N.Y. Private Housing Finance Law § 111: Mortgages and mortgage bonds

§ 111. Mortgages and mortgage bonds. Any redevelopment company,

subject to the approval of the supervising agency, may borrow funds and

secure the repayment thereof by bond and mortgage or by an issue of

bonds under a trust indenture. Each mortgage or issue of bonds of a

redevelopment company shall relate only to a single specified project

and to no other and such bonds shall be secured by mortgage upon all of

the real property of which such project consists.

First lien bonds of such redevelopment company when secured by a

mortgage not exceeding ninety per centum of the estimated cost prior to

the completion of the project, and in no event exceeding ninety per

centum of the actual cost upon such completion, as certified by the

supervising agency, or, in the case of a completed project, not

exceeding ninety per centum of the appraised value or such previously

certified actual cost, whichever is less, are hereby declared securities

in which all public officers and bodies of the state and of its

municipal subdivisions, all insurance companies and associations, all

savings banks and savings institutions, including savings and loan

associations, executors, administrators, guardians, trustees and all

other fiduciaries in the state may properly and legally invest the funds

within their control.

First lien bonds of such a redevelopment company issued under a trust

indenture and pursuant to a building loan contract, or a building loan

bond and building loan mortgage under which advances are made pursuant

to a building loan contract, where the aggregate principal amount to be

issued or advanced does not exceed ninety per centum of the estimated

cost prior to the completion of the project, and in any event does not

exceed ninety per centum of the actual cost upon such completion, as

certified by the supervising agency, are hereby declared securities in

which all banks, savings banks, savings institutions and trust companies

in addition to all such officers, bodies, companies, associations,

institutions and fiduciaries may properly and legally invest the funds

within their control; provided, however, that such investment is made as

a construction loan with a maturity of not to exceed two years. The

maturity of any such construction loan may be extended from time to time

with the approval of the board of directors or trustees of the bank,

savings banks, savings institutions or trust company holding such loan

but no one such extension shall be for a period of time exceeding six

months.

The bonds so issued and secured and the mortgage or trust indenture

relating thereto, may create a first or senior lien and a secondary or

junior liens upon the real property embraced in any project; provided,

however, that the total mortgage liens shall not exceed ninety per

centum of the estimated cost prior to the completion of the project, and

shall not in any event exceed ninety per centum of the actual cost upon

such completion, or, in the case of a completed project, not exceeding

ninety per centum of the appraised value or such previously certified

actual cost, whichever is less. Such bonds and mortgages or trust

indentures may contain such other clauses and provisions as shall be

approved by the supervising agency, including the right to assignment of

rents and entry into possession in case of default and including in the

case of a redevelopment company which is a partnership or trust the

right of the partners or trustees, as the case may be, to be free of any

personal liability thereunder; but the operation of the housing project

in the event of such entry by mortgagee or receiver shall be subject to

regulations promulgated by the supervising agency. Provisions for the

amortization of the bonded indebtedness of companies formed under this

article shall be subject to the approval of the supervising agency. So

long as funds made available by the federal government or any

instrumentality thereof or any mortgage or mortgage bonds, insured by

the federal housing administrator or any other instrumentality of the

federal government are used in financing, in whole or in part, any

project under this article, the capital structure of a redevelopment

company undertaking such project and the proportionate amount of the

cost of the lands and improvements to be represented by mortgages or

bonds shall be entirely in the discretion of the supervising agency; and

all restrictions as to the maturity of any construction loan and as to

the amounts to be represented by mortgages, mortgage bonds, income

debentures or capital shall be inapplicable to such projects or to

redevelopment companies undertaking such projects, except that the

bonds, mortgages, debentures and capital covering any project shall not

exceed the total actual final cost of such project as defined in

subdivision two of section one hundred twelve of this article.

Interest rates on mortgage indebtedness shall not exceed the greater

of

(a) six percentum per annum,

(b) the rate prescribed by the superintendent of financial services

pursuant to section fourteen-a of the banking law,

(c) the rates of mortgages or mortgage bonds insured by the federal

housing administration or any other instrumentality of the federal

government and

(d) such rate as may be approved by the supervising agency provided,

however, that the applicable rate for purposes of paragraphs (b), (c)

and (d), of this section one hundred eleven shall be the rate applicable

or approved at the time the redevelopment company incurs the mortgage

indebtedness.

As used in this section the term "bond" includes a note heretofore or

hereafter made.