New York Codes, Rules and Regulations › Title 9 - EXECUTIVE DEPARTMENT › Subtitle C - Division of the Budget › Part 153 - Guidelines For Mortgage Modification Agreements › Section 153.3 - Criteria established in statute for mortgage modifications

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Chapter 888 of
				the Laws of 1980 establishes explicit criteria that must be met before an
				HFA-financed housing project can qualify for a mortgage modification. The
				amendment also provides a framework or schedule for mortgage modifications by
				setting a statutory limit on the length of time that housing project rental
				rates may be held below the level of economic rent and that a housing project
				may take to pay its debt service and tax arrearages. The major statutory
				criteria that determine whether or not a project qualifies for a mortgage
				modification, and that specify the contents of an approved mortgage
				modification, are summarized below. This summary is not intended to be, nor
				should it be interpreted as, an exhaustive list of all of the statutory
				requirements imposed on mortgage modification agreements. The guidelines
				approved by the director are intended to complement those criteria and to
				resolve important issues concerning the content of mortgage modification
				agreements, which the amendment does not address.
(b) Eligible housing projects. The owners of
				a housing project may enter into an agreement modifying the terms of the
				mortgage on that project only if the imposition of total economic rent (rent
				levels which are high enough to generate revenues that are sufficient to pay
				all current costs of operating the project, plus accumulated arrearages) would
				require an increase in the project's rental rates or carrying charges of 20
				percent or $10 per room per month, whichever is greater. (See section 60,
				Private Housing Finance Law.)
(c)
				Duration of the mortgage modification. As part of a mortgage modification
				agreement, a housing company and HFA may agree to vary rental rates or carrying
				charges at a housing project below the level of economic rent for as much as 75
				months, so long as rents reach the level of current economic rent at the end of
				that period. Current economic rent is defined in the amendment to be the rent
				or carrying charges sufficient to provide for the payment of all current costs
				of operating a housing project, including payments into reserve funds, real
				property taxes, water and sewer charges and mortgage payments (see section 60,
				Private Housing Finance Law). However, the amendment also requires that certain
				arrearages, which are not included in the calculation of current economic rent,
				must be cured, as described in the next subdivision.
(d) Payment of arrearages. The statute
				establishes different requirements for the payment of three distinct types of
				housing project arrearages. Debt service arrearages that accumulate before a
				mortgage modification begins are to be repaid by the date that the project's
				mortgage was originally scheduled to terminate. Debt service arrearages that
				occur during the period of the mortgage modification agreement must be paid
				within 10 years of the termination date of that agreement. Also, all real
				property tax and water and sewer charge arrearages must be paid, with interest,
				within 15 years of the effective date of the initial variation in rental rates
				or carrying charges. (See section 60, Private Housing Finance Law.)