N.Y. Public Authorities Law § 2405-b: Purchase of forward commitment mortgages

* § 2405-b. Purchase of forward commitment mortgages. (1) A purpose of

the agency shall be to purchase forward commitment mortgages from banks

within the state during periods when there is an inadequate supply of

credit available for new residential mortgages or available for such

loans at carrying charges within the financial means of persons and

families of low and moderate income.

It is hereby found and declared that such activities by the agency

will alleviate a condition in this state which is contrary to the public

health, safety and general welfare and which has constituted in the past

and from time to time in the future can be expected to constitute a

public emergency. It is further found and declared that such purposes

are in all respects for the benefit of the people of the state of New

York and the agency shall be regarded as performing an essential

governmental function in carrying out its purposes and in exercising the

powers granted by this title.

(2) The agency shall purchase forward commitment mortgages from banks

at such prices and upon such terms and conditions as it shall determine;

provided, however, that the total purchase price, exclusive of any

amounts representing a refund of commitment or other fees paid by a bank

to the agency, for all mortgages which the agency commits to purchase

from a bank at any one time shall in no event be more than the total of

the unpaid principal balances thereof, plus accrued interest thereon.

(3) In conducting its program of purchasing forward commitment

mortgages, the agency shall be governed by the provisions of paragraph

(b) of subdivision three of section twenty-four hundred five of this

part; however, with respect to new construction loans for single-family

modular or manufactured housing purchased and sited on land, the agency

shall be governed by the provisions of only subparagraph (iii) of

paragraph (b) of subdivision three of section twenty-four hundred five

of this part.

(4) The agency shall require as a condition of purchase of forward

commitment mortgages from banks that each such bank certify that each

such forward commitment mortgage is to an individual borrower and is in

addition to the mortgages such certifying bank otherwise would have

made.

(5) Notwithstanding the maximum interest rate, if any, fixed by

section 5-501 of the general obligations law or any other law not

specifically amending or applicable to this section, the agency may set

the interest rate to be borne by forward commitment mortgages purchased

by the agency from banks at a rate or rates which the agency from time

to time shall determine, provided however, that if such mortgages are

financed through the issuance of the agency's bonds or notes, the

interest rate shall be at least sufficient, together with any other

available monies, to provide for the payment of its bonds and notes, and

forward commitment mortgages bearing such interest rate shall not be

deemed to violate any such law or to be unenforceable if originated by a

bank in good faith pursuant to an undertaking with the agency with

respect to the sale thereof notwithstanding any subsequent failure of

the agency to purchase the mortgage or any subsequent sale or

disposition of the mortgage by the agency to such bank or any other

person.

(6) The agency shall require the submission to it by each bank from

which the agency has purchased forward commitment mortgages evidence

satisfactory to the agency of the making, and if applicable, the

servicing, of such forward commitment mortgages in conformity with such

bank's undertaking with the agency and in connection therewith may,

through its employees or agents or those of the department of financial

services, inspect the books and records of any such bank.

(7) Compliance by any bank with the terms of its agreement with or

undertaking to the agency with respect to the sale, and if applicable,

the servicing, of forward commitment mortgages may be enforced by decree

of the supreme court. The agency may require as a condition of purchase

of forward commitment mortgages from any bank the consent of such bank

to the jurisdiction of the supreme court over any such proceeding. The

agency may also require agreement by any bank, as a condition of the

agency's purchase of forward commitment mortgages from such bank, to the

payment of penalties to the agency for violation by the bank of its

undertakings to the agency, and such penalties shall be recoverable at

the suit of the agency.

(8) The agency shall require as a condition of purchase of any forward

commitment mortgage from a bank that the bank represent and warrant to

the agency that:

(a) other than with respect to new construction loans for

single-family modular or manufactured housing purchased and sited on

land, the mortgage was not made in satisfaction of an obligation of the

bank under section twenty-four hundred five of this part;

(b) the unpaid principal balance of the mortgage and the interest rate

thereon have been accurately stated to the agency;

(c) the amount of the unpaid principal balance is justly due and

owing;

(d) the bank has no notice of the existence of any counterclaim,

offset or defense asserted by the mortgagor or any successor in

interest;

(e) the mortgage is evidenced by a bond or promissory note and a

mortgage document which has been properly recorded with the appropriate

public official or by an instrument which shall constitute or create a

security interest in tangible personal property constituting modular or

manufactured housing purchased by the agency;

(f) the mortgage constitutes a valid first lien, or second lien on the

real property or tangible personal property constituting modular or

manufactured housing, described to the agency in accordance with

subdivision five of section twenty-four hundred two of this part subject

only to real property taxes or other taxes not yet due, installments of

assessments not yet due, and easements and restrictions of record which

do not adversely affect, to a material degree, the use or value of the

real property, tangible personal property constituting modular or

manufactured housing or improvements thereon;

(g) the mortgagor is not now in default in the payment of any

installment of principal or interest, escrow funds, real property taxes

or otherwise in the performance of his obligations under the mortgage

documents and has not to the knowledge of the bank been in default in

the performance of any such obligation for a period of longer than sixty

days during the life of the mortgage; and

(h) the improvements to, or new construction of single-family modular

or manufactured housing purchased and sited on land, the mortgaged real

property or tangible personal property constituting modular or

manufactured housing, are covered by a valid and subsisting policy of

insurance issued by a company authorized by the superintendent of

financial services to issue such policies in the state of New York and

providing fire and extended coverage to an amount not less than eighty

percent of the insurable value of the improvements to, or new

construction of, the mortgaged real property or tangible personal

property constituting modular or manufactured housing.

(9) Each bank shall be liable to the agency for any damages suffered

by the agency by reason of the untruth of any representation or the

breach of any warranty and, in the event that any representation shall

prove to be untrue when made or in the event of any breach of warranty,

the bank shall, at the option of the agency, repurchase the mortgage for

the original purchase price adjusted for amounts subsequently paid

thereon, as the agency shall determine.

(10) The agency need not require the recording of an assignment of any

forward commitment mortgage purchased by it from a bank pursuant to this

section and shall not be required to notify the mortgagor of its

purchase of the mortgage. The agency shall not be required to inspect or

take possession of the mortgage documents if the bank from which the

forward commitment mortgage is purchased by the agency shall enter a

contract to service such mortgage and account to the agency therefor.

(11) Notwithstanding any other provision of law, the agency is

authorized to require, as a condition to the purchase from banks of any

forward commitment mortgage, such restrictions upon assumability of the

mortgage, default provisions, rights to accelerate, and other terms

applicable to such forward commitment mortgages made by the bank

pursuant to undertakings with the agency with respect to the sale

thereof as the agency may determine to be necessary or desirable to

assure the repayment of its bonds and notes and the exemption from

federal income taxes of the interest payable on its bonds and notes.

All such terms shall be enforceable by the originating bank, the agency,

and any successor holder of the mortgage unless expressly waived in

writing by or on behalf of the agency.

* NB Repealed July 23, 2027