N.Y. Private Housing Finance Law § 94: Foreclosure

§ 94. Foreclosure. 1. In any foreclosure action the commissioner, and

the municipality if it has made a loan to the housing company, in

addition to other necessary parties, shall be made parties defendant;

and the commissioner and the municipality shall take all steps in such

action necessary to protect the interest of the public therein, and no

costs shall be awarded against him or the municipality. Foreclosure

shall not be decreed unless the court to which application therefor is

made shall be satisfied that the interests of the lienholder or holders

can not be adequately secured or safeguarded except by the sale of the

property. In any such proceeding, the court shall be authorized to make

an order increasing the rentals to be charged for the housing

accommodations in the project involved in such foreclosure, but not

exceeding the maximum average rentals fixed herein, or appoint the

commissioner as a receiver of the property and in the event the

municipality has made a loan to the housing company, appoint an officer

or employee of the municipality, or grant such other and further relief

as may be reasonable and proper. In the event of a foreclosure sale or

other judicial sale, the property shall, except as provided in the next

succeeding paragraph of this section, be sold only to a housing company,

unless the court shall find that the interest on the bonds cannot be

earned under the restrictions imposed by the provisions of this article

and that the proceeding was brought in good faith. In such event the

property shall be sold free of all restrictions imposed by this article

and all the benefits theretofore granted under this article to such

project shall thereupon terminate.

2. Notwithstanding the foregoing provisions of this section, wherever

it shall appear that a government, the New York state housing finance

agency, the New York state urban development corporation, created by the

New York state urban development corporation act, the New York city

housing development corporation, Battery Park city authority, an

organization or entity investing or participating in a loan pursuant to

subdivision one of section fifteen of this chapter, or a corporation

subject to the supervision of the state department of financial

services, shall have loaned on a mortgage which is a lien upon any such

property, such government, New York state housing finance agency, New

York state urban development corporation, New York city housing

development corporation, Battery Park city authority, an organization or

entity investing or participating in a loan pursuant to said section

fifteen or a corporation subject to such supervision, or any trustee or

trustees, or any successor trustee or trustees, for the benefit of any

one or more of the aforesaid classes shall have all the remedies

available to a mortgagee under the laws of the state of New York, free

from any restrictions contained in this section except that the

commissioner shall be made a party defendant and that the commissioner

shall take all steps necessary to protect the interests of the public

and no costs shall be awarded against him or her