§ 23-B — Participation in loan or investment

New York § 23-B

• Jurisdiction: New York
• Law PVH: Private Housing Finance
• Art. 2: Limited-profit Housing Companies

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§ 23-b. Participation in loan or investment. Notwithstanding any other\nprovisions of this article or of any general, special or local law,\nwhere a municipality has made or contracted to make a mortgage loan to a\ncompany to finance a project: one or more banking organizations as\ndefined in subdivision eleven of section two of the banking law,\neducational institutions, hospitals, medical research institutes,\ninsurance companies, trustees or fiduciaries, including fiduciaries\nholding funds for investment, the New York city housing development\ncorporation, other public corporations, or other entities which\npurchase, invest, or deal in first mortgage loans in the normal course\nof their business, or any combination of the foregoing, shall have the\npower to participate in such loan or make or participate in a new loan\nsecured by a bond or note and a single participating mortgage, or by\nseparate bonds or notes and separate mortgages, or to invest, singly or\njointly, with the municipality in a bond or note and single\nparticipating mortgage or in separate bonds or notes and mortgages or in\na new mortgage or mortgages with respect to all or a portion of the loan\nby a municipality to a company; and the supervising agency shall have\nthe power, upon the mortgagor's consent, to modify the terms and\nconditions of the original bond or bonds or note or notes and mortgage\nor mortgages and any other documents executed in connection with such\noriginal loan, as the supervising agency may deem necessary or desirable\nto provide for such participation, new loan or investment as provided in\nthis section, including but not limited to (i) modification of the rate\nand time of payment of interest on the original loan or rate and time of\namortization of principal thereof, (ii) providing for priority for\npayment of the principal of and interest on that portion of the mortgage\nindebtedness attributable to such participation, new loan or investment\nby one or more of such entities or organizations, (iii) subordination of\nthe interest of the municipality to the interest of one or more of such\norganizations or entities in such participation, new loan or investment,\nand (iv) otherwise providing that the interest of each upon such\nparticipation, new loan or investment need not be of equal priority as\nto lien, or be equal as to interest rate, time or rate of amortization\nof principal or time of payment of interest or otherwise; provided,\nhowever, that the aggregate amount of the loan or loans to a company\ndoes not exceed the amount authorized pursuant to section twenty-three\nof this article. When consent of a company is required for any\nparticipation, new loan or investment pursuant to this section and such\nparticipation, new loan or investment will be substantially equivalent\nto a refinancing of indebtedness pursuant to section twenty-three-a or\nsubdivision twenty-two-a of section six hundred fifty-four of this\nchapter, then; (i) the provisions of this article, including without\nlimitation the provisions of section twenty-three-a, limiting total\nindebtedness of a company after a refinancing shall apply to total\nindebtedness of the company after such participation, new loan or\ninvestment; (ii) the provisions of this article applicable to a mortgage\nof a company insured by the federal government in connection with such\nrefinancing shall apply to a mortgage securing the interest of entities\nor organizations other than the municipality in such participation, new\nloan or investment; (iii) the provisions of this article concerning\nresidual indebtedness, such residual indebtedness having been calculated\nas if the mortgage referred to in clause (ii) of this sentence were a\nfederally insured mortgage, shall apply to an interest of the\nmunicipality after such participation, new loan or investment which is\nsecured by a mortgage; (iv) the provisions of this article concerning\nresidual receipts obligations shall apply to an interest of the\nmunicipality after such participation, new loan or investment which is\nunsecured, and (v) the provisions of subdivision four-b of section\ntwenty-three-a of this article concerning the credit referred to therein\nshall apply in a manner consistent with such subdivision. For purposes\nof the foregoing sentence of this section, the term surplus cash\n(referred to in subdivision seven of section twenty-three-a of this\narticle) shall be applied by the supervising agency in a manner\nconsistent with the definition of such term in regulatory agreements\nwith the federal government for the refinancing of indebtedness of\nmunicipally-aided projects. The provisions of subdivisions one and five\nof section twenty-six of this article shall not apply to such\nparticipation in a loan or investment pursuant to this section if\nundertaken in connection with a project theretofore approved pursuant to\nsection twenty-six of this article. Where the municipality shall join\nwith one or more organizations of the kind hereinabove mentioned, in\nmaking a loan secured by a single participating mortgage or by separate\nmortgages, the municipality is authorized, through its supervising\nagency, to make provision, either in the mortgage or mortgages or by\nseparate agreement, for the performance of such services as are\ngenerally performed by a banking institution or insurance company which\nitself owns and holds a mortgage or by a trustee under a trust mortgage.\nThe supervising agency is hereby authorized to act as trustee or to\nconsent to the appointment of a banking institution to act in such\ncapacity. In connection with any participation in a loan or investment\npursuant to this section, the municipality through its supervising\nagency shall have the power to assign or pledge, in whole or in part, to\none or more of the organizations or entities participating in such loan\nor investment its right, title and interest in and to any mortgage held\nby it pursuant to this article and any contract or arrangement for the\npayment of subsidy relating to such mortgage, including the right to\nreceive and apply to repayment of such loan and the interest thereon any\nreceipts to be derived by it from such mortgage or from such contract or\narrangement.\n