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  title.    (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 to 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 banking department,  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.  Theagency  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)  the mortgage was not made in satisfaction of an obligation of the  bank under section twenty-four hundred five of this title;    (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;    (f)  the mortgage constitutes a valid first lien or second lien on the  real property described to the agency  in  accordance  with  subdivision  five  of  section  twenty-four  hundred two of this part subject only to  real property 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  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 the mortgaged real property are covered by a  valid and subsisting policy of insurance issued by a company  authorized  by  the  superintendent of insurance 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  the mortgaged real property.    (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  bankpursuant  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 16, 2011