N.Y. Public Authorities Law § 2405-c: Purchase of new housing loans

* § 2405-c. Purchase of new housing loans. (1) The agency is hereby

directed, to the extent it finds it practicable, to establish a program

whereby it purchases new housing loans from banks within the state

during periods when there is an inadequate supply of credit available

for new residential improvement loans or available for such loans at

carrying charges within the financial means of persons and families of

low or 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 new housing loans from banks at such

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

provided, however, that each borrower receiving a housing loan purchased

by the agency shall be a person of low or moderate income and provided

further 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 housing loans 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 new housing loans, the

agency shall not be governed or limited by the provisions of clause (i),

(ii) or (iii) of paragraph (b) of subdivision three of section

twenty-four hundred five of this title.

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

loans from banks that each such bank certify that each such new housing

loan is to an individual borrower and is in addition to the housing

loans 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 new housing loans purchased by the

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

shall determine to be at least sufficient, together with any other

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

new housing loans 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 housing loan or any subsequent sale or disposition of the

housing loan 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 new housing loans evidence satisfactory

to the agency of the making, and if applicable, the servicing, of such

new housing loans 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 new housing loans may be enforced by decree of the

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

housing loans from any national 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 new housing loans 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 new

housing loan from a bank that the bank represent and warrant to the

agency that:

(a) the unpaid principal balance of the housing loan and the interest

rate thereon have been accurately stated to the agency;

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

owing;

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

offset or defense asserted by the mortgagor or any successor in

interest;

(d) the housing loan is evidenced and secured in the manner specified

in the bank's undertaking to the agency and all required loan documents

have been properly recorded with any appropriate public official;

(e) the housing loan is secured by the security described to the

agency subject only to liens, security interests and encumbrances

described to the agency;

(f) the borrower 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 loan

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 housing loan;

(g) the residential family dwelling unit improved, rehabilitated,

reconstructed or redeveloped with the proceeds of the housing loan is

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 the extent specified in the bank's undertaking to the

agency; and

(h) the housing loan is insured or guaranteed by the United States of

America or any agency thereof, or by a firm which is authorized by the

superintendent of financial services of the state of New York to issue

such policies in the state.

(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 housing loan

for the original purchase price adjusted for amounts subsequently paid

thereon, as the agency shall determine.

(10) The agency need not require the recording or filing of an

assignment of any new housing loan purchased by it from a bank pursuant

to this section and shall not be required to notify the borrower of its

purchase of the housing loan. The agency shall not be required to

inspect or take possession of the loan documents if the bank from which

the new housing loan is purchased by the agency shall enter a contract

to service such housing loan 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 new

housing loans, such restrictions upon assumability of the loan, default

provisions, rights to accelerate, and other terms applicable to new

housing loans made by banks 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 housing

loan unless expressly waived in writing by or on behalf of the agency.

(12) In conducting its program of purchasing new housing loans, the

agency shall use its best efforts to work in conjunction with and

maximize the participation of programs operated by not-for-profit

corporations or charitable organizations for the improvement,

rehabilitation, reconstruction or redevelopment of one to four unit

residences.

* NB Repealed July 23, 2027