§ 2428 — Insurance of mortgages

§ 2428 Insurance of mortgages. 1. The agency is authorized, subject to\nthe provisions of this article, to make commitments to insure and to\ncontract to insure mortgage loans eligible for insurance hereunder.\n * 1-a. The agency may issue commitments to provide and may provide\npool insurance in an amount not in excess of twenty-five percent of the\noutstanding principal indebtedness at the time of commitment of any\naggregate of mortgage loans or with respect to mortgage loans acquired\npursuant to section twenty-four hundred five-b of this title,\ntwenty-five percent of the initial principal indebtedness of any\naggregate of mortgage loans.\n * NB Repealed July 23, 2027\n 2. The agency shall limit its insurance on a rehabilitation or\npreservation loan to an amount not in excess of fifty per centum of the\noutstanding principal indebtedness, provided, however, that the agency\nmay insure an amount not in excess of seventy-five per centum of the\noutstanding principal indebtedness of a rehabilitation loan if it shall\nfind, pursuant to rules or regulations which it shall establish that the\nextent of rehabilitation is sufficient to justify such additional\ninsurance, provided further, however, that the agency may insure an\namount equal to the full outstanding principal indebtedness when the\nloan has been made by a public benefit corporation of the state of New\nYork which public benefit corporation has issued or will issue bonds or\nnotes, some or all of the proceeds of which bonds or notes were used or\nwill be used to make such loan, or when the loan has been made by a\npublic employee pension fund.\n However, the sum of the percentage of any mortgage loan insured by the\nagency and the percentage of such loan insured or to be insured by any\nother party shall not exceed one hundred per centum of the outstanding\nprincipal indebtedness.\n * 2-a. The agency may issue a commitment to provide and may insure a\npreservation loan in an amount equal to the full outstanding principal\nindebtedness of such preservation loan if: (a) the existing indebtedness\nshall have been originated during the period from January first, two\nthousand four through December thirty-first, two thousand eight; (b) the\namount of each insured preservation loan shall not exceed one hundred\nfifty million dollars; (c) such preservation loan shall preserve or\ncreate affordable housing accommodations; and (d) the preservation loan\nshall have been made by a public benefit corporation of the state of New\nYork which public benefit corporation has issued or will issue bonds or\nnotes, some or all of the proceeds of which bonds or notes shall have\nbeen, or will be, used to make such preservation loan, or the\npreservation loan shall have been made by a public employee pension\nfund.\n * NB Repealed July 23, 2027\n * 3. Except for pool insurance, and except as otherwise provided in\nsubdivision three-a of this section, the agency shall not issue a\ncommitment to insure nor shall it insure any loan unless it shall first\nfind (a) that the property which is the security for such loan is\nlocated in a neighborhood characterized by a deficiency of available\nmortgage financing; (b) that such deficiency has caused or threatens to\ncause undermaintained and deteriorating housing accommodations and\nsubstandard and insanitary neighborhoods; (c) that the granting of such\nloan will aid in the preservation or rehabilitation of the neighborhood\nin which such property is located; (d) if the property which is the\nsecurity for such loan is not a housing accommodation, that the granting\nof such loan will assist in preventing the deterioration of housing\naccommodations in the neighborhood in which such property is located;\n(e) that the sum of (i) twenty percentum or such percentum as may be\nestablished by the board of the agency pursuant to subdivision seven of\nthis section, of the amount of such loan which is to be insured, plus\n(ii) the amount of the mortgage insurance fund requirement for the\ncategory of loan does not exceed the amount available in the special\naccount; and (f) that the property which is the security for such loan\nmeets such other requirements as the agency may from time to time\nestablish by guidelines adopted by the agency.\n The agency shall not issue a commitment to provide pool insurance nor\nshall it provide such insurance unless it shall first find (a) that the\nsum of (i) twenty per centum, or such per centum as may be established\nby the board of the agency pursuant to subdivision seven of this\nsection, of the amount of such loans or aggregate of loans which is to\nbe insured, plus (ii) the amount of the mortgage insurance fund\nrequirement for the category of loan does not exceed the amount\navailable in the pool insurance account; and (b) that the property which\nis the security for such loan or loans meets such other requirements as\nthe agency may from time to time establish by guidelines adopted by the\nagency.\n The agency may issue a commitment to insure and may insure an existing\nloan, first when an application for such mortgage insurance is pending\nprior to the making of a loan, when significant circumstances beyond the\nreasonable control of the mortgagor and mortgagee necessitate the making\nof the loan prior to the issuance of the commitment to insure and when\nit is determined by the agency that such loan would not have been made\nexcept for the reasonable expectation that the agency would insure the\nloan, or second, as part of a transaction in which the financial\ninstitution requesting insurance makes additional loan or loans which\nqualify for insurance by the agency, in accordance with provisions of\nthis section and requirements established by the agency, in a total\namount such that the uninsured portion of such additional loan or loans\nequals or exceeds the insured portion of such existing loan or loans.\n * NB Effective until July 23, 2027\n * 3. The agency shall not issue a commitment to insure nor shall it\ninsure any loan unless it shall first find (a) that the property which\nis the security for such loan is located in a neighborhood characterized\nby a deficiency of available mortgage financing; (b) that such\ndeficiency has caused or threatens to cause undermaintained and\ndeteriorating housing accommodations and substandard and insanitary\nneighborhoods; (c) that the granting of such loan will aid in the\npreservation or rehabilitation of the neighborhood in which such\nproperty is located; (d) if the property which is the security for such\nloan is not a housing accommodation, that the granting of such loan will\nassist in preventing the deterioration of housing accommodations in the\nneighborhood in which such property is located; (e) that the sum of (i)\ntwenty percentum or such percentum as may be established by the board of\nthe agency pursuant to subdivision seven of this section, of the amount\nof such loan which is to be insured, plus (ii) the amount of the\nmortgage insurance fund requirement for the category of loan does not\nexceed the amount available in the special account; and (f) that the\nproperty which is the security for such loan meets such other\nrequirements as the agency may from time to time establish by rules and\nregulations.\n The agency may issue a commitment to insure and may insure an existing\nloan, first when an application for such mortgage insurance is pending\nprior to the making of a loan, when significant circumstances beyond the\nreasonable control of the mortgagor and mortgagee necessitate the making\nof the loan prior to the issuance of the commitment to insure and when\nit is determined by the agency that such loan would not have been made\nexcept for the reasonable expectation that the agency would insure the\nloan, or second, as part of a transaction in which the financial\ninstitution requesting insurance makes additional loan or loans which\nqualify for insurance by the agency, in accordance with provisions of\nthis section and requirements established by the agency, in a total\namount such that the uninsured portion of such additional loan or loans\nequals or exceeds the insured portion of such existing loan or loans.\n * NB Effective July 23, 2027\n * 3-a. The agency may issue a commitment to insure and may insure any\nloans or aggregate of loans and may issue a commitment to provide and\nmay provide mortgage pool insurance on any loans or aggregate of loans,\nnotwithstanding the criteria set forth in subparagraph (a), (b), (c) or\n(d) of the opening paragraph of subdivision three of this section\nprovided that it shall find that the property which is the security for\nsuch loan or loans is either: (a) located within an empire zone\ndesignated pursuant to article eighteen-B of the general municipal law,\nor (b) will provide affordable housing, or (c) the entity providing the\nproject's mortgage financing was or is created by local, state or\nfederal legislation and certifies to the agency that the project meets\nthe program criteria applicable to such entity, or (d) providing a\nretail or community service facility that would not otherwise be\nprovided.\n * NB Repealed July 23, 2027\n 3-b. Notwithstanding any other provision of law to the contrary, when\nsuch insurance is not available through the private market the agency\nmay insure reverse mortgage loans which meet the following conditions:\n (a) the authorized lender requires primary mortgage insurance on the\nreal property and the applicant is unable to procure such mortgage\ninsurance in the private market;\n (b) the reverse mortgage loan is issued pursuant to section two\nhundred eighty or two hundred eighty-a of the real property law;\n (c) the reverse mortgage loan amount shall not exceed the loan to\nvalue ratio as may be determined by the superintendent of financial\nservices; and\n (d) the real property which is the security for such reverse mortgage\nloan meets such other requirements as the agency may from time to time\nestablish.\n * 4. To be eligible for insurance under this article, a mortgage loan\nshall (a) (i) be a first lien of the kind which is commonly given to\nsecure advances on, or the unpaid purchase price of, real property, or\ntangible personal property constituting modular or manufactured housing\nin the case of mortgage loans purchased by the agency under its forward\ncommitment program, under the laws of the state together with any credit\ninstrument secured thereby, provided, however, that a mortgage loan may\nbe a second lien if such mortgage loan was purchased by the agency or\n(ii) be secured by an assignment or transfer of stock certificates or\nother evidence of ownership interest of the borrower in, and a\nproprietary lease from, a corporation formed for the purpose of the\ncooperative ownership of residential real estate in the state; (b)\nsecure a rehabilitation or preservation loan on real property held in\nfee simple or on a leasehold under a proprietary lease or a lease having\na period of years to run at the time the mortgage is insured under this\narticle of at least twenty per centum greater duration than the\nremaining term of the mortgage; (c) contain terms with respect to\nprepayment, insurance, repairs, alterations, payment of taxes, special\nassessments, service charges, default reserves, delinquency charges,\nforeclosure proceedings, additional and secondary liens, and such other\nmatters as the agency may in its discretion prescribe; (d) be\naccompanied by certificates, issued by such officers of the mortgage\nfinancial institutions, independent appraisers or other persons as the\nagency may require, certifying that (i) where appropriate, the annual\nincome to be derived from the property equals not less than one hundred\nand five per centum of the annual charges and expenses, including\nprovision for reserves, satisfactory to the agency, for the amortization\nof subordinate mortgage loans over the remaining terms of such loans\nnotwithstanding the provisions thereof; (ii) the remaining useful life\nof the property is greater than the term of the mortgage; and (iii) the\nproperty does not contain any substantial violations of local building\nmaintenance and construction codes, except that in the case of a loan\nmade to the owner of a property containing any such violations, the\nagency may insure or commit to insure such loan if the mortgagee and the\nowner have submitted a plan, satisfactory to the agency to eliminate\nsuch violations and the issuance of such insurance shall be conditioned\non removal of such violations to the satisfaction of the local code\nenforcement agency; and (e) satisfy such additional terms and conditions\nas the agency may prescribe. For pool insurance, the requirements of\nparagraph (b) of this subdivision shall not be applicable.\n * NB Effective until July 23, 2027\n * 4. To be eligible for insurance under this article, a mortgage loan\nshall (a) (i) be a first lien of the kind which is commonly given to\nsecure advances on, or the unpaid purchase price of, real property under\nthe laws of the state together with any credit instrument secured\nthereby, provided, however, that a mortgage loan may be a second lien if\nsuch mortgage loan was purchased by the agency or (ii) be secured by an\nassignment or transfer of stock certificates or other evidence of\nownership interest of the borrower in, and a proprietary lease from, a\ncorporation formed for the purpose of the cooperative ownership of\nresidential real estate in the state; (b) secure a rehabilitation or\npreservation loan on real property held in fee simple or on a leasehold\nunder a proprietary lease or a lease having a period of years to run at\nthe time the mortgage is insured under this article of at least twenty\nper centum greater duration than the remaining term of the mortgage; (c)\ncontain terms with respect to prepayment, insurance, repairs,\nalterations, payment of taxes, special assessments, service charges,\ndefault reserves, delinquency charges, foreclosure proceedings,\nadditional and secondary liens, and such other matters as the agency may\nin its discretion prescribe; (d) be accompanied by certificates, issued\nby such officers of the mortgage financial institutions, independent\nappraisers or other persons as the agency may require, certifying that\n(i) where appropriate, the annual income to be derived from the property\nequals not less than one hundred and five per centum of the annual\ncharges and expenses, including provision for reserves, satisfactory to\nthe agency, for the amortization of subordinate mortgage loans over the\nremaining terms of such loans notwithstanding the provisions thereof;\n(ii) the remaining useful life of the property is greater than the term\nof the mortgage; and (iii) the property does not contain any substantial\nviolations of local building maintenance and construction codes, except\nthat in the case of a loan made to the owner of a property containing\nany such violations, the agency may insure or commit to insure such loan\nif the mortgagee and the owner have submitted a plan, satisfactory to\nthe agency to eliminate such violations and the issuance of such\ninsurance shall be conditioned on removal of such violations to the\nsatisfaction of the local code enforcement agency; and (e) satisfy such\nadditional terms and conditions as the agency may prescribe.\n * NB Effective July 23, 2027\n 5. In addition to the conditions set forth in subdivisions three and\nfour of this section, the agency shall not insure nor issue a commitment\nto insure any rehabilitation loan unless it shall first find that\nrehabilitation is necessary to upgrade the property and that\nrehabilitation will not necessitate more than a minimum amount of\nrelocation of the residents of any housing accommodation.\n 6. A financial institution may request insurance by written\napplication to the agency in such form and manner, together with such\ninformation and documents, as the agency may prescribe. No application\nshall be complete unless and until the financial institution has paid\nsuch processing fees and other charges as the agency may impose in\nconnection therewith. The agency shall signify its acceptance of such\napplication for insurance by issuance of a commitment to insure or a\ncontract of insurance.\n 7. * (a) The board of directors of the agency may, from time to time,\nby vote of a majority of all of its members, establish a percentage\ngreater than the per centum set in subdivision five of section\ntwenty-four hundred twenty-six of this title for any or all of the\nfollowing categories of loans insurable by the agency or for one or more\nloans within such categories: one to four family dwellings one unit of\nwhich is owner-occupied; one to four family dwellings which are not\nowner-occupied; five or more family dwellings; proprietary leases;\ncondominiums; loans secured by other real property; loans purchased or\nto be purchased by the agency with proceeds of bonds or notes issued by\nthe agency; loans securing bonds or notes issued by the agency; loans\ncovered by pool insurance; or, combinations thereof. The board shall\nspecify such percentage and shall specify the date on which the\nestablishment of such percentage shall take effect as to (i) commitments\nissued on or after such date and (ii) nothing contained in this section\nshall be construed to prohibit the board of directors of the agency from\nreducing the per centum used in calculating the mortgage insurance fund\nrequirement, provided such new per centum is not less than that set in\nsubdivision five of section twenty-four hundred twenty-six of this\ntitle.\n * NB Effective until July 23, 2027\n * (a) The board of directors of the agency may, from time to time, by\nvote of a majority of all of its members, establish a percentage other\nthan the percentum set in subdivision five of section twenty-four\nhundred twenty-six of this chapter for any or all of the following\ncategories of loans insurable by the agency: single family residences\nwhich are owner-occupied; single family residences which are not\nowner-occupied; multi-family residences; proprietary leases;\ncondominiums and loans secured by other real property; or, combinations\nthereof. The board shall specify such percentage in multiples of five\nand shall specify the date on which the establishment of such percentage\nshall take effect as to commitments issued on or after such date.\n * NB Effective July 23, 2027\n (b) No change in the amount of moneys which must be held in or\ncredited to the mortgage insurance fund pursuant to paragraph (a) of\nthis subdivision shall have force or effect until the governor of the\nstate of New York shall have an opportunity to approve or veto it. For\nthe purpose of procuring such approval or veto, the secretary of the\nboard shall transmit to the governor at the executive chamber in Albany\na certified copy of that portion of the minutes of the meeting of the\nboard in which such change was discussed and voted upon as soon after\nthe holding of such meeting as the minutes can be prepared. The governor\nshall, within thirty days, Saturdays, Sundays and public holidays\nexcepted, after such minutes shall have been delivered at the executive\nchamber as aforesaid, cause the same to be returned to the board either\nwith his approval or with his veto, provided, however, that if the\ngovernor shall not return such minutes within such period then at the\nexpiration thereof the change therein authorized will have full force\nand effect according to the wording thereof. If the governor within such\nperiod returns such minutes with a veto against the change, then such\nchange shall be null and void.\n * 8. Notwithstanding any contrary provisions of this article or of any\nother law, rule or regulation, on and after the effective date of this\nsubdivision;\n (a) Except for pool insurance, the agency shall not issue a commitment\nto insure nor shall it provide loan insurance for any loan if twenty\npercent (or such other percentage as may be established pursuant to\nsubdivision seven of this section) of the amount to be insured exceeds\nten percent of the mortgage insurance fund requirement for all loans\ninsured and loans for which commitments to insure have been issued at\nthat time.\n (b) If less than fifty percent, or none of the space of the project is\nor is to be used for residential purposes, the amount of such loan\ninsurance shall not exceed five million dollars and no such loan\ninsurance may be issued unless the agency finds that the space which is\nto be used for other than residential purposes is to be used to provide\nthe residents of the neighborhood with retail and community service\nfacilities which would not otherwise be provided. The provisions of this\nparagraph shall not apply to loan insurance for projects which provide\ntemporary shelter for homeless persons or community health facilities.\n (c) The agency shall not issue a commitment to insure nor shall it\nprovide loan insurance for a preservation loan unless: (i) such loan is\nmade with respect to a one to four family dwelling; or (ii) such loan is\nmade with respect to a building, which on the effective date of this\nsubparagraph, is owned by a cooperative housing corporation formed for\nthe purpose of the cooperative ownership of residential real estate in\nthe state where such refinancing is not otherwise available and such\nloan will facilitate or accommodate affordable homeownership\nopportunities; or (iii) such loan is made with respect to the real\nproperty and improvements owned by a cooperative housing corporation\nformed for the purpose of the cooperative ownership of residential\nmanufactured homes in the state where such refinancing is not otherwise\navailable and such loan will facilitate or accommodate affordable\nhomeownership opportunities; or (iv) such loan is made with respect to\nmulti-family residential buildings with existing indebtedness originated\nduring the period from January first, two thousand four through December\nthirty-first, two thousand eight, where such loan will facilitate or\naccommodate the preservation of affordable housing accommodations.\n * NB Effective until July 23, 2027\n * 8. Notwithstanding any contrary provisions of this article or of any\nother law, rule or regulation, on and after the effective date of this\nsubdivision;\n (a) The agency shall not issue a commitment to insure nor shall it\nprovide loan insurance for an amount in excess of the lesser of ten\nmillion dollars or forty percent of the amount of money on deposit in\nthe mortgage insurance fund at that time.\n (b) If less than fifty percent, or none of the space of the project is\nor is to be used for residential purposes, the amount of such loan\ninsurance shall not exceed five million dollars and no such loan\ninsurance may be issued unless the agency finds that the space which is\nto be used for other than residential purposes is to be used to provide\nthe residents of the neighborhood with retail and community service\nfacilities which would not otherwise be provided.\n (c) The agency shall not issue a commitment to insure nor shall it\nprovide loan insurance for a preservation loan unless (i) such loan is\nmade with respect to a one to four family dwelling; or (ii) such loan is\nmade with respect to a building, which on the effective date of this\nsubparagraph, is owned by a cooperative housing corporation formed for\nthe purpose of the cooperative ownership of residential real estate in\nthe state where such refinancing is not otherwise available and such\nloan will facilitate or accommodate affordable homeownership\nopportunities; or (iii) such loan is made with respect to the real\nproperty and improvements owned by a cooperative housing corporation\nformed for the purpose of the cooperative ownership of residential\nmanufactured homes in the state where such refinancing is not otherwise\navailable and such loan will facilitate or accommodate affordable\nhomeownership opportunities.\n * NB Effective July 23, 2027\n