2023 New York Laws › PBA - Public Authorities › Article 8 - Miscellaneous Authorities › Title 17 - State of New York Mortgage Agency Act › Part 1 › 2405-C - Purchase of New Housing Loans.

* §  2405-c.  Purchase  of new housing loans. (1) The agency is hereby
directed, to the extent it finds it practicable, to establish a  program
whereby  it  purchases  new  housing  loans  from banks within the state
during periods when there is an inadequate supply  of  credit  available
for  new  residential  improvement  loans or available for such loans at
carrying charges within the financial means of persons and  families  of
low or moderate income.
It  is  hereby  found  and declared that such activities by the agency
will alleviate a condition in this state which is contrary to the public
health, safety and general welfare and which has constituted in the past
and from time to time in the future can  be  expected  to  constitute  a
public  emergency.  It  is further found and declared that such purposes
are in all respects for the benefit of the people of the  state  of  New
York  and  the  agency  shall  be  regarded  as  performing an essential
governmental function in carrying out its purposes and in exercising the
powers granted by this title.
(2) The agency shall purchase new housing loans  from  banks  at  such
prices  and  upon  such  terms  and  conditions  as  it shall determine;
provided, however, that each borrower receiving a housing loan purchased
by the agency shall be a person of low or moderate income  and  provided
further  that  the  total  purchase  price,  exclusive  of  any  amounts
representing a refund of commitment or other fees paid by a bank to  the
agency,  for all housing loans which the agency commits to purchase from
a bank at any one time shall in no event be more than the total  of  the
unpaid principal balances thereof, plus accrued interest thereon.
(3)  In  conducting  its  program of purchasing new housing loans, the
agency shall not be governed or limited by the provisions of clause (i),
(ii)  or  (iii)  of  paragraph  (b)  of  subdivision  three  of  section
twenty-four hundred five of this title.
(4) The agency shall require as a condition of purchase of new housing
loans  from banks that each such bank certify that each such new housing
loan is to an individual borrower and is  in  addition  to  the  housing
loans such certifying bank otherwise would have made.
(5)  Notwithstanding  the  maximum  interest  rate,  if  any, fixed by
section 5-501 of the general  obligations  law  or  any  other  law  not
specifically  amending or applicable to this section, the agency may set
the interest rate to be borne by new  housing  loans  purchased  by  the
agency  from banks at a rate or rates which the agency from time to time
shall determine to be at  least  sufficient,  together  with  any  other
available monies, to provide for the payment of its bonds and notes, and
new  housing  loans  bearing  such  interest rate shall not be deemed to
violate any such law or to be unenforceable if originated by a  bank  in
good  faith  pursuant  to an undertaking with the agency with respect to
the sale thereof notwithstanding any subsequent failure of the agency to
purchase the housing loan or any subsequent sale or disposition  of  the
housing loan by the agency to such bank or any other person.
(6)  The  agency  shall require the submission to it by each bank from
which the agency has purchased new housing loans  evidence  satisfactory
to  the  agency of the making, and if applicable, the servicing, of such
new housing loans in conformity with such bank's  undertaking  with  the
agency  and in connection therewith may, through its employees or agents
or those of the department of financial services, inspect the books  and
records of any such bank.
(7)  Compliance  by  any  bank with the terms of its agreement with or
undertaking to the agency with respect to the sale, and  if  applicable,
the  servicing,  of  new  housing loans may be enforced by decree of the
supreme court. The agency may require as a condition of purchase of  new
housing  loans  from  any  national bank the consent of such bank to the

jurisdiction of the supreme court over any such proceeding.  The  agency
may  also  require agreement by any bank, as a condition of the agency's
purchase of new  housing  loans  from  such  bank,  to  the  payment  of
penalties to the agency for violation by the bank of its undertakings to
the  agency,  and such penalties shall be recoverable at the suit of the
agency.
(8) The agency shall require as a condition of  purchase  of  any  new
housing  loan  from  a  bank  that the bank represent and warrant to the
agency that:
(a) the unpaid principal balance of the housing loan and the  interest
rate thereon have been accurately stated to the agency;
(b)  the  amount  of  the  unpaid  principal balance is justly due and
owing;
(c) the bank has no notice  of  the  existence  of  any  counterclaim,
offset  or  defense  asserted  by  the  mortgagor  or  any  successor in
interest;
(d) the housing loan is evidenced and secured in the manner  specified
in  the bank's undertaking to the agency and all required loan documents
have been properly recorded with any appropriate public official;
(e) the housing loan is secured  by  the  security  described  to  the
agency  subject  only  to  liens,  security  interests  and encumbrances
described to the agency;
(f) the borrower  is  not  now  in  default  in  the  payment  of  any
installment  of principal or interest, escrow funds, real property taxes
or otherwise in the  performance  of  his  obligations  under  the  loan
documents  and  has  not to the knowledge of the bank been in default in
the performance of any such obligation for a period of longer than sixty
days during the life of the housing loan;
(g) the residential  family  dwelling  unit  improved,  rehabilitated,
reconstructed  or  redeveloped  with the proceeds of the housing loan is
covered by a valid and  subsisting  policy  of  insurance  issued  by  a
company  authorized by the superintendent of financial services to issue
such policies in the state of New York and providing fire  and  extended
coverage  to  the  extent  specified  in  the  bank's undertaking to the
agency; and
(h) the housing loan is insured or guaranteed by the United States  of
America  or  any agency thereof, or by a firm which is authorized by the
superintendent of financial services of the state of New York  to  issue
such policies in the state.
(9)  Each  bank shall be liable to the agency for any damages suffered
by the agency by reason of the untruth  of  any  representation  or  the
breach  of  any warranty and, in the event that any representation shall
prove to be untrue when made or in the event of any breach of  warranty,
the bank shall, at the option of the agency, repurchase the housing loan
for  the  original purchase price adjusted for amounts subsequently paid
thereon, as the agency shall determine.
(10) The agency need  not  require  the  recording  or  filing  of  an
assignment  of any new housing loan purchased by it from a bank pursuant
to this section and shall not be required to notify the borrower of  its
purchase  of  the  housing  loan.  The  agency  shall not be required to
inspect or take possession of the loan documents if the bank from  which
the  new  housing loan is purchased by the agency shall enter a contract
to service such housing loan and account to the agency therefor.
(11) Notwithstanding  any  other  provision  of  law,  the  agency  is
authorized  to require, as a condition to the purchase from banks of new
housing loans, such restrictions upon assumability of the loan,  default
provisions,  rights  to  accelerate,  and  other terms applicable to new
housing loans made by banks pursuant to  undertakings  with  the  agency

with  respect  to  the  sale  thereof  as the agency may determine to be
necessary or desirable to assure the repayment of its  bonds  and  notes
and  the  exemption from federal income taxes of the interest payable on
its  bonds  and  notes.  All  such  terms  shall  be  enforceable by the
originating bank, the agency, and any successor holder  of  the  housing
loan unless expressly waived in writing by or on behalf of the agency.
(12)  In  conducting  its program of purchasing new housing loans, the
agency shall use its best  efforts  to  work  in  conjunction  with  and
maximize  the  participation  of  programs  operated  by  not-for-profit
corporations  or   charitable   organizations   for   the   improvement,
rehabilitation,  reconstruction  or  redevelopment  of  one to four unit
residences.
* NB Repealed July 23, 2025