N.Y. Public Authorities Law § 2428: Insurance of mortgages

§ 2428 Insurance of mortgages. 1. The agency is authorized, subject to

the provisions of this article, to make commitments to insure and to

contract to insure mortgage loans eligible for insurance hereunder.

* 1-a. The agency may issue commitments to provide and may provide

pool insurance in an amount not in excess of twenty-five percent of the

outstanding principal indebtedness at the time of commitment of any

aggregate of mortgage loans or with respect to mortgage loans acquired

pursuant to section twenty-four hundred five-b of this title,

twenty-five percent of the initial principal indebtedness of any

aggregate of mortgage loans.

* NB Repealed July 23, 2027

2. The agency shall limit its insurance on a rehabilitation or

preservation loan to an amount not in excess of fifty per centum of the

outstanding principal indebtedness, provided, however, that the agency

may insure an amount not in excess of seventy-five per centum of the

outstanding principal indebtedness of a rehabilitation loan if it shall

find, pursuant to rules or regulations which it shall establish that the

extent of rehabilitation is sufficient to justify such additional

insurance, provided further, however, that the agency may insure an

amount equal to the full outstanding principal indebtedness when the

loan has been made by a public benefit corporation of the state of New

York which public benefit corporation has issued or will issue bonds or

notes, some or all of the proceeds of which bonds or notes were used or

will be used to make such loan, or when the loan has been made by a

public employee pension fund.

However, the sum of the percentage of any mortgage loan insured by the

agency and the percentage of such loan insured or to be insured by any

other party shall not exceed one hundred per centum of the outstanding

principal indebtedness.

* 2-a. The agency may issue a commitment to provide and may insure a

preservation loan in an amount equal to the full outstanding principal

indebtedness of such preservation loan if: (a) the existing indebtedness

shall have been originated during the period from January first, two

thousand four through December thirty-first, two thousand eight; (b) the

amount of each insured preservation loan shall not exceed one hundred

fifty million dollars; (c) such preservation loan shall preserve or

create affordable housing accommodations; and (d) the preservation loan

shall have been made by a public benefit corporation of the state of New

York which public benefit corporation has issued or will issue bonds or

notes, some or all of the proceeds of which bonds or notes shall have

been, or will be, used to make such preservation loan, or the

preservation loan shall have been made by a public employee pension

fund.

* NB Repealed July 23, 2027

* 3. Except for pool insurance, and except as otherwise provided in

subdivision three-a of this section, the agency shall not issue a

commitment to insure nor shall it insure any loan unless it shall first

find (a) that the property which is the security for such loan is

located in a neighborhood characterized by a deficiency of available

mortgage financing; (b) that such deficiency has caused or threatens to

cause undermaintained and deteriorating housing accommodations and

substandard and insanitary neighborhoods; (c) that the granting of such

loan will aid in the preservation or rehabilitation of the neighborhood

in which such property is located; (d) if the property which is the

security for such loan is not a housing accommodation, that the granting

of such loan will assist in preventing the deterioration of housing

accommodations in the neighborhood in which such property is located;

(e) that the sum of (i) twenty percentum or such percentum as may be

established by the board of the agency pursuant to subdivision seven of

this section, of the amount of such loan which is to be insured, plus

(ii) the amount of the mortgage insurance fund requirement for the

category of loan does not exceed the amount available in the special

account; and (f) that the property which is the security for such loan

meets such other requirements as the agency may from time to time

establish by guidelines adopted by the agency.

The agency shall not issue a commitment to provide pool insurance nor

shall it provide such insurance unless it shall first find (a) that the

sum of (i) twenty per centum, or such per centum as may be established

by the board of the agency pursuant to subdivision seven of this

section, of the amount of such loans or aggregate of loans which is to

be insured, plus (ii) the amount of the mortgage insurance fund

requirement for the category of loan does not exceed the amount

available in the pool insurance account; and (b) that the property which

is the security for such loan or loans meets such other requirements as

the agency may from time to time establish by guidelines adopted by the

agency.

The agency may issue a commitment to insure and may insure an existing

loan, first when an application for such mortgage insurance is pending

prior to the making of a loan, when significant circumstances beyond the

reasonable control of the mortgagor and mortgagee necessitate the making

of the loan prior to the issuance of the commitment to insure and when

it is determined by the agency that such loan would not have been made

except for the reasonable expectation that the agency would insure the

loan, or second, as part of a transaction in which the financial

institution requesting insurance makes additional loan or loans which

qualify for insurance by the agency, in accordance with provisions of

this section and requirements established by the agency, in a total

amount such that the uninsured portion of such additional loan or loans

equals or exceeds the insured portion of such existing loan or loans.

* NB Effective until July 23, 2027

* 3. The agency shall not issue a commitment to insure nor shall it

insure any loan unless it shall first find (a) that the property which

is the security for such loan is located in a neighborhood characterized

by a deficiency of available mortgage financing; (b) that such

deficiency has caused or threatens to cause undermaintained and

deteriorating housing accommodations and substandard and insanitary

neighborhoods; (c) that the granting of such loan will aid in the

preservation or rehabilitation of the neighborhood in which such

property is located; (d) if the property which is the security for such

loan is not a housing accommodation, that the granting of such loan will

assist in preventing the deterioration of housing accommodations in the

neighborhood in which such property is located; (e) that the sum of (i)

twenty percentum or such percentum as may be established by the board of

the agency pursuant to subdivision seven of this section, of the amount

of such loan which is to be insured, plus (ii) the amount of the

mortgage insurance fund requirement for the category of loan does not

exceed the amount available in the special account; and (f) that the

property which is the security for such loan meets such other

requirements as the agency may from time to time establish by rules and

regulations.

The agency may issue a commitment to insure and may insure an existing

loan, first when an application for such mortgage insurance is pending

prior to the making of a loan, when significant circumstances beyond the

reasonable control of the mortgagor and mortgagee necessitate the making

of the loan prior to the issuance of the commitment to insure and when

it is determined by the agency that such loan would not have been made

except for the reasonable expectation that the agency would insure the

loan, or second, as part of a transaction in which the financial

institution requesting insurance makes additional loan or loans which

qualify for insurance by the agency, in accordance with provisions of

this section and requirements established by the agency, in a total

amount such that the uninsured portion of such additional loan or loans

equals or exceeds the insured portion of such existing loan or loans.

* NB Effective July 23, 2027

* 3-a. The agency may issue a commitment to insure and may insure any

loans or aggregate of loans and may issue a commitment to provide and

may provide mortgage pool insurance on any loans or aggregate of loans,

notwithstanding the criteria set forth in subparagraph (a), (b), (c) or

(d) of the opening paragraph of subdivision three of this section

provided that it shall find that the property which is the security for

such loan or loans is either: (a) located within an empire zone

designated pursuant to article eighteen-B of the general municipal law,

or (b) will provide affordable housing, or (c) the entity providing the

project's mortgage financing was or is created by local, state or

federal legislation and certifies to the agency that the project meets

the program criteria applicable to such entity, or (d) providing a

retail or community service facility that would not otherwise be

provided.

* NB Repealed July 23, 2027

3-b. Notwithstanding any other provision of law to the contrary, when

such insurance is not available through the private market the agency

may insure reverse mortgage loans which meet the following conditions:

(a) the authorized lender requires primary mortgage insurance on the

real property and the applicant is unable to procure such mortgage

insurance in the private market;

(b) the reverse mortgage loan is issued pursuant to section two

hundred eighty or two hundred eighty-a of the real property law;

(c) the reverse mortgage loan amount shall not exceed the loan to

value ratio as may be determined by the superintendent of financial

services; and

(d) the real property which is the security for such reverse mortgage

loan meets such other requirements as the agency may from time to time

establish.

* 4. To be eligible for insurance under this article, a mortgage loan

shall (a) (i) be a first lien of the kind which is commonly given to

secure advances on, or the unpaid purchase price of, real property, or

tangible personal property constituting modular or manufactured housing

in the case of mortgage loans purchased by the agency under its forward

commitment program, under the laws of the state together with any credit

instrument secured thereby, provided, however, that a mortgage loan may

be a second lien if such mortgage loan was purchased by the agency or

(ii) be secured by an assignment or transfer of stock certificates or

other evidence of ownership interest of the borrower in, and a

proprietary lease from, a corporation formed for the purpose of the

cooperative ownership of residential real estate in the state; (b)

secure a rehabilitation or preservation loan on real property held in

fee simple or on a leasehold under a proprietary lease or a lease having

a period of years to run at the time the mortgage is insured under this

article of at least twenty per centum greater duration than the

remaining term of the mortgage; (c) contain terms with respect to

prepayment, insurance, repairs, alterations, payment of taxes, special

assessments, service charges, default reserves, delinquency charges,

foreclosure proceedings, additional and secondary liens, and such other

matters as the agency may in its discretion prescribe; (d) be

accompanied by certificates, issued by such officers of the mortgage

financial institutions, independent appraisers or other persons as the

agency may require, certifying that (i) where appropriate, the annual

income to be derived from the property equals not less than one hundred

and five per centum of the annual charges and expenses, including

provision for reserves, satisfactory to the agency, for the amortization

of subordinate mortgage loans over the remaining terms of such loans

notwithstanding the provisions thereof; (ii) the remaining useful life

of the property is greater than the term of the mortgage; and (iii) the

property does not contain any substantial violations of local building

maintenance and construction codes, except that in the case of a loan

made to the owner of a property containing any such violations, the

agency may insure or commit to insure such loan if the mortgagee and the

owner have submitted a plan, satisfactory to the agency to eliminate

such violations and the issuance of such insurance shall be conditioned

on removal of such violations to the satisfaction of the local code

enforcement agency; and (e) satisfy such additional terms and conditions

as the agency may prescribe. For pool insurance, the requirements of

paragraph (b) of this subdivision shall not be applicable.

* NB Effective until July 23, 2027

* 4. To be eligible for insurance under this article, a mortgage loan

shall (a) (i) be a first lien of the kind which is commonly given to

secure advances on, or the unpaid purchase price of, real property under

the laws of the state together with any credit instrument secured

thereby, provided, however, that a mortgage loan may be a second lien if

such mortgage loan was purchased by the agency or (ii) be secured by an

assignment or transfer of stock certificates or other evidence of

ownership interest of the borrower in, and a proprietary lease from, a

corporation formed for the purpose of the cooperative ownership of

residential real estate in the state; (b) secure a rehabilitation or

preservation loan on real property held in fee simple or on a leasehold

under a proprietary lease or a lease having a period of years to run at

the time the mortgage is insured under this article of at least twenty

per centum greater duration than the remaining term of the mortgage; (c)

contain terms with respect to prepayment, insurance, repairs,

alterations, payment of taxes, special assessments, service charges,

default reserves, delinquency charges, foreclosure proceedings,

additional and secondary liens, and such other matters as the agency may

in its discretion prescribe; (d) be accompanied by certificates, issued

by such officers of the mortgage financial institutions, independent

appraisers or other persons as the agency may require, certifying that

(i) where appropriate, the annual income to be derived from the property

equals not less than one hundred and five per centum of the annual

charges and expenses, including provision for reserves, satisfactory to

the agency, for the amortization of subordinate mortgage loans over the

remaining terms of such loans notwithstanding the provisions thereof;

(ii) the remaining useful life of the property is greater than the term

of the mortgage; and (iii) the property does not contain any substantial

violations of local building maintenance and construction codes, except

that in the case of a loan made to the owner of a property containing

any such violations, the agency may insure or commit to insure such loan

if the mortgagee and the owner have submitted a plan, satisfactory to

the agency to eliminate such violations and the issuance of such

insurance shall be conditioned on removal of such violations to the

satisfaction of the local code enforcement agency; and (e) satisfy such

additional terms and conditions as the agency may prescribe.

* NB Effective July 23, 2027

5. In addition to the conditions set forth in subdivisions three and

four of this section, the agency shall not insure nor issue a commitment

to insure any rehabilitation loan unless it shall first find that

rehabilitation is necessary to upgrade the property and that

rehabilitation will not necessitate more than a minimum amount of

relocation of the residents of any housing accommodation.

6. A financial institution may request insurance by written

application to the agency in such form and manner, together with such

information and documents, as the agency may prescribe. No application

shall be complete unless and until the financial institution has paid

such processing fees and other charges as the agency may impose in

connection therewith. The agency shall signify its acceptance of such

application for insurance by issuance of a commitment to insure or a

contract of insurance.

7. * (a) The board of directors of the agency may, from time to time,

by vote of a majority of all of its members, establish a percentage

greater than the per centum set in subdivision five of section

twenty-four hundred twenty-six of this title for any or all of the

following categories of loans insurable by the agency or for one or more

loans within such categories: one to four family dwellings one unit of

which is owner-occupied; one to four family dwellings which are not

owner-occupied; five or more family dwellings; proprietary leases;

condominiums; loans secured by other real property; loans purchased or

to be purchased by the agency with proceeds of bonds or notes issued by

the agency; loans securing bonds or notes issued by the agency; loans

covered by pool insurance; or, combinations thereof. The board shall

specify such percentage and shall specify the date on which the

establishment of such percentage shall take effect as to (i) commitments

issued on or after such date and (ii) nothing contained in this section

shall be construed to prohibit the board of directors of the agency from

reducing the per centum used in calculating the mortgage insurance fund

requirement, provided such new per centum is not less than that set in

subdivision five of section twenty-four hundred twenty-six of this

title.

* NB Effective until July 23, 2027

* (a) The board of directors of the agency may, from time to time, by

vote of a majority of all of its members, establish a percentage other

than the percentum set in subdivision five of section twenty-four

hundred twenty-six of this chapter for any or all of the following

categories of loans insurable by the agency: single family residences

which are owner-occupied; single family residences which are not

owner-occupied; multi-family residences; proprietary leases;

condominiums and loans secured by other real property; or, combinations

thereof. The board shall specify such percentage in multiples of five

and shall specify the date on which the establishment of such percentage

shall take effect as to commitments issued on or after such date.

* NB Effective July 23, 2027

(b) No change in the amount of moneys which must be held in or

credited to the mortgage insurance fund pursuant to paragraph (a) of

this subdivision shall have force or effect until the governor of the

state of New York shall have an opportunity to approve or veto it. For

the purpose of procuring such approval or veto, the secretary of the

board shall transmit to the governor at the executive chamber in Albany

a certified copy of that portion of the minutes of the meeting of the

board in which such change was discussed and voted upon as soon after

the holding of such meeting as the minutes can be prepared. The governor

shall, within thirty days, Saturdays, Sundays and public holidays

excepted, after such minutes shall have been delivered at the executive

chamber as aforesaid, cause the same to be returned to the board either

with his approval or with his veto, provided, however, that if the

governor shall not return such minutes within such period then at the

expiration thereof the change therein authorized will have full force

and effect according to the wording thereof. If the governor within such

period returns such minutes with a veto against the change, then such

change shall be null and void.

* 8. Notwithstanding any contrary provisions of this article or of any

other law, rule or regulation, on and after the effective date of this

subdivision;

(a) Except for pool insurance, the agency shall not issue a commitment

to insure nor shall it provide loan insurance for any loan if twenty

percent (or such other percentage as may be established pursuant to

subdivision seven of this section) of the amount to be insured exceeds

ten percent of the mortgage insurance fund requirement for all loans

insured and loans for which commitments to insure have been issued at

that time.

(b) If less than fifty percent, or none of the space of the project is

or is to be used for residential purposes, the amount of such loan

insurance shall not exceed five million dollars and no such loan

insurance may be issued unless the agency finds that the space which is

to be used for other than residential purposes is to be used to provide

the residents of the neighborhood with retail and community service

facilities which would not otherwise be provided. The provisions of this

paragraph shall not apply to loan insurance for projects which provide

temporary shelter for homeless persons or community health facilities.

(c) The agency shall not issue a commitment to insure nor shall it

provide loan insurance for a preservation loan unless: (i) such loan is

made with respect to a one to four family dwelling; or (ii) such loan is

made with respect to a building, which on the effective date of this

subparagraph, is owned by a cooperative housing corporation formed for

the purpose of the cooperative ownership of residential real estate in

the state where such refinancing is not otherwise available and such

loan will facilitate or accommodate affordable homeownership

opportunities; or (iii) such loan is made with respect to the real

property and improvements owned by a cooperative housing corporation

formed for the purpose of the cooperative ownership of residential

manufactured homes in the state where such refinancing is not otherwise

available and such loan will facilitate or accommodate affordable

homeownership opportunities; or (iv) such loan is made with respect to

multi-family residential buildings with existing indebtedness originated

during the period from January first, two thousand four through December

thirty-first, two thousand eight, where such loan will facilitate or

accommodate the preservation of affordable housing accommodations.

* NB Effective until July 23, 2027

* 8. Notwithstanding any contrary provisions of this article or of any

other law, rule or regulation, on and after the effective date of this

subdivision;

(a) The agency shall not issue a commitment to insure nor shall it

provide loan insurance for an amount in excess of the lesser of ten

million dollars or forty percent of the amount of money on deposit in

the mortgage insurance fund at that time.

(b) If less than fifty percent, or none of the space of the project is

or is to be used for residential purposes, the amount of such loan

insurance shall not exceed five million dollars and no such loan

insurance may be issued unless the agency finds that the space which is

to be used for other than residential purposes is to be used to provide

the residents of the neighborhood with retail and community service

facilities which would not otherwise be provided.

(c) The agency shall not issue a commitment to insure nor shall it

provide loan insurance for a preservation loan unless (i) such loan is

made with respect to a one to four family dwelling; or (ii) such loan is

made with respect to a building, which on the effective date of this

subparagraph, is owned by a cooperative housing corporation formed for

the purpose of the cooperative ownership of residential real estate in

the state where such refinancing is not otherwise available and such

loan will facilitate or accommodate affordable homeownership

opportunities; or (iii) such loan is made with respect to the real

property and improvements owned by a cooperative housing corporation

formed for the purpose of the cooperative ownership of residential

manufactured homes in the state where such refinancing is not otherwise

available and such loan will facilitate or accommodate affordable

homeownership opportunities.

* NB Effective July 23, 2027