NY Priv Hous Fin L § 23-A (2021)
2021 New York Laws PVH - Private Housing Finance Article 2 - Limited-Profit Housing Companies 23-A - Mortgage Modifications, Evidence of Pre-Existing Indebtedness.

§ 23-a. Mortgage modifications, evidence of pre-existing indebtedness. 1.  Notwithstanding  the  provision  of any law, general or special, the supervising agency shall have the power to:  (i) assign or pledge or contract to  assign  or  pledge  any  mortgage securing  a  loan,  including  any loan to finance the construction of a project, and any note or bond evidencing indebtedness thereon,  made  by the  municipality in accordance with the provisions of this article, and any  contract  or  arrangement,  including  any  subsidy   contract   or arrangement,  relating  to such mortgage, and the receipts to be derived from any of the foregoing, and may reacquire or accept and  contract  to reacquire   or  accept  any  such  mortgage,  note,  bond,  contract  or arrangement, including any mortgage, note, bond, contract or arrangement made in substitution thereof, and the receipts to be derived  therefrom, or  (ii)  consent to and contract for the modification of any of the terms of a mortgage, and note  or  bond  secured  thereby,  made  pursuant  to section  twenty-three  of  this  chapter  for  the  purpose of obtaining insurance of such mortgage loan by the federal government  in  order  to refinance all or any part of the indebtedness evidenced by such mortgage and note or bond, or  (iii)  satisfy  such mortgage in order to enable the company to obtain insurance by the federal government of a  mortgage  loan  made  for  the purpose  of refinancing all or any part of the indebtedness evidenced by such mortgage and note or bond.   2. In the event that the existing mortgage loan is satisfied  pursuant to  this  section,  the  supervising  agency may in consideration of the issuance of such satisfaction accept a new mortgage  and  note  or  bond insured  by  the  federal  government  in an amount equal to the maximum principal amount of a mortgage loan the federal government  will  insure or  accept  the proceeds available to the housing company as a result of the refinancing.   3. In the event that  there  is  residual  indebtedness,  the  housing company  shall  make  and  the  supervising  agency  shall  accept  such instruments evidencing such indebtedness  as  may  be  required  by  the supervising  agency as are consistent with the provisions of subdivision fifteen of section twelve of this chapter, in such form  and  upon  such terms as the supervising agency may approve. In the event that there are residual  receipts  obligations,  the  housing  company may make and the supervising agency may accept instruments evidencing such obligations in accordance with the provisions of subdivision sixteen of section  twelve of this chapter.   4.  Notwithstanding  any  other  provisions  of  this  article  or any general, special or local law, where the supervising agency has made the findings required in subdivision one of section  twenty-six  or  section twenty-six-a   and  where  a  project  has  been  approved  pursuant  to subdivision five of section twenty-six of this chapter, the  supervising agency  may  make  or contract to make a mortgage loan or exercise other related powers pursuant to this section  or  section  twenty-three-b  or subdivision  twenty-two-a  of  section  six  hundred  fifty-four of this chapter without further findings by the supervising  agency  or  further approval by the local legislative body.   4-a.  Notwithstanding  the  provisions of this article or any general, special or local law to the contrary, where an existing mortgage loan is modified or satisfied pursuant  to  this  section  and  the  supervising agency has approved a new or modified mortgage or mortgages, including a mortgage  and  note  or  bond  insured  by  the federal government and a mortgage to secure residual indebtedness,  the  supervising  agency  may sell,  assign,  or  otherwise  dispose of, at public or private sale, on  such terms  and  conditions  as  shall  be  deemed  appropriate  by  the supervising  agency  subject to the approval of the comptroller or chief fiscal officer of the municipality wherein such agency is located,  such new or modified mortgage or mortgages and related instruments.   4-b.  Notwithstanding  the  provisions of this article or any general, special or local law to the contrary, where an existing mortgage loan is modified or satisfied pursuant to this section, the  supervising  agency may pay or incur fees, costs, expenses and other amounts, whether or not any  amounts  have  been  appropriated  therefor  in order to (1) meet a municipality's  obligations  under  an  agreement   with   the   federal government   on   account   of   mortgage  insurance,  provided  that  a municipality's share of any mortgage insurance claim paid by the federal government shall not exceed fifty percent of the insurance benefits paid by the federal government, and further provided  that  a  municipality's share  of  such  claims  under  any  contract  or contracts entered into between a municipality and the federal government shall not exceed  five percent  of  the  outstanding  principal  amount of all mortgages of the municipality at any time insured by the federal government and  included within  such  contract, (2) make loans for, or establish escrow accounts for the issuance of mortgage insurance, (3) absorb discounts  associated with  any  sale,  assignment  or other disposition of a mortgage note or bond insured by the federal government, (4) pay  fees  required  by  the federal   government  as  a  condition  for  the  issuance  of  mortgage insurance, (5) install such life safety devices and satisfy such minimum property standards, as may be required by the federal  government  which devices  or  standards are in addition to any requirement imposed by the municipality as mortgagee and to make loans for such purposes,  (6)  pay closing and other costs related to obtaining mortgage insurance from the federal  government,  (7)  permit  the municipality to issue obligations secured by such mortgage or mortgages, (8) meet such other costs as  the federal government may from time to time impose, (9) pay any amounts not previously  advanced under a mortgage or mortgages modified or satisfied pursuant to this section, and (10) hold an amount not to  exceed  twenty million  dollars at any one time in a revolving account for a period not to exceed eighteen months from the time of the first deposit therein, to pay fees, costs, expenses and other amounts attributable to  making  and insuring  mortgages  pursuant to this section or attributable to issuing obligations secured by such mortgages.   If the municipality  sells  any such mortgages insured by the federal government for an amount in excess of  the  principal  amount  thereof  at the time of such sale, or if the municipality issues obligations secured by any such  mortgages  and  the yield  on  such  mortgages is greater than the yield on such obligations (the yield on such mortgages and obligations having been  calculated  in accordance  with  section one hundred three of the internal revenue code of the United States and regulations thereunder), then any such  premium and any such differential may be used by the municipality for any lawful purpose,  provided,  however,  that an amount equal to the annual sum of such premium and such differential, to the extent such  differential  is not paid to or for the benefit of the holders of such obligations, shall be credited annually by the municipality, at such times as determined by the  supervising  agency, as a payment by all municipally-aided projects then having residual  indebtedness,  of  the  then  accrued  and  unpaid interest  on  such  residual  indebtedness.  To the extent that any such credit otherwise allocable to a  project  in  any  year  exceeds  unpaid interest on the residual indebtedness of such project in that year, such excess  credit  shall  be  allocated  among  all other eligible projects having accrued and unpaid interest  on  residual  indebtedness  in  that year.  Notwithstanding  the provisions of the foregoing sentence of this  subdivision, if an eligible project has made cash payments in  any  year for  the  sum  of  (i)  interest on and principal of a federally insured mortgage and (ii) interest on and principal of residual indebtedness and (iii)  all other payments on account of such insured mortgage, including mortgage insurance premium and reserves, at least equal to  the  sum  of (i)  interest  and  principal  which would have been due annually on the original mortgage loan for the project, at the interest rate  in  effect at  the  time  the  project  is  refinanced, and (ii) all other required annual payments on account of  such  original  mortgage  loan,  such  as reserve  requirements, then any excess credit allocable to such eligible project shall be credited in the next succeeding year as  a  payment  of interest  on  residual  indebtedness  of  such  project  before any cash payment is required to  be  made  for  such  interest.  Subject  to  the provisions  of  the preceding sentence of this subdivision, if the total of such credit in any year available for all eligible  projects  exceeds the  total  of  all accrued and unpaid interest in that year on residual indebtedness of all eligible projects then having residual indebtedness, an amount equal to such excess  credit  shall  be  carried  forward  and credited  in future years as a payment of accrued and unpaid interest on residual indebtedness of eligible projects in future  years  until  such time  as no further interest remains unpaid with respect to any residual indebtedness of eligible projects.  The supervising agency shall  divide such  credit  among  eligible  projects  on  the basis of the respective original  principal  amounts  of  the  federally  insured  mortgages  on eligible   projects;  provided,  however,  that  such  credit  shall  be allocated to projects which receive federal subsidies only to the extent that  such  subsidies  are  not  thereby  reduced.  When  there   is   a participation, new loan or investment pursuant to section twenty-three-b of this article for which the consent of a company is required and which will  be  substantially  equivalent to a refinancing pursuant to section twenty-three-a  or  subdivision  twenty-two-a  of  section  six  hundred fifty-four  of  this  article, then for purposes of this subdivision the interest of the municipality  after  such  participation,  new  loan  or investment  which  is  secured  by  a mortgage shall be deemed to be the equivalent of residual indebtedness and  the  interest  of  entities  or organizations  other  than  the  municipality in such participation, new loan or investment shall be deemed to be the equivalent of  a  federally insured mortgage.   5.  No  company  shall  accept  a  mortgage  loan to be insured by the federal government made for the  purpose  of  refinancing  the  existing mortgage  loan  of  a company which shall exceed the amount which can be supported by the income derived from the operation of the project at the rental rate determined by the supervising agency that would be necessary to meet all necessary payments  to  be  made  by  the  company,  of  all expenses  including fixed charges, sinking funds, reserves and dividends on outstanding stock, as authorized by the supervising  agency,  if  the principal amount of the original mortgage loan of the company were to be fully  repaid  over the term of such mortgage loan by constant and equal payments of principal and interest and  if  the  interest  rate  on  the company's  original  mortgage  loan  was  eight and one-half percent per annum or, where the original mortgage loan provides for the  payment  of interest  at  a maximum rate of less than eight and one-half percent per annum, such maximum amount.   6. A company shall not accept a mortgage to be insured by the  federal government for the purpose of refinancing an existing mortgage loan of a municipally-aided  project  unless  the  sum  of  interest and principal payable in respect of  such  mortgage  to  be  insured  by  the  federal government and in respect of any residual indebtedness, over the term of  such  mortgage  and residual indebtedness, shall be no more than the sum of interest and principal that  would  be  payable  in  respect  of  the existing mortgage loan, over the term of such existing mortgage loan, at an  interest  rate  of eight and one-half percent per annum or where the existing mortgage loan provides for a maximum interest rate of less than eight and one-half percent, at such maximum interest rate.   7. The terms of any  mortgage  securing  residual  indebtedness  of  a municipally-aided  project  shall include a provision to the effect that so long as the project is subject to a mortgage insured or held  by  the federal  government  (a)  interest  on  and  principal  of such mortgage securing residual indebtedness shall be  payable  only  if  and  to  the extent  to  which  surplus  cash,  as  defined in a regulatory agreement excecuted  by  the  housing  company  and  the  federal  government,  is available,  and  (b)  the  failure to pay interest and principal on such mortgage securing residual indebtedness shall not constitute an event of default unless surplus  cash  is  available  and  not  applied  to  such payments of interest and principal.   8.  Ten  days  before an initial application is filed with the federal government to obtain insurance by the federal government of  a  mortgage for  the purpose of refinancing all or any part of a mortgage loan for a municipally-aided  project  pursuant  to   section   twenty-three-a   or subdivision  twenty-two-a  of  section  six  hundred  fifty-four of this chapter, the supervising agency shall (a) mail to the president or other representative of the  tenants'  association  or  cooperators'  advisory council, recognized by the supervising agency for such municipally-aided project, written notice of the proposed refinancing, including a copy of such   initial  application,  and  (b)  make  a  copy  of  such  initial application  available  at  its  offices  during  business  hours,   for inspection  and  copying  by  the  residents  of  such municipally-aided project. Ten days before the closing of a  proposed  participation,  new loan  or investment with respect to a municipally-aided project pursuant to section twenty-three-b of this article, the supervising agency  shall (a)  mail  to  the  president  or  other  representative of the tenants' association  or  cooperators'  advisory  council,  recognized   by   the supervising agency for such municipally-aided project, written notice of such proposed participation, new loan or investment, including a summary of  the  principal  terms and conditions thereof, and (b) make a copy of such summary  available  at  its  offices  during  business  hours,  for inspection  and  copying  by  the  residents  of  such municipally-aided project. The unintentional failure of the supervising agency  to  comply with  the  foregoing provisions of this subdivision shall not invalidate or otherwise affect any such refinancing of a mortgage loan or any  such participation, new loan or investment.