§ 2405-C — Purchase of new housing loans

* § 2405-c. Purchase of new housing loans. (1) The agency is hereby\ndirected, to the extent it finds it practicable, to establish a program\nwhereby it purchases new housing loans from banks within the state\nduring periods when there is an inadequate supply of credit available\nfor new residential improvement loans or available for such loans at\ncarrying charges within the financial means of persons and families of\nlow or 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 new housing loans from banks at such\nprices and upon such terms and conditions as it shall determine;\nprovided, however, that each borrower receiving a housing loan purchased\nby the agency shall be a person of low or moderate income and provided\nfurther that the total purchase price, exclusive of any amounts\nrepresenting a refund of commitment or other fees paid by a bank to the\nagency, for all housing loans which the agency commits to purchase from\na bank at any one time shall in no event be more than the total of the\nunpaid principal balances thereof, plus accrued interest thereon.\n (3) In conducting its program of purchasing new housing loans, the\nagency shall not be governed or limited by the provisions of clause (i),\n(ii) or (iii) of paragraph (b) of subdivision three of section\ntwenty-four hundred five of this title.\n (4) The agency shall require as a condition of purchase of new housing\nloans from banks that each such bank certify that each such new housing\nloan is to an individual borrower and is in addition to the housing\nloans such certifying bank otherwise would have made.\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 new housing loans purchased by the\nagency from banks at a rate or rates which the agency from time to time\nshall determine to be at least sufficient, together with any other\navailable monies, to provide for the payment of its bonds and notes, and\nnew housing loans bearing such interest rate shall not be deemed to\nviolate any such law or to be unenforceable if originated by a bank in\ngood faith pursuant to an undertaking with the agency with respect to\nthe sale thereof notwithstanding any subsequent failure of the agency to\npurchase the housing loan or any subsequent sale or disposition of the\nhousing loan by the agency to such bank or any other person.\n (6) The agency shall require the submission to it by each bank from\nwhich the agency has purchased new housing loans evidence satisfactory\nto the agency of the making, and if applicable, the servicing, of such\nnew housing loans in conformity with such bank's undertaking with the\nagency and in connection therewith may, through its employees or agents\nor those of the department of financial services, inspect the books and\nrecords 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 new housing loans may be enforced by decree of the\nsupreme court. The agency may require as a condition of purchase of new\nhousing loans from any national bank the consent of such bank to the\njurisdiction of the supreme court over any such proceeding. The agency\nmay also require agreement by any bank, as a condition of the agency's\npurchase of new housing loans from such bank, to the payment of\npenalties to the agency for violation by the bank of its undertakings to\nthe agency, and such penalties shall be recoverable at the suit of the\nagency.\n (8) The agency shall require as a condition of purchase of any new\nhousing loan from a bank that the bank represent and warrant to the\nagency that:\n (a) the unpaid principal balance of the housing loan and the interest\nrate thereon have been accurately stated to the agency;\n (b) the amount of the unpaid principal balance is justly due and\nowing;\n (c) the bank has no notice of the existence of any counterclaim,\noffset or defense asserted by the mortgagor or any successor in\ninterest;\n (d) the housing loan is evidenced and secured in the manner specified\nin the bank's undertaking to the agency and all required loan documents\nhave been properly recorded with any appropriate public official;\n (e) the housing loan is secured by the security described to the\nagency subject only to liens, security interests and encumbrances\ndescribed to the agency;\n (f) the borrower 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 loan\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 housing loan;\n (g) the residential family dwelling unit improved, rehabilitated,\nreconstructed or redeveloped with the proceeds of the housing loan is\ncovered by a valid and subsisting policy of insurance issued by a\ncompany authorized by the superintendent of financial services to issue\nsuch policies in the state of New York and providing fire and extended\ncoverage to the extent specified in the bank's undertaking to the\nagency; and\n (h) the housing loan is insured or guaranteed by the United States of\nAmerica or any agency thereof, or by a firm which is authorized by the\nsuperintendent of financial services of the state of New York to issue\nsuch policies in the state.\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 housing loan\nfor the original purchase price adjusted for amounts subsequently paid\nthereon, as the agency shall determine.\n (10) The agency need not require the recording or filing of an\nassignment of any new housing loan purchased by it from a bank pursuant\nto this section and shall not be required to notify the borrower of its\npurchase of the housing loan. The agency shall not be required to\ninspect or take possession of the loan documents if the bank from which\nthe new housing loan is purchased by the agency shall enter a contract\nto service such housing loan 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 new\nhousing loans, such restrictions upon assumability of the loan, default\nprovisions, rights to accelerate, and other terms applicable to new\nhousing loans made by banks pursuant to undertakings with the agency\nwith respect to the sale thereof as the agency may determine to be\nnecessary or desirable to assure the repayment of its bonds and notes\nand the exemption from federal income taxes of the interest payable on\nits bonds and notes. All such terms shall be enforceable by the\noriginating bank, the agency, and any successor holder of the housing\nloan unless expressly waived in writing by or on behalf of the agency.\n (12) In conducting its program of purchasing new housing loans, the\nagency shall use its best efforts to work in conjunction with and\nmaximize the participation of programs operated by not-for-profit\ncorporations or charitable organizations for the improvement,\nrehabilitation, reconstruction or redevelopment of one to four unit\nresidences.\n * NB Repealed July 23, 2027\n