2023 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* NB Repealed July 23, 2025
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, 2025
* 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, 2025
* 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, 2025
* 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, 2025
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,  or
tangible  personal property constituting modular or manufactured housing
in the case of mortgage loans purchased by the agency under its  forward
commitment program, 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, 2025
* 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, 2025
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, 2025
* (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, 2025
(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, 2025
* 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, 2025