N.Y. Private Housing Finance Law § 23-b: Participation in loan or investment

§ 23-b. Participation in loan or investment. Notwithstanding any other

provisions of this article or of any general, special or local law,

where a municipality has made or contracted to make a mortgage loan to a

company to finance a project: one or more banking organizations as

defined in subdivision eleven of section two of the banking law,

educational institutions, hospitals, medical research institutes,

insurance companies, trustees or fiduciaries, including fiduciaries

holding funds for investment, the New York city housing development

corporation, other public corporations, or other entities which

purchase, invest, or deal in first mortgage loans in the normal course

of their business, or any combination of the foregoing, shall have the

power to participate in such loan or make or participate in a new loan

secured by a bond or note and a single participating mortgage, or by

separate bonds or notes and separate mortgages, or to invest, singly or

jointly, with the municipality in a bond or note and single

participating mortgage or in separate bonds or notes and mortgages or in

a new mortgage or mortgages with respect to all or a portion of the loan

by a municipality to a company; and the supervising agency shall have

the power, upon the mortgagor's consent, to modify the terms and

conditions of the original bond or bonds or note or notes and mortgage

or mortgages and any other documents executed in connection with such

original loan, as the supervising agency may deem necessary or desirable

to provide for such participation, new loan or investment as provided in

this section, including but not limited to (i) modification of the rate

and time of payment of interest on the original loan or rate and time of

amortization of principal thereof, (ii) providing for priority for

payment of the principal of and interest on that portion of the mortgage

indebtedness attributable to such participation, new loan or investment

by one or more of such entities or organizations, (iii) subordination of

the interest of the municipality to the interest of one or more of such

organizations or entities in such participation, new loan or investment,

and (iv) otherwise providing that the interest of each upon such

participation, new loan or investment need not be of equal priority as

to lien, or be equal as to interest rate, time or rate of amortization

of principal or time of payment of interest or otherwise; provided,

however, that the aggregate amount of the loan or loans to a company

does not exceed the amount authorized pursuant to section twenty-three

of this article. When consent of a company is required for any

participation, new loan or investment pursuant to this section and such

participation, new loan or investment will be substantially equivalent

to a refinancing of indebtedness pursuant to section twenty-three-a or

subdivision twenty-two-a of section six hundred fifty-four of this

chapter, then; (i) the provisions of this article, including without

limitation the provisions of section twenty-three-a, limiting total

indebtedness of a company after a refinancing shall apply to total

indebtedness of the company after such participation, new loan or

investment; (ii) the provisions of this article applicable to a mortgage

of a company insured by the federal government in connection with such

refinancing shall apply to a mortgage securing the interest of entities

or organizations other than the municipality in such participation, new

loan or investment; (iii) the provisions of this article concerning

residual indebtedness, such residual indebtedness having been calculated

as if the mortgage referred to in clause (ii) of this sentence were a

federally insured mortgage, shall apply to an interest of the

municipality after such participation, new loan or investment which is

secured by a mortgage; (iv) the provisions of this article concerning

residual receipts obligations shall apply to an interest of the

municipality after such participation, new loan or investment which is

unsecured, and (v) the provisions of subdivision four-b of section

twenty-three-a of this article concerning the credit referred to therein

shall apply in a manner consistent with such subdivision. For purposes

of the foregoing sentence of this section, the term surplus cash

(referred to in subdivision seven of section twenty-three-a of this

article) shall be applied by the supervising agency in a manner

consistent with the definition of such term in regulatory agreements

with the federal government for the refinancing of indebtedness of

municipally-aided projects. The provisions of subdivisions one and five

of section twenty-six of this article shall not apply to such

participation in a loan or investment pursuant to this section if

undertaken in connection with a project theretofore approved pursuant to

section twenty-six of this article. Where the municipality shall join

with one or more organizations of the kind hereinabove mentioned, in

making a loan secured by a single participating mortgage or by separate

mortgages, the municipality is authorized, through its supervising

agency, to make provision, either in the mortgage or mortgages or by

separate agreement, for the performance of such services as are

generally performed by a banking institution or insurance company which

itself owns and holds a mortgage or by a trustee under a trust mortgage.

The supervising agency is hereby authorized to act as trustee or to

consent to the appointment of a banking institution to act in such

capacity. In connection with any participation in a loan or investment

pursuant to this section, the municipality through its supervising

agency shall have the power to assign or pledge, in whole or in part, to

one or more of the organizations or entities participating in such loan

or investment its right, title and interest in and to any mortgage held

by it pursuant to this article and any contract or arrangement for the

payment of subsidy relating to such mortgage, including the right to

receive and apply to repayment of such loan and the interest thereon any

receipts to be derived by it from such mortgage or from such contract or

arrangement.