N.Y. Private Housing Finance Law § 472: Loans to owners

§ 472. Loans to owners. 1. Notwithstanding the provisions of any

general, special or local law, a municipality, acting through an agency,

is authorized:

(a) to make, or contract to make, loans to owners of one to four unit

existing private or multiple dwellings within its territorial limits,

subject to the limitation of subdivisions two through seven of this

section, in such amounts as shall be required for the rehabilitation,

improvement or acquisition of such dwellings provided, that any such

rehabilitation or improvement may include climate resiliency

improvements. Such loans may also be made exclusively for or include the

refinancing of the outstanding indebtedness of such dwellings, and the

municipality may make temporary loans or advances to such owners in

anticipation of permanent loans for such purposes; and

(b) to make or contract to make grants to any owner described in

paragraph (a) of this subdivision, on the same terms as permitted under

such paragraph for a loan.

1-a. As used in this article, the term "loan" shall include any grant

made by a municipality pursuant to this article, provided, however, that

provisions of this article concerning the repayment or forgiveness of,

or security for, a loan shall not apply to any grant made pursuant to

this article.

2. Each loan shall be evidenced by a note executed by the owner of the

existing dwelling. Repayment of each such note shall be within a period

of forty years, provided that such period may be extended as the agency

may determine necessary to ensure the continued affordability or

economic viability of the existing dwelling. The repayment shall be made

in such manner as may be provided in such note and contract, if any, in

connection with such loan, and may authorize such owner, with the

consent of the agency, to prepay the principal of the loan subject to

such terms and conditions as therein provided. In order to make any such

loan affordable to the owner, the agency may provide in such note and

contract that all of the outstanding principal of said loan may be

self-liquidated over a period of not less than fifteen years of

continuous compliance by the owner with a regulatory agreement or other

restrictive covenant with or approved by the agency and upon the

satisfaction of any additional conditions specified therein. Such note

and contract may contain such other terms and provisions not

inconsistent with the provisions of this article as the agency may deem

necessary or desirable to secure repayment of the loan, the interest

thereon, if any, and other charges in connection therewith, and to carry

out the purposes and provisions of this article, including, but not

limited to, providing that the lien created by the note and mortgage,

and, if applicable, any regulatory agreement executed by such owner and

agency, or restrictive covenant approved by such agency, may be recorded

in an equal or subordinate position, or subsequently made equal or

subordinate, to a lien recorded by any private lender against such

existing dwelling.

3. The agency in its discretion may require that the owner execute,

acknowledge and deliver a uniform commercial code financing statement

for the real property improvement to be in such form as the agency shall

specify and in accordance with the requirements of section 9--502 of the

uniform commercial code of the state of New York. Said financing

statement shall be filed or recorded without charge in accordance with

the provisions of paragraph one of subsection (a) of section 9--501 of

the uniform commercial code, and from the date of such filing the

municipality shall have a lien against said real property improvement

for the amount advanced or so much thereof as remains unpaid together

with the interest thereon. Upon payment of all sums advanced by the

municipality and interest thereon, and upon demand of the then record

owner of the real property, the agency shall deliver a copy of the

financing statement with an endorsement thereon that the lien is

satisfied. Upon filing of such copy in the office where the financing

statement was filed and upon payment of the proper fee therefor, the

lien of such financing statement shall be discharged.

4. The agency may require the owner to execute a mortgage as security

for a loan in lieu of or in addition to a financing statement as

provided in subdivision three of this section. Such mortgage shall

contain such terms and provisions not inconsistent with the provisions

of this article as the agency shall deem necessary or desirable to

secure repayment of the loan.

5. Loans may be made with respect to a one to four unit private or

multiple dwelling encumbered by mortgages, provided no mortgage is in

default, except if such default shall be remedied by the proposed

rehabilitation or improvement.

6. The agency may require the payment of charges by the owner of such

existing private or multiple dwelling in consideration for the

financing, regulation, supervision and audit of such loan. Such charges

shall be paid into the treasury of the municipality requiring the

charges and shall be paid and deposited in the general fund of any such

municipality.

7. In making a loan under this article, an agency shall have the power

to participate in a loan made by any private investor The agency may

enter into an agreement with a private investor to deposit funds with

such private investor to cover the agency's participation in loans to

owners of one to four unit existing private and multiple dwellings with

such funds advanced by such private investor to owners of existing

dwellings. The portion of the loan funded by the agency may be equal to

or subordinate in lien to the portion of the loan funded by the private

investor and the note and contract may contain such terms with respect

to interest rate, if any, and time of payment of principal and interest

as determined by the agency. The agency may make provision, either in

the mortgage or mortgages or by separate agreement, for the performance

by the private investor of such services as are generally performed by a

banking institution which itself holds a mortgage, including, without

limitation, construction loan advances, construction supervision,

initiation of foreclosure proceedings, procurement of insurance, and all

other matters in connection with the financing, supervision, regulation

and audit of any such loan. In order to make the loan affordable to the

owner, the agency may provide an interest reduction subsidy pursuant to

section four hundred seventy-five of this article, or may provide that

all or part of the agency's portion of the outstanding principal of any

such participation loan may be self-liquidated over a period of not less

than fifteen years of continuous compliance by the owner with a

regulatory agreement or other restrictive covenant with or approved by

the agency and upon the satisfaction of any additional conditions

specified therein.