NB Effective July 23, 2023   * 3-a. The agency may issue a commitment to insure and may insure  any loans  or  aggregate  of loans and may issue a commitment to provide and may provide mortgage pool insurance on any loans or aggregate of  loans, notwithstanding  the criteria set forth in subparagraph (a), (b), (c) or (d) of the opening  paragraph  of  subdivision  three  of  this  section provided  that it shall find that the property which is the security for such loan or  loans  is  either:  (a)  located  within  an  empire  zone designated  pursuant to article eighteen-B of the general municipal law, or (b) will provide affordable housing, or (c) the entity providing  the project's  mortgage  financing  was  or  is  created  by local, state or federal legislation and certifies to the agency that the  project  meets the  program  criteria  applicable  to  such  entity, or (d) providing a retail or  community  service  facility  that  would  not  otherwise  be provided.   * NB Repealed July 23, 2023   3-b.  Notwithstanding any other provision of law to the contrary, when such insurance is not available through the private  market  the  agency may insure reverse mortgage loans which meet the following conditions:  (a)  the  authorized lender requires primary mortgage insurance on the real property and the applicant  is  unable  to  procure  such  mortgage insurance in the private market;  (b)  the  reverse  mortgage  loan  is  issued  pursuant to section two hundred eighty or two hundred eighty-a of the real property law;  (c) the reverse mortgage loan amount shall  not  exceed  the  loan  to value  ratio  as  may  be  determined by the superintendent of financial services; and  (d) the real property which is the security for such reverse  mortgage loan  meets  such other requirements as the agency may from time to time establish.   * 4. To be eligible for insurance under this article, a mortgage  loan shall  (a)  (i)  be  a first lien of the kind which is commonly given to secure advances on, or the unpaid purchase price of, real property under the laws of the  state  together  with  any  credit  instrument  secured thereby, provided, however, that a mortgage loan may be a second lien if such  mortgage loan was purchased by the agency or (ii) be secured by an assignment or transfer  of  stock  certificates  or  other  evidence  of ownership  interest  of the borrower in, and a proprietary lease from, a corporation formed for the  purpose  of  the  cooperative  ownership  of residential  real  estate  in  the state; (b) secure a rehabilitation or preservation loan on real property held in fee simple or on a  leasehold under  a proprietary lease or a lease having a period of years to run at the time the mortgage is insured under this article of at  least  twenty per centum greater duration than the remaining term of the mortgage; (c) contain   terms   with   respect   to  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 agency may in its discretion prescribe; (d) be accompanied by certificates,  issued by  such  officers  of  the mortgage financial institutions, independent appraisers or other persons as the agency may require,  certifying  that  (i) where appropriate, the annual income to be derived from the property equals  not  less  than  one  hundred  and five per centum of the annual charges and expenses, including provision for reserves, satisfactory  to the  agency, for the amortization of subordinate mortgage loans over the remaining terms of such loans notwithstanding  the  provisions  thereof; (ii)  the remaining useful life of the property is greater than the term of the mortgage; and (iii) the property does not contain any substantial violations of local building maintenance and construction codes,  except that  in  the  case of a loan made to the owner of a property containing any such violations, the agency may insure or commit to insure such loan if the mortgagee and the owner have submitted a  plan,  satisfactory  to the  agency  to  eliminate  such  violations  and  the  issuance of such insurance shall be conditioned on removal  of  such  violations  to  the satisfaction  of the local code enforcement agency; and (e) satisfy such additional terms and conditions as the agency may  prescribe.  For  pool insurance,  the  requirements of paragraph (b) of this subdivision shall not be applicable.   * NB Effective until July 23, 2023   * 4. To be eligible for insurance under this article, a mortgage  loan shall  (a)  (i)  be  a first lien of the kind which is commonly given to secure advances on, or the unpaid purchase price of, real property under the laws of the  state  together  with  any  credit  instrument  secured thereby, provided, however, that a mortgage loan may be a second lien if such  mortgage loan was purchased by the agency or (ii) be secured by an assignment or transfer  of  stock  certificates  or  other  evidence  of ownership  interest  of the borrower in, and a proprietary lease from, a corporation formed for the  purpose  of  the  cooperative  ownership  of residential  real  estate  in  the state; (b) secure a rehabilitation or preservation loan on real property held in fee simple or on a  leasehold under  a proprietary lease or a lease having a period of years to run at the time the mortgage is insured under this article of at  least  twenty per centum greater duration than the remaining term of the mortgage; (c) contain   terms   with   respect   to  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 agency may in its discretion prescribe; (d) be accompanied by certificates,  issued by  such  officers  of  the mortgage financial institutions, independent appraisers or other persons as the agency may require,  certifying  that (i) where appropriate, the annual income to be derived from the property equals  not  less  than  one  hundred  and five per centum of the annual charges and expenses, including provision for reserves, satisfactory  to the  agency, for the amortization of subordinate mortgage loans over the remaining terms of such loans notwithstanding  the  provisions  thereof; (ii)  the remaining useful life of the property is greater than the term of the mortgage; and (iii) the property does not contain any substantial violations of local building maintenance and construction codes,  except that  in  the  case of a loan made to the owner of a property containing any such violations, the agency may insure or commit to insure such loan if the mortgagee and the owner have submitted a  plan,  satisfactory  to the  agency  to  eliminate  such  violations  and  the  issuance of such insurance shall be conditioned on removal  of  such  violations  to  the satisfaction  of the local code enforcement agency; and (e) satisfy such additional terms and conditions as the agency may prescribe.   * NB Effective July 23, 2023   5. In addition to the conditions set forth in subdivisions  three  and four of this section, the agency shall not insure nor issue a commitment to  insure  any  rehabilitation  loan  unless  it  shall first find that  rehabilitation  is  necessary  to  upgrade   the   property   and   that rehabilitation  will  not  necessitate  more  than  a  minimum amount of relocation of the residents of any housing accommodation.   6.   A   financial   institution  may  request  insurance  by  written application to the agency in such form and manner,  together  with  such information  and  documents, as the agency may prescribe. No application shall be complete unless and until the financial  institution  has  paid such  processing  fees  and  other  charges  as the agency may impose in connection therewith. The agency shall signify its  acceptance  of  such application  for  insurance  by  issuance of a commitment to insure or a contract of insurance.   7. * (a) The board of directors of the agency may, from time to  time, by  vote  of  a  majority  of all of its members, establish a percentage greater  than  the  per  centum  set  in  subdivision  five  of  section twenty-four  hundred  twenty-six  of  this  title  for any or all of the following categories of loans insurable by the agency or for one or more loans within such categories: one to four family dwellings one  unit  of which  is  owner-occupied;  one  to  four family dwellings which are not owner-occupied; five  or  more  family  dwellings;  proprietary  leases; condominiums;  loans  secured by other real property; loans purchased or to be purchased by the agency with proceeds of bonds or notes issued  by the  agency;  loans  securing bonds or notes issued by the agency; loans covered by pool insurance; or, combinations  thereof.  The  board  shall specify  such  percentage  and  shall  specify  the  date  on  which the establishment of such percentage shall take effect as to (i) commitments issued on or after such date and (ii) nothing contained in this  section shall be construed to prohibit the board of directors of the agency from reducing  the per centum used in calculating the mortgage insurance fund requirement, provided such new per centum is not less than that  set  in subdivision  five  of  section  twenty-four  hundred  twenty-six of this title.   * NB Effective until July 23, 2023   * (a) The board of directors of the agency may, from time to time,  by vote  of  a majority of all of its members, establish a percentage other than the percentum  set  in  subdivision  five  of  section  twenty-four hundred  twenty-six  of  this  chapter  for  any or all of the following categories of loans insurable by the agency:  single  family  residences which  are  owner-occupied;  single  family  residences  which  are  not owner-occupied;    multi-family    residences;    proprietary    leases; condominiums  and loans secured by other real property; or, combinations thereof. The board shall specify such percentage in  multiples  of  five and shall specify the date on which the establishment of such percentage shall take effect as to commitments issued on or after such date.   * NB Effective July 23, 2023  (b)  No  change  in  the  amount  of  moneys  which must be held in or credited to the mortgage insurance fund pursuant  to  paragraph  (a)  of this  subdivision  shall  have force or effect until the governor of the state of New York shall have an opportunity to approve or veto  it.  For the  purpose  of  procuring  such approval or veto, the secretary of the board shall transmit to the governor at the executive chamber in  Albany a  certified  copy  of that portion of the minutes of the meeting of the board in which such change was discussed and voted upon  as  soon  after the holding of such meeting as the minutes can be prepared. The governor shall,  within  thirty  days,  Saturdays,  Sundays  and  public holidays excepted, after such minutes shall have been delivered at the  executive chamber  as aforesaid, cause the same to be returned to the board either with his approval or with his  veto,  provided,  however,  that  if  the governor  shall  not  return such minutes within such period then at the  expiration thereof the change therein authorized will  have  full  force and effect according to the wording thereof. If the governor within such period  returns  such  minutes with a veto against the change, then such change shall be null and void.   * 8. Notwithstanding any contrary provisions of this article or of any other  law,  rule or regulation, on and after the effective date of this subdivision;  (a) Except for pool insurance, the agency shall not issue a commitment to insure nor shall it provide loan insurance for  any  loan  if  twenty percent  (or  such  other  percentage  as may be established pursuant to subdivision seven of this section) of the amount to be  insured  exceeds ten  percent  of  the  mortgage insurance fund requirement for all loans insured and loans for which commitments to insure have  been  issued  at that time.  (b) If less than fifty percent, or none of the space of the project is or  is  to  be  used  for  residential purposes, the amount of such loan insurance shall not  exceed  five  million  dollars  and  no  such  loan insurance  may be issued unless the agency finds that the space which is to be used for other than residential purposes is to be used to  provide the  residents  of  the  neighborhood  with retail and community service facilities which would not otherwise be provided. The provisions of this paragraph shall not apply to loan insurance for projects  which  provide temporary shelter for homeless persons or community health facilities.  (c)  The  agency  shall  not issue a commitment to insure nor shall it provide loan insurance for a preservation loan unless: (i) such loan  is made with respect to a one to four family dwelling; or (ii) such loan is made  with  respect  to  a building, which on the effective date of this subparagraph, is owned by a cooperative housing corporation  formed  for the  purpose  of the cooperative ownership of residential real estate in the state where such refinancing is not  otherwise  available  and  such loan   will   facilitate   or   accommodate   affordable   homeownership opportunities; or (iii) such loan is  made  with  respect  to  the  real property  and  improvements  owned  by a cooperative housing corporation formed for the purpose  of  the  cooperative  ownership  of  residential manufactured  homes in the state where such refinancing is not otherwise available and  such  loan  will  facilitate  or  accommodate  affordable homeownership  opportunities;  or (iv) such loan is made with respect to multi-family residential buildings with existing indebtedness originated during the period from January first, two thousand four through December thirty-first, two thousand eight, where such  loan  will  facilitate  or accommodate the preservation of affordable housing accommodations.   * NB Effective until July 23, 2023   * 8. Notwithstanding any contrary provisions of this article or of any other  law,  rule or regulation, on and after the effective date of this subdivision;  (a) The agency shall not issue a commitment to  insure  nor  shall  it provide  loan  insurance  for  an  amount in excess of the lesser of ten million dollars or forty percent of the amount of money  on  deposit  in the mortgage insurance fund at that time.  (b) If less than fifty percent, or none of the space of the project is or  is  to  be  used  for  residential purposes, the amount of such loan insurance shall not  exceed  five  million  dollars  and  no  such  loan insurance  may be issued unless the agency finds that the space which is to be used for other than residential purposes is to be used to  provide the  residents  of  the  neighborhood  with retail and community service facilities which would not otherwise be provided.  (c) The agency shall not issue a commitment to  insure  nor  shall  it provide  loan  insurance for a preservation loan unless (i) such loan is  made with respect to a one to four family dwelling; or (ii) such loan is made with respect to a building, which on the  effective  date  of  this subparagraph,  is  owned by a cooperative housing corporation formed for the  purpose  of the cooperative ownership of residential real estate in the state where such refinancing is not  otherwise  available  and  such loan   will   facilitate   or   accommodate   affordable   homeownership opportunities; or (iii) such loan is  made  with  respect  to  the  real property  and  improvements  owned  by a cooperative housing corporation formed for the purpose  of  the  cooperative  ownership  of  residential manufactured  homes in the state where such refinancing is not otherwise available and  such  loan  will  facilitate  or  accommodate  affordable homeownership opportunities.   * NB Effective July 23, 2023