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    * NB Repealed July 16, 2011    2.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 June 30, 2012    * 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  beestablished  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 16, 2011    * 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  madeexcept  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 16, 2011    * 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 16, 2011    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 banking board; 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 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 propertyequals 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 16, 2011    * 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 16, 2011    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  thatrehabilitation 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 16, 2011    * (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 16, 2011    (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  forceand 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 16, 2011    * 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 such loan is made  with respect to a one to four family dwelling.* NB Effective July 16, 2011