§ 2405-B — Purchase of forward commitment mortgages

New York § 2405-B

• Jurisdiction: New York
• Law PBA: Public Authorities
• Title 17: State of New York Mortgage Agency Act
• Part 1: No title
• Art. 8: Miscellaneous Authorities

Text

* § 2405-b. Purchase of forward commitment mortgages. (1) A purpose of\nthe agency shall be to purchase forward commitment mortgages from banks\nwithin the state during periods when there is an inadequate supply of\ncredit available for new residential mortgages or available for such\nloans at carrying charges within the financial means of persons and\nfamilies of low and moderate income.\n It is hereby found and declared that such activities by the agency\nwill alleviate a condition in this state which is contrary to the public\nhealth, safety and general welfare and which has constituted in the past\nand from time to time in the future can be expected to constitute a\npublic emergency. It is further found and declared that such purposes\nare in all respects for the benefit of the people of the state of New\nYork and the agency shall be regarded as performing an essential\ngovernmental function in carrying out its purposes and in exercising the\npowers granted by this title.\n (2) The agency shall purchase forward commitment mortgages from banks\nat such prices and upon such terms and conditions as it shall determine;\nprovided, however, that the total purchase price, exclusive of any\namounts representing a refund of commitment or other fees paid by a bank\nto the agency, for all mortgages which the agency commits to purchase\nfrom a bank at any one time shall in no event be more than the total of\nthe unpaid principal balances thereof, plus accrued interest thereon.\n (3) In conducting its program of purchasing forward commitment\nmortgages, the agency shall be governed by the provisions of paragraph\n(b) of subdivision three of section twenty-four hundred five of this\npart; however, with respect to new construction loans for single-family\nmodular or manufactured housing purchased and sited on land, the agency\nshall be governed by the provisions of only subparagraph (iii) of\nparagraph (b) of subdivision three of section twenty-four hundred five\nof this part.\n (4) The agency shall require as a condition of purchase of forward\ncommitment mortgages from banks that each such bank certify that each\nsuch forward commitment mortgage is to an individual borrower and is in\naddition to the mortgages such certifying bank otherwise would have\nmade.\n (5) Notwithstanding the maximum interest rate, if any, fixed by\nsection 5-501 of the general obligations law or any other law not\nspecifically amending or applicable to this section, the agency may set\nthe interest rate to be borne by forward commitment mortgages purchased\nby the agency from banks at a rate or rates which the agency from time\nto time shall determine, provided however, that if such mortgages are\nfinanced through the issuance of the agency's bonds or notes, the\ninterest rate shall be at least sufficient, together with any other\navailable monies, to provide for the payment of its bonds and notes, and\nforward commitment mortgages bearing such interest rate shall not be\ndeemed to violate any such law or to be unenforceable if originated by a\nbank in good faith pursuant to an undertaking with the agency with\nrespect to the sale thereof notwithstanding any subsequent failure of\nthe agency to purchase the mortgage or any subsequent sale or\ndisposition of the mortgage by the agency to such bank or any other\nperson.\n (6) The agency shall require the submission to it by each bank from\nwhich the agency has purchased forward commitment mortgages evidence\nsatisfactory to the agency of the making, and if applicable, the\nservicing, of such forward commitment mortgages in conformity with such\nbank's undertaking with the agency and in connection therewith may,\nthrough its employees or agents or those of the department of financial\nservices, inspect the books and records of any such bank.\n (7) Compliance by any bank with the terms of its agreement with or\nundertaking to the agency with respect to the sale, and if applicable,\nthe servicing, of forward commitment mortgages may be enforced by decree\nof the supreme court. The agency may require as a condition of purchase\nof forward commitment mortgages from any bank the consent of such bank\nto the jurisdiction of the supreme court over any such proceeding. The\nagency may also require agreement by any bank, as a condition of the\nagency's purchase of forward commitment mortgages from such bank, to the\npayment of penalties to the agency for violation by the bank of its\nundertakings to the agency, and such penalties shall be recoverable at\nthe suit of the agency.\n (8) The agency shall require as a condition of purchase of any forward\ncommitment mortgage from a bank that the bank represent and warrant to\nthe agency that:\n (a) other than with respect to new construction loans for\nsingle-family modular or manufactured housing purchased and sited on\nland, the mortgage was not made in satisfaction of an obligation of the\nbank under section twenty-four hundred five of this part;\n (b) the unpaid principal balance of the mortgage and the interest rate\nthereon have been accurately stated to the agency;\n (c) the amount of the unpaid principal balance is justly due and\nowing;\n (d) the bank has no notice of the existence of any counterclaim,\noffset or defense asserted by the mortgagor or any successor in\ninterest;\n (e) the mortgage is evidenced by a bond or promissory note and a\nmortgage document which has been properly recorded with the appropriate\npublic official or by an instrument which shall constitute or create a\nsecurity interest in tangible personal property constituting modular or\nmanufactured housing purchased by the agency;\n (f) the mortgage constitutes a valid first lien, or second lien on the\nreal property or tangible personal property constituting modular or\nmanufactured housing, described to the agency in accordance with\nsubdivision five of section twenty-four hundred two of this part subject\nonly to real property taxes or other taxes not yet due, installments of\nassessments not yet due, and easements and restrictions of record which\ndo not adversely affect, to a material degree, the use or value of the\nreal property, tangible personal property constituting modular or\nmanufactured housing or improvements thereon;\n (g) the mortgagor is not now in default in the payment of any\ninstallment of principal or interest, escrow funds, real property taxes\nor otherwise in the performance of his obligations under the mortgage\ndocuments and has not to the knowledge of the bank been in default in\nthe performance of any such obligation for a period of longer than sixty\ndays during the life of the mortgage; and\n (h) the improvements to, or new construction of single-family modular\nor manufactured housing purchased and sited on land, the mortgaged real\nproperty or tangible personal property constituting modular or\nmanufactured housing, are covered by a valid and subsisting policy of\ninsurance issued by a company authorized by the superintendent of\nfinancial services to issue such policies in the state of New York and\nproviding fire and extended coverage to an amount not less than eighty\npercent of the insurable value of the improvements to, or new\nconstruction of, the mortgaged real property or tangible personal\nproperty constituting modular or manufactured housing.\n (9) Each bank shall be liable to the agency for any damages suffered\nby the agency by reason of the untruth of any representation or the\nbreach of any warranty and, in the event that any representation shall\nprove to be untrue when made or in the event of any breach of warranty,\nthe bank shall, at the option of the agency, repurchase the mortgage for\nthe original purchase price adjusted for amounts subsequently paid\nthereon, as the agency shall determine.\n (10) The agency need not require the recording of an assignment of any\nforward commitment mortgage purchased by it from a bank pursuant to this\nsection and shall not be required to notify the mortgagor of its\npurchase of the mortgage. The agency shall not be required to inspect or\ntake possession of the mortgage documents if the bank from which the\nforward commitment mortgage is purchased by the agency shall enter a\ncontract to service such mortgage and account to the agency therefor.\n (11) Notwithstanding any other provision of law, the agency is\nauthorized to require, as a condition to the purchase from banks of any\nforward commitment mortgage, such restrictions upon assumability of the\nmortgage, default provisions, rights to accelerate, and other terms\napplicable to such forward commitment mortgages made by the bank\npursuant to undertakings with the agency with respect to the sale\nthereof as the agency may determine to be necessary or desirable to\nassure the repayment of its bonds and notes and the exemption from\nfederal income taxes of the interest payable on its bonds and notes.\nAll such terms shall be enforceable by the originating bank, the agency,\nand any successor holder of the mortgage unless expressly waived in\nwriting by or on behalf of the agency.\n * NB Repealed July 23, 2027\n