§ 654-D — Residential mortgage insurance corporation

§ 654-d. Residential mortgage insurance corporation. 1. Definitions.\nAs used in this section, the following words and terms shall have the\nfollowing meanings unless the context shall indicate another or\ndifferent meaning or intent:\n (a) "Cash equivalent". A letter of credit, insurance policy, surety,\nguarantee, indemnity or other security arrangement.\n (b) "Financial institution". (i) Any bank, trust company, national\nbank, state or federal savings bank, state or federal savings and loan\nassociation, or state or federal credit union, insurance company,\npension fund or retirement system of any corporation, association, any\nother entity which is owned or controlled by any one or more of the\nabove, provided such bank, trust company, national bank, state or\nfederal savings bank, state or federal savings and loan association, or\nstate or federal credit union, insurance company, pension fund or\nretirement system of any corporation or association, and, if an entity\nwhich is owned by one or more of the above, such entity, is supervised\nby or responsible to any agency of the federal government, the state,\nany department thereof or the governing body of any city, town or\nvillage of the state, or (ii) any other entity approved by the\nsubsidiary corporation, or (iii) any one or more of the above when\nlawfully acting as a trustee or otherwise in a fiduciary capacity. The\nterm "financial institution" shall also include the New York state\nhousing finance agency, the New York state medical care facilities\nfinance agency, the state of New York mortgage agency, the New York\nstate urban development corporation, the corporation, the New York city\ndepartment of housing preservation and development, the community\npreservation corporation, any governmental agency of the United States\nwhich customarily makes, purchases or holds residential mortgages and\nany person who is approved as a mortgage lender by the federal housing\nadministration for purposes of insurance issued by such administration\nor licensed by the state of New York as a mortgage banker.\n (c) "Housing accommodation". Any existing building, structure, unit\nthereof (including an owner-occupied unit in a condominium and a\nlessee-occupied dwelling unit in which the lessee retains a proprietary\nlease with respect to such dwelling unit and has an allocable ownership\ninterest in a cooperative housing corporation) or unimproved real\nproperty, which is used or occupied, or is intended to be used or\noccupied as the home or residence of one or more persons, a portion of\nwhich may also be used for commercial and other community facilities\nancillary to such residence provided that, in the case of any housing\naccommodation consisting of more than six dwelling units, the floor area\nof above-ground commercial facilities shall not exceed one-quarter of\nthe above-ground floor area of such housing accommodation (inclusive of\nsuch commercial facilities).\n (d) "Housing insurance contracts". All contracts entered into by the\nsubsidiary corporation to insure mortgages pursuant to this section, but\nnot including (i) any contracts to insure mortgages entered into by the\npredecessor corporation which are imposed upon and assumed by the\nsubsidiary corporation pursuant to paragraph (d) of subdivision two of\nthis section, or (ii) any contracts to insure mortgages entered into by\nthe subsidiary corporation with respect to which a commitment to insure\nwas issued by the predecessor corporation.\n (e) "Housing insurance fund". The housing insurance fund as\nestablished pursuant to subdivision twelve of this section.\n (f) "Housing insurance fund requirement". As of any particular date of\ncomputation, an amount equal to the aggregate of (i) one hundred per\ncentum of the insured amounts due and payable by the subsidiary\ncorporation pursuant to housing insurance contracts, plus (ii) twenty\nper centum of the insured amounts under housing insurance contracts\nother than insured amounts which are due and payable pursuant to (i)\nabove, plus (iii) twenty per centum of the amounts to be insured under\nhousing insurance contracts pursuant to the subsidiary corporation's\ncommitments to insure.\n (g) "Mortgage". A first mortgage on real property located within the\ncity of New York, securing a preservation loan or a rehabilitation loan,\nwith a term not to exceed forty years, on real estate, held in fee\nsimple or on a leasehold under a lease having a period of years to run\nat the time a mortgage is insured under this section of at least twenty\nper centum greater duration than the remaining term of such mortgage;\nthe term "first mortgage" means such first liens as are commonly given\nto secure advances on, or the unpaid purchase price of, real estate\nunder the laws of the state, together with the credit instruments, if\nany, secured thereby.\n (h) "Mortgage insurance contracts". All contracts to insure mortgages\nentered into by the predecessor corporation that are imposed upon and\nassumed by the subsidiary corporation pursuant to paragraph (d) of\nsubdivision two of this section and all contracts to insure mortgages\nentered into by the subsidiary corporation with respect to which a\ncommitment to insure was issued by the predecessor corporation.\n (i) "Mortgage insurance fund". The mortgage insurance fund as\nestablished pursuant to subdivision twelve of this section.\n (j) "Mortgage insurance fund requirement". As of any particular date\nof computation, an amount equal to the aggregate of (i) one hundred per\ncentum of the insured amounts due and payable by the subsidiary\ncorporation pursuant to mortgage insurance contracts, plus (ii) an\namount equal to the greater of (A) seven million five hundred thousand\ndollars or (B) twenty per centum of the insured amounts under mortgage\ninsurance contracts other than insured amounts which are due and payable\nunder subparagraph (i) of this paragraph, plus (iii) twenty per centum\nof the amounts to be insured under the predecessor corporation's\ncommitments to insure; provided, however, that notwithstanding the\nforegoing, at no time shall the mortgage insurance fund requirement\nexceed the aggregate of (1) insured amounts due and payable by the\nsubsidiary corporation pursuant to mortgage insurance contracts, plus\n(2) one hundred per centum of the insured amounts under mortgage\ninsurance contracts other than insured amounts which are due and payable\nunder clause (1) of this paragraph, plus (3) one hundred per centum of\nthe amounts to be insured under the predecessor corporation's\ncommitments to insure.\n (k) "Mortgagee". The mortgage lender under a mortgage insured by the\npredecessor corporation or insured pursuant to subdivision ten of this\nsection, and its successors and assigns.\n (l) "Mortgage loan". A mortgage loan secured by a mortgage.\n (m) "Mortgagor". The original borrower under a mortgage loan insured\nby the predecessor corporation or insured pursuant to subdivision ten of\nthis section, and its successors and assigns.\n (n) "Multi-family housing accommodation". A housing accommodation with\nfive or more dwelling units.\n (o) "Operating expenses". All costs of administering the subsidiary\ncorporation, including, but not limited to, salaries and wages, expenses\nof administering staff functions, fees of professional consultants,\nlegal fees, charges incurred for servicing of mortgage loans, money\nmanagement fees, office rents, utility charges, costs of supplies,\nfurnishings, equipment, machinery and apparatus, maintenance and repair\nof property, payment to the corporation for services rendered, amounts\ndue and owing under contracts validly entered into by the predecessor\ncorporation or the subsidiary corporation, other than mortgage insurance\ncontracts and housing insurance contracts, respectively, and other\nexpenses incurred in connection with any of the foregoing.\n (p) "Other real property". Any building, structure or unimproved\nproperty which is used or occupied, or is intended to be used or\noccupied, primarily for emergency, transitional or shelter housing, a\nportion of which may also be used for commercial and other community\nfacilities ancillary to such use provided that, the floor area of\nabove-ground commercial facilities shall not exceed one-quarter of the\nabove-ground floor area of such other real property (inclusive of such\ncommercial facilities).\n (q) "Predecessor corporation". The New York city rehabilitation\nmortgage insurance corporation created by section one of chapter nine\nhundred twenty-four of the laws of nineteen hundred seventy-three,\nbeing, prior to repeal, article fourteen of the private housing finance\nlaw.\n (r) "Preservation loan". A mortgage loan extended by a financial\ninstitution with a term not to exceed forty years for the purposes of\nrefinancing existing indebtedness secured by one or more mortgages on a\nhousing accommodation or other real property located within the city of\nNew York and/or financing the acquisition of a housing accommodation or\nother real property located within the city of New York and which\notherwise complies with the conditions established pursuant to\nsubdivision ten of this section.\n (s) "Rehabilitation". Repairs, alterations or improvements of a\nhousing accommodation or other real property designed to raise the\nhousing standards therein or, in the case of other real property,\ndesigned to provide needed improvements therein. Rehabilitation shall\nalso include the construction of a housing accommodation or other real\nproperty.\n (t) "Rehabilitation loan". A mortgage loan extended by a financial\ninstitution with a term not to exceed forty years which may include the\nrefinancing of existing indebtedness, if any, secured by one or more\nmortgages on the housing accommodation or other real property to be\nrehabilitated, or financing the acquisition of the housing accommodation\nor other real property to be rehabilitated, which housing accommodation\nor other real property shall be located within the city of New York and\nwhich otherwise complies with the conditions established pursuant to\nsubdivision ten of this section, provided, however, that a sum equal to\nat least twenty-five percent of the amount of the mortgage loan shall be\nused for the cost of rehabilitation of, or construction of improvements\non, a housing accommodation or other real property.\n 2. New York city residential mortgage insurance corporation. (a) There\nis hereby established a public benefit corporation known as the "New\nYork city residential mortgage insurance corporation" as a subsidiary\ncorporation of the corporation. The purpose of such subsidiary\ncorporation shall be to insure mortgage loans in order to promote the\npreservation of neighborhoods which are blighted, are becoming blighted\nor may become blighted, to discourage disinvestment and encourage the\ninvestment of mortgage capital in such neighborhoods and to provide\nsafe, sanitary and affordable housing accommodations to persons and\nfamilies for whom the ordinary operations of private enterprise cannot\nsupply such accommodations.\n (b) The subsidiary corporation shall be the successor to the\npredecessor corporation.\n (c) All property and rights of the predecessor corporation (other than\nmoneys of the predecessor corporation) are hereby passed to and vested\nin the subsidiary corporation, subject, however, to all outstanding\ncontracts of insurance, commitments to insure mortgages, and all\noutstanding obligations of the predecessor corporation. All moneys of\nthe predecessor corporation (including, but not limited to, amounts held\nin the mortgage insurance fund established pursuant to section seven\nhundred nine of this chapter, prior to said section being repealed) and\nall moneys held in the remic premium reserve fund established pursuant\nto said section seven hundred nine shall be transferred to the city;\nprovided that as a condition to said transfer, a like amount of money\nshall be transferred from the corporation to the subsidiary corporation\nto be deposited into the mortgage insurance fund, the housing insurance\nfund and the remic premium reserve fund (all established pursuant to\nsubdivision twelve of this section) in such amounts as shall be\ndetermined by the subsidiary corporation, subject to the provisions of\nparagraph (a) of subdivision twelve of this section.\n (d) All debts, liabilities, obligations, contracts, agreements, and\ncovenants of the predecessor corporation (including, but not limited to,\ncontracts of insurance and commitments to insure mortgages) are hereby\nimposed upon and shall be assumed by the subsidiary corporation. All\npersons having claims under any contracts of insurance or commitments to\ninsure mortgages entered into with the predecessor corporation may\nenforce those claims against the subsidiary corporation in the same\nmanner as they might have against the predecessor corporation, and the\nrights and remedies of such persons shall not be limited or restricted\nin any manner by this section. The foregoing notwithstanding, the debts,\nliabilities, obligations, contracts, agreements and covenants of the\npredecessor corporation shall not be imposed upon the corporation. All\npersons having claims under any contracts of insurance or commitments to\ninsure mortgages entered into with the predecessor corporation shall\nhave no right to enforce those claims in any manner against the\ncorporation.\n (e) In continuing the functions and carrying out the contracts,\nobligations and duties of the predecessor corporation, the subsidiary\ncorporation is hereby authorized to act in its own name or in the name\nof the predecessor corporation as may be convenient or advisable.\n (f) All regulations of the predecessor corporation shall continue to\nbe in effect as the regulations of the subsidiary corporation until\namended, supplemented or rescinded by the subsidiary corporation in\naccordance with law.\n 3. Assistance; privileges. (a) The subsidiary corporation may receive\nmoneys from the corporation, the state, any public benefit corporation,\nthe city, the federal government or any other source for public purposes\nset forth in this section.\n (b) The subsidiary corporation may contract for and accept any gifts\nor grants or loans of funds or property or financial or other aid in any\nform from the federal government or any agency or instrumentality\nthereof, or from the state or any agency or instrumentality thereof,\nincluding the city and the corporation, or from any other source, public\nor private, and to comply, subject to the provisions of this section,\nwith the terms and conditions thereof.\n (c) The city and the corporation are each hereby authorized to, but\nneither is required to, make gifts, grants or loans of funds or property\nor financial or other aid in any form to the subsidiary corporation and\nto enter into any contracts or other agreements with the subsidiary\ncorporation, on such terms and conditions as the city or the\ncorporation, as applicable, and the subsidiary corporation may agree\nupon, all in furtherance of the public purposes set forth in this\nsection.\n (d) All domestic corporations or associations organized for the\npurpose of carrying on business in this state, public benefit\ncorporations, public employee pension funds and any other persons,\ncorporations or associations are hereby authorized to make contributions\nto the subsidiary corporation.\n (e) The subsidiary corporation shall have all the privileges,\nimmunities, tax exemptions and other exemptions of the corporation to\nthe extent the same are not inconsistent with this section.\n 4. Membership. The membership of such subsidiary corporation shall\nconsist of nine members, seven of whom shall be members of the\ncorporation and two of whom shall be appointed by the mayor. The members\nwho are not members of the corporation shall serve for terms ending two\nand four years respectively from January first next succeeding the date\nof their appointment. The successors of the members who are not members\nof the corporation shall serve for terms of four years each. A member\nwho is not a member of the corporation shall continue in office until\nhis or her successor has been appointed and qualified. With respect to\nany member who is not a member of the corporation, the mayor shall fill\nany vacancy which may occur by reason of death, resignation or otherwise\nfor the remaining unexpired term of such member. A member who is not a\nmember of the corporation may be removed by the mayor for cause, but not\nwithout an opportunity to be heard in person or by counsel, in such\nmember's defense, upon not less than ten days' notice. The powers of the\nsubsidiary corporation shall be vested in and exercised by no less than\nfive of the members thereof then in office. The subsidiary corporation\nmay delegate to one or more of its members, or its officers, agents and\nemployees, such duties and powers as it may deem proper. The\ncommissioner of the department of housing preservation and development\nshall serve as chairperson of the subsidiary corporation. The president\nof the corporation shall serve as president of the subsidiary\ncorporation.\n 5. Compensation. Notwithstanding any inconsistent provisions of this\nor any other general, special or local law, no officer or employee of\nthe corporation, the city or the state, or of any public corporation, as\ndefined in the general construction law, shall be deemed to have\nforfeited or shall forfeit such person's office or employment or any\nbenefits provided under the retirement and social security law or under\nany public retirement system maintained by the state or by the civil\ndivisions thereof by reason of such person's acceptance of membership on\nor by virtue of such person's being an officer, employee or agent of the\nsubsidiary corporation. The members may engage in private employment or\nin a profession or business, unless otherwise prohibited from doing so\nby virtue of holding another public office, subject to the provisions of\narticle eighteen of the general municipal law. For the purposes of such\narticle eighteen, the subsidiary corporation shall be a "municipality"\nand a member shall be a "municipal officer". No member of the subsidiary\ncorporation shall receive additional compensation, either direct or\nindirect, other than reimbursement for actual and necessary expenses\nincurred in the performance of such person's duties, by reason of such\nperson serving as a member of the subsidiary corporation.\n 6. Transfer of resources. The city and the corporation shall have the\npower to, but shall not be obligated to, transfer to the subsidiary\ncorporation such agents, employees and facilities, including any real\nand/or personal property, in order to carry out the purposes of this\nsection.\n 7. Termination. The subsidiary corporation and its corporate existence\nshall continue until terminated by law; provided, however, that no such\nlaw shall take effect so long as the subsidiary corporation shall have\ncontracts to insure mortgages (including mortgage insurance contracts\nand housing insurance contracts), commitments to insure, notes, bonds,\nor other obligations outstanding, unless adequate provision has been\nmade for the payment thereof. Upon termination of the existence of the\nsubsidiary corporation all of its rights and properties shall pass to\nand be vested in the corporation.\n 8. Powers. The subsidiary corporation shall have the power:\n (a) To sue and be sued;\n (b) To have a seal and alter the same at pleasure;\n (c) To make and alter by-laws for its organization;\n (d) To adopt, amend or rescind rules and regulations appropriate to\ncarry out its corporate purposes, including rules and regulations\ngoverning the use of its property and facilities and to establish such\nrequirements and enter into such agreements to achieve the objectives of\nthis section;\n (e) To make and execute contracts and all other instruments necessary\nor convenient for the exercise of its powers and functions under this\nsection;\n (f) To acquire, hold and dispose of real and/or personal property for\nits corporate purposes;\n (g) To engage the services of private consultants on a contract basis\nfor rendering professional and technical assistance and advice;\n (h) To appoint officers, agents and employees, prescribe their duties\nand qualifications and fix their compensation;\n (i) To invest any funds, or other moneys under its custody and control\nin the same manner as the corporation;\n (j) To establish and levy fees and charges in connection with the\nprocessing of applications for mortgage insurance and fix premium\ncharges for mortgage insurance;\n (k) To enter into commitments to insure mortgages and contracts of\ninsurance and enter into any additional agreements as the subsidiary\ncorporation deems appropriate to further the objectives of this section;\n (l) To fulfill its obligations and enforce its rights under any\ncontract of insurance, or commitment to insure so furnished as provided\nin this section and such rules and regulations as may be adopted by the\nsubsidiary corporation;\n (m) To pay, pursue to final collection, compromise, waive or release\nany right, title, claim, lien or demand, however acquired, including any\nequity or right of redemption;\n (n) To foreclose any mortgage in default or commence any action to\nprotect or enforce any right conferred upon it by any law, mortgage,\ncontract or other agreement, and to bid for and purchase such property\nat any foreclosure or at any other sale, or otherwise to acquire or take\npossession of any such property;\n (o) To deal with, hold, administer, manage, rent, repair, insure or\nsell, lease or otherwise dispose of any property conveyed to or acquired\nby the subsidiary corporation and to enter into agreements with the\nstate, the city, or any person, firm, entity, partnership or\ncorporation, either public or private, with regard thereto;\n (p) To procure insurance against any loss in connection with its\nproperty and other assets and to procure reinsurance in connection with\nits obligations, all in such amounts and from such insurers as it deems\nnecessary or desirable;\n (q) To consent to the modification, with respect to rate of interest,\ntime of payment of any installment of principal or interest, security or\nany other term, of any mortgage, mortgage loan, contract or agreement of\nany kind which the subsidiary corporation has insured or to which the\nsubsidiary corporation is a party;\n (r) To sell, at public or private sale, any mortgage, mortgage\nparticipation or other obligation held by the subsidiary corporation;\n (s) To procure cash equivalents for deposit in its funds;\n (t) To enter into co-insurance agreements with any entity authorized\nby law to provide mortgage insurance with respect to property located\nwithin the city of New York, including, but not limited to the state of\nNew York mortgage agency and the United States department of housing and\nurban development;\n (u) To do any and all things necessary or convenient to carry out its\npurposes and exercise the powers expressly given and granted in this\nsection.\n 9. Classification of housing accommodations. The subsidiary\ncorporation may classify housing accommodations within the city and\napprove any of such classes as eligible for insurance pursuant to this\nsection and enact separate guidelines dealing with the provision and\nextent of such insurance.\n 10. Insurance of mortgage loans. (a) The subsidiary corporation is\nauthorized, subject to the provisions of this section, to make\ncommitments to insure and to contract to insure mortgage loans eligible\nfor insurance hereunder.\n (b) The subsidiary corporation shall limit its insurance on a\nrehabilitation or preservation loan to an amount not in excess of fifty\nper centum of the outstanding principal indebtedness, provided, however,\nthat the subsidiary corporation may insure an amount not in excess of\nseventy-five per centum of the outstanding principal indebtedness of a\nrehabilitation loan if it shall find that the extent of rehabilitation\nis sufficient to justify such additional insurance, provided further,\nhowever, that the subsidiary corporation may insure an amount not to\nexceed the full outstanding principal indebtedness of a rehabilitation\nor preservation loan when such mortgage loan has been made by a public\nbenefit corporation of the state of New York which public benefit\ncorporation has issued or will issue bonds or notes, some or all of the\nproceeds of which bonds or notes were used or will be used to make such\nmortgage loan, or when the mortgage loan has been made by a public\nemployee pension fund. The foregoing notwithstanding, the sum of the\npercentage of any mortgage loan insured by the subsidiary corporation\nand the percentage of such loan insured or to be insured by any other\nparty shall not exceed one hundred per centum of the outstanding\nprincipal indebtedness of such mortgage loan.\n (c) The subsidiary corporation shall not issue a commitment to insure\nor a housing insurance contract unless upon the issuance thereof amounts\non deposit in the housing insurance fund will at least equal the housing\ninsurance fund requirement.\n (d) Except for mortgage insurance contracts and except as otherwise\nprovided in paragraph (e) of this subdivision, the subsidiary\ncorporation shall not issue a commitment to insure nor shall it insure\nany mortgage loan unless it shall first find (i) that the property which\nis the security for such mortgage loan is located in a neighborhood\nwithin the city of New York characterized by a deficiency of available\nmortgage financing; (ii) that such deficiency has caused or threatens to\ncause undermaintained and deteriorating housing accommodations and\nsubstandard and unsanitary neighborhoods; (iii) that the granting of\nsuch mortgage loan will aid in the preservation or rehabilitation of the\nneighborhood in which such property is located; (iv) that, if the\nproperty which is the security for such mortgage loan is other real\nproperty, the granting of such mortgage loan will assist in preventing\nthe deterioration of residential housing in the neighborhood in which\nsuch property is located; and (v) that the property which is the\nsecurity for such loan meets such other requirements as the subsidiary\ncorporation may from time to time establish by guidelines adopted by the\nsubsidiary corporation. Any such determination by the subsidiary\ncorporation shall be conclusive and final and shall not be subject to\nreview of any kind or nature or in any manner whatsoever and shall not\ngive rise to any liability on the part of the subsidiary corporation.\n (e) The subsidiary corporation may issue a commitment to insure and\nmay insure any mortgage loans, notwithstanding the criteria set forth in\nsubparagraph (i), (ii), (iii) or (iv) of paragraph (d) of this\nsubdivision provided that it shall find the property which is the\nsecurity for such mortgage loan or mortgage loans is either: (i) located\nwithin the city of New York in an empire zone designated pursuant to\narticle eighteen-B of the general municipal law, or (ii) will provide\nsafe, sanitary and affordable housing for persons and families for whom\nthe ordinary operations of private enterprise cannot supply such\nhousing, or (iii) the entity providing the mortgage financing was or is\ncreated by local, state or federal legislation and certifies to the\nsubsidiary corporation that the housing accommodations or other real\nproperty are located within the city of New York and meet the program\ncriteria applicable to such entity. In addition, the subsidiary\ncorporation may enter into any mortgage insurance contract,\nnotwithstanding the criteria set forth in subparagraph (i), (ii), (iii)\nor (iv) of paragraph (d) of this subdivision provided that with respect\nto such mortgage insurance contract, a commitment to insure shall have\nbeen previously issued by the predecessor corporation.\n (f) The subsidiary corporation may issue a commitment to insure and\nmay insure an existing mortgage loan, when an application for such\nmortgage insurance has been submitted prior to the making of such\nmortgage loan, and significant circumstances beyond the reasonable\ncontrol of the mortgagor and mortgagee necessitate the making of the\nmortgage loan prior to the issuance of the commitment to insure and when\nit is determined by the subsidiary corporation that such mortgage loan\nwould not have been made except for the reasonable expectation that the\nsubsidiary corporation would insure the mortgage loan.\n (g) To be eligible for insurance under this section, a mortgage loan\nshall be a preservation loan and/or a rehabilitation loan and (i) bear\ninterest, exclusive of premium charges fixed by the subsidiary\ncorporation, at a rate not in excess of the rate of interest authorized\nby law and not in excess of a maximum rate of interest established by\nthe subsidiary corporation from time to time. In making its\ndetermination of appropriate maximum interest rate, the subsidiary\ncorporation shall take into account the rates of interest prevalent in\nthe mortgage market, current data on secondary market yields and\ndiscount and/or premium levels; (ii) unless the subsidiary corporation\nin its sole discretion shall otherwise determine, provide for\nsubstantially equal and constant periodic payments of principal and\ninterest in amounts sufficient to pay all interest and effect full\nrepayment of principal within the term of the mortgage loan; (iii)\ncontain terms with respect to the 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 subsidiary\ncorporation may in its discretion prescribe; (iv) be accompanied by\ncertificates, issued by such officers of the mortgagee, independent\nappraisers or other persons as the subsidiary corporation may require,\ncertifying that: (A) where appropriate, the annual income to be derived\nfrom the property equals not less than one hundred five per centum of\nthe annual charges and expenses, including provision for reserves,\nsatisfactory to the subsidiary corporation, for the amortization of\nsubordinate mortgage loans over the remaining terms of such mortgage\nloans regardless of whether the terms of such subordinate mortgage loans\ninclude scheduled amortization of principal; (B) the remaining useful\nlife of the property is greater than the term of the mortgage; and (C)\nthe housing accommodation or other real property does not contain any\nsubstantial violations of the housing maintenance code or the multiple\ndwelling law, except that in the case of a mortgage loan made to the\nowner of a housing accommodation or other real property containing any\nsuch violations, the subsidiary corporation may insure or commit to\ninsure such mortgage loan if the mortgagee and the owner have submitted\na plan, satisfactory to the subsidiary corporation to eliminate such\nviolations; and (v) satisfy such additional terms and conditions as the\nsubsidiary corporation may prescribe.\n (h) In addition to the conditions set forth in paragraphs (d) through\n(g) in this subdivision, the subsidiary corporation shall not insure nor\nissue a commitment to insure any rehabilitation loan unless it shall\nfind (i) that rehabilitation is necessary to upgrade the property, (ii)\nthat rehabilitation will not necessitate more than a minimum amount of\nrelocation of the residents of any housing accommodation and (iii) that\nthe rehabilitation undertaken with the proceeds of the rehabilitation\nloan has been completed.\n (i) A financial institution may request insurance by written\napplication to the subsidiary corporation in such form and manner,\ntogether with such information and documents, as the subsidiary\ncorporation may prescribe. No application shall be complete unless and\nuntil the financial institution has paid such processing fees and other\ncharges as the subsidiary corporation may impose in connection\ntherewith. The subsidiary corporation shall signify its acceptance of\nsuch application for insurance by issuance of a commitment to insure or\na contract of insurance.\n (j) The subsidiary corporation shall not issue a commitment to insure\na mortgage loan extended by the corporation unless such commitment to\ninsure is approved by at least two members of a committee composed of\nthe chairperson of the subsidiary corporation and the members of the\nsubsidiary corporation who are not members of the corporation.\n 11. Payment of insurance. The subsidiary corporation shall establish\nprocedures to be followed by a mortgagee in the event of a default under\nthe terms of any mortgage insured by the subsidiary corporation,\nprovided, however, any modification to such procedures (other than to\ncure any ambiguity, defect or omission) shall apply only to mortgages\nfor which commitments have been issued after the effective date of such\nmodification. The subsidiary corporation may establish prerequisites for\npayment of an insurance claim, including, but not limited to, requiring\nthe mortgagee to take such actions with respect to the property securing\nthe defaulted mortgage as may be specified by the subsidiary corporation\nto be satisfactory evidence of a continuing default, including but not\nlimited to the following actions: (i) becoming lawfully the mortgagee in\npossession thereof; (ii) causing a receiver to be appointed of such\nproperty; (iii) obtaining voluntary conveyance of the mortgagor's right\nand title to such property; or (iv) obtaining by foreclosure clear and\nunencumbered title to such property, all in such manner as the\nsubsidiary corporation may require. Following submission of a valid\nclaim, the subsidiary corporation shall pay an amount which shall not\nexceed the lesser of: (A) the then outstanding principal amount of the\nmortgage multiplied by the per centum of such outstanding amount insured\nby the subsidiary corporation plus that per centum of the mortgagee's\ncost arising from the default, inclusive of public liens and delinquent\nand unpaid interest, all as the subsidiary corporation may from time to\ntime allow, which per centum shall not exceed the per centum of the\noutstanding principal indebtedness insured by the subsidiary corporation\nor (B) the insured amount of the mortgage loan at the date of execution\nof the contract of insurance or its latest amendment, if any, except\nthat the subsidiary corporation shall pay the greater of the two amounts\non claims by a public employee pension fund or by a public benefit\ncorporation from mortgage loans financed by the sale of notes or bonds\nissued by said corporation and such amount payable may, if so provided\nin the contract of insurance, include accrued interest to the date of\nredemption for such bonds or notes and any cost associated with such\nredemption, provided that no more than the actual loss suffered by such\npublic benefit corporation or public employee pension fund shall be\npaid. Such payment may be made by the subsidiary corporation in a lump\nsum, or in partial payments made within such period of time, not in\nexcess of two years, as may be agreed to between the subsidiary\ncorporation and the mortgagee, all in accordance with procedures to be\nestablished by the subsidiary corporation. The subsidiary corporation\nshall have the power to bid for and purchase the property securing the\ndefaulted mortgage at any foreclosure or other sale of such property, or\nto otherwise acquire or take possession of such property in accordance\nwith other provisions of law. In the event of any such purchase,\nacquisition, or taking of possession, the subsidiary corporation shall\nhave the power to complete, administer, sell, dispose of, and otherwise\ndeal with such property, in such manner as may be necessary or desirable\nto protect the interests of the subsidiary corporation.\n 12. Mortgage insurance fund, housing insurance fund and remic premium\nreserve fund. (a) The subsidiary corporation shall create and establish\na fund to be known as the "mortgage insurance fund" which shall be used\nas a revolving fund for carrying out the provisions of this section with\nrespect to mortgage insurance contracts and shall, upon its creation,\npay into such fund moneys made available to the subsidiary corporation\nfrom the corporation in an amount equal to the mortgage insurance fund\nrequirement as of such date for the purpose of such fund, and shall\nthereafter, pay into such fund, upon receipt, (i) such portion of\nmortgage insurance contract premium payments in an amount equal to the\namount necessary to be transferred to the mortgage insurance fund in\norder that the amount on deposit therein be equal to the mortgage\ninsurance fund requirement (or such lesser amount as may be available);\n(ii) such portion of the proceeds received by the subsidiary corporation\nin connection with the exercise of such subsidiary corporation's rights\nunder any mortgage insurance contract in an amount equal to the amount\nnecessary to be transferred to the mortgage insurance fund in order that\nthe amount on deposit therein be equal to the mortgage insurance fund\nrequirement (or such lesser amount as may be available); (iii) any\nmoneys appropriated, paid or otherwise made available by the city or the\ncorporation for the purpose of such fund; and (iv) any other moneys\nwhich may be made available to the subsidiary corporation for the\npurpose of such fund from any other source. All moneys held in the\nmortgage insurance fund, except as hereinafter provided, shall be used,\nas required, solely for the payment of the subsidiary corporation's\nliabilities arising from mortgage insurance contracts; provided,\nhowever, that moneys in such fund shall not be withdrawn therefrom at\nany time in such amount as would reduce the amount of such fund to less\nthan the mortgage insurance fund requirement, except for the purposes of\npaying such liabilities, as the same become due and for the payment of\nwhich other moneys of the subsidiary corporation are not available. Any\nincome or interest earned by, or increment to, the mortgage insurance\nfund due to the investment thereof or any amount in excess of the\nmortgage insurance fund requirement shall be transferred at least\nannually by the subsidiary corporation to the remic premium reserve fund\nor, at the written direction of the chairperson, to such other funds or\naccounts of the subsidiary corporation to the extent it does not reduce\nthe amount of the mortgage insurance fund below the mortgage insurance\nfund requirement.\n (b) The subsidiary corporation shall create and establish a fund to be\nknown as the "housing insurance fund" which shall be used as a revolving\nfund for carrying out the provisions of this section with respect to\nhousing insurance contracts and shall, upon its creation, pay into such\nfund any moneys or cash equivalents made available to the subsidiary\ncorporation from the corporation for the purpose of such fund, and shall\nthereafter, pay into such fund, upon receipt, (i) such portion of\nhousing insurance contract premium payments in an amount equal to the\namount necessary to be transferred to the housing insurance fund in\norder that the amount on deposit therein be equal to the housing\ninsurance fund requirement (or such lesser amount as may be available);\n(ii) such portion of the proceeds received by the subsidiary corporation\nin connection with the exercise of such subsidiary corporation's rights\nunder any housing insurance contract in an amount equal to the amount\nnecessary to be transferred to the housing insurance fund in order that\nthe amount on deposit therein be equal to the housing insurance fund\nrequirement (or such lesser amount as may be available); (iii) any\nmoneys or cash equivalents appropriated, paid or otherwise made\navailable by the city, the federal government or the corporation for the\npurpose of such fund; and (iv) any other moneys or cash equivalents\nwhich may be made available to the subsidiary corporation for the\npurpose of such fund from any other source. All moneys or cash\nequivalents held in the housing insurance fund, except as hereinafter\nprovided, shall be used, as required, solely for the payment of the\nsubsidiary corporation's liabilities arising from housing insurance\ncontracts; provided, however, that moneys or cash equivalents in such\nfund shall not be withdrawn therefrom at any time in such amount as\nwould reduce the amount of such fund to less than the housing insurance\nfund requirement, except for the purpose of paying such liabilities, as\nthe same become due and for the payment of which other moneys of the\nsubsidiary corporation are not available. Any income or interest earned\nby, or increment to, the housing insurance fund due to the investment\nthereof or any amount in excess of the housing insurance fund\nrequirement shall be transferred at least annually by the subsidiary\ncorporation to the remic premium reserve fund or at the written\ndirection of the chairperson, to such other funds or accounts of the\nsubsidiary corporation to the extent it does not reduce the amount of\nthe housing insurance fund below the housing insurance fund requirement.\n (c) The subsidiary corporation shall create and establish such\naccounts within the housing insurance fund as may be necessary or\ndesirable for its corporate purposes.\n (d) The subsidiary corporation shall create and establish a fund to be\nknown as the "remic premium reserve fund" for the purpose of providing\nfor payment of the subsidiary corporation's liabilities arising from its\noperations, its mortgage insurance contracts and its housing insurance\ncontracts and shall, upon its creation, pay into such fund moneys or\ncash equivalents made available to the subsidiary corporation from the\ncorporation for the purpose of such fund, and shall thereafter, pay into\nsuch fund, upon receipt, (i) the balance of the premium payments, if\nany, received by the subsidiary corporation with respect to mortgage\ninsurance contracts and housing insurance contracts after making the\ndeposits described in subparagraph (i) of paragraph (a) and subparagraph\n(i) of paragraph (b) respectively, of this subdivision; (ii) the balance\nof any proceeds received by the subsidiary corporation in connection\nwith the exercise of such subsidiary corporation's rights under any\nmortgage insurance contract or housing insurance contract after making\nthe deposits described in subparagraph (ii) of paragraph (a) and\nsubparagraph (ii) of paragraph (b) respectively of this subdivision;\n(iii) any moneys or cash equivalents appropriated, paid or otherwise\nmade available by the city, the federal government or the corporation\nfor the purpose of such fund; and (iv) any other moneys or cash\nequivalents which may be made available to the subsidiary corporation\nfor the purpose of such fund from any other source.\n (e) The subsidiary corporation shall create and establish such\naccounts within the remic premium reserve fund as may be necessary for\nits corporate purposes.\n (f) Except as otherwise provided in this section, all moneys received\nby the subsidiary corporation shall be deposited in the remic premium\nreserve fund.\n (g) If the remic premium reserve fund is funded in whole or in part\nwith cash, the moneys in such fund shall be deposited in one or more\nbanks or trust companies designated, in manner provided by law, as\ndepositories of the funds of the subsidiary corporation. The subsidiary\ncorporation may invest any moneys in such fund in the same manner as\nmoneys of the corporation may be invested, provided that such\nobligations shall be payable within such time as the proceeds may be\nneeded to meet expenditures estimated to be incurred by the subsidiary\ncorporation. Any interest earned or capital gain realized on the money\nso deposited or invested shall accrue to and become part of such fund.\nThe separate indentity of such fund shall be maintained whether its\nassets consist of cash or investments or both.\n (h) The subsidiary corporation shall transfer from the remic premium\nreserve fund such moneys as the subsidiary corporation, by its\nchairperson, shall certify are required for the subsidiary corporation\nto pay its operating expenses, to pay any liabilities arising from the\nsubsidiary corporation's mortgage insurance contracts and housing\ninsurance contracts, and to restore the mortgage insurance fund and the\nhousing insurance fund to the mortgage insurance fund requirement and\nhousing insurance fund requirement, respectively.\n (i) The subsidiary corporation shall keep a separate account for the\nremic premium reserve fund. Such account shall show (i) the date and\namount of each sum paid into the fund, (ii) the interest earned by the\nfund, (iii) the capital gains or losses resulting from the sale of\ninvestments of the fund, (iv) the interest or capital gains which have\naccrued to the fund, (v) the amount and date of each withdrawal from the\nfund, and (vi) the assets of the fund indicating the cash balance\ntherein and a schedule of the amounts invested.\n (j) In computing the amount of the mortgage insurance fund, the\nhousing insurance fund and the remic premium reserve fund for the\npurposes of this section, securities in which all or a portion of such\nfunds shall be invested shall be valued at par, if purchased at par, or\nif purchased at other than par, at amortized value. Amortized value,\nwhen used with respect to securities purchased at a premium above or a\ndiscount below par or if purchased at par, or if purchased at other than\npar, shall mean the value as of any given date obtained by dividing the\ntotal premiums or discount at which such securities were purchased by\nthe number of interest payments remaining to maturity on such securities\nafter such purchase and by multiplying the amount so calculated by the\nnumber of interest payment dates having passed since the date of such\npurchase; and (i) in the case of securities purchased at a premium by\ndeducting the product thus obtained from the purchase price, and (ii) in\nthe case of securities purchased at a discount by adding the product\nthus obtained to the purchase price.\n (k) The subsidiary corporation shall create and establish such other\nfund or funds as may be necessary or desirable for its corporate\npurposes.\n 13. Charges and fees. (a) The subsidiary corporation shall fix a\npremium charge for its insurance of mortgages pursuant to this section\nwhich shall not be less than the minimum amount nor more than the\nmaximum amount that the state of New York mortgage agency is permitted\nto charge pursuant to applicable provisions of law.\n (b) The subsidiary corporation may establish and levy such other\ncharges and fees in connection with applications for mortgage insurance\nand insurance commitments as it may deem appropriate and necessary.\n (c) Such premium charges and other charges shall be payable by the\nmortgagor in cash in such manner as may be prescribed by the subsidiary\ncorporation.\n (d) Such premium charges and other charges and fees shall not be\ndeemed to be interest for the purposes of section 5-501 of the general\nobligations law.\n 14. Assistance by the corporation. The corporation is hereby\nauthorized to perform such functions and services in connection with any\nlawful corporate purpose of the subsidiary corporation as shall be\nrequested by the subsidiary corporation. The subsidiary corporation\nshall pay to the corporation from any moneys of the subsidiary\ncorporation available for such purposes such amounts as are necessary to\npay the corporation for the services rendered by the corporation\npursuant to this section.\n 15. Assistance by the department of housing preservation and\ndevelopment. The commissioner of housing preservation and development\nand the department of housing preservation and development are hereby\nauthorized to perform such functions and services in connection with any\nlawful corporate purpose of the subsidiary corporation as shall be\nrequested by the subsidiary corporation. The subsidiary corporation\nshall pay to the department of housing preservation and development from\nany moneys of the subsidiary corporation available for such purposes\nsuch amounts as are necessary to reimburse the department of housing\npreservation and development for the services provided pursuant to this\nsection.\n 16. Annual report. The subsidiary corporation shall submit to the\nmayor, the comptroller, the director of management and budget and the\ncorporation within ninety days after the end of its fiscal year, a\ncomplete and detailed report setting forth: (i) its operations and\naccomplishments; (ii) its receipts and expenditures during such fiscal\nyear in accordance with the categories or classifications established by\nthe subsidiary corporation for its operating and capital outlay\npurposes; and (iii) its assets and liabilities at the end of its fiscal\nyear, including a schedule of mortgages which have been insured during\nsuch year, the status of the mortgage insurance fund, housing insurance\nfund and other reserve or special funds established by the subsidiary\ncorporation.\n 17. Moneys of the subsidiary corporation. (a) All moneys of the\nsubsidiary corporation, except as otherwise authorized or provided in\nthis section, shall be deposited as soon as practicable in a separate\naccount or accounts in banks or trust companies organized under the laws\nof the state or national banking association, in each case doing\nbusiness in the city. The moneys in such accounts shall be paid out on\nchecks signed by such officer or employee of the subsidiary corporation\nas the subsidiary corporation shall authorize. All deposits of such\nmoneys shall, if required by the subsidiary corporation, be secured by\nobligations of the United States or of the state or of the city of a\nmarket value equal at all times to the amount of the deposit and all\nbanks and trust companies are authorized to give such security for such\ndeposits.\n (b) The subsidiary corporation shall prescribe a system of accounts.\n (c) The comptroller, or the comptroller's legally authorized\nrepresentative, is hereby authorized and empowered from time to time to\nexamine the books and accounts of the subsidiary corporation including\nits receipts, disbursements, contracts, reserve funds, sinking funds,\ninvestments, and any other matters relating to its financial standing.\nSuch an examination shall be conducted by the comptroller at least once\nin every five years; the comptroller is authorized, however, to accept\nfrom the subsidiary corporation, in lieu of such an examination, an\nexternal examination of its books and accounts made at the request of\nthe subsidiary corporation.\n (d) The subsidiary corporation shall submit to the mayor, the\ncomptroller and the corporation within thirty days of the receipt\nthereof by the subsidiary corporation a copy of the report of every\nexternal examination of the books and accounts of the subsidiary\ncorporation other than copies of the reports of such examinations made\nby the comptroller.\n 18. Rentals. Notwithstanding the provisions of, or any regulation\npromulgated pursuant to, the emergency housing rent control law, the\nlocal emergency housing rent control act or local law enacted pursuant\nthereto, all dwelling units in a multiple dwelling the rehabilitation of\nwhich commenced after July first, nineteen hundred seventy-seven and\nwhich is financed by a mortgage loan insured by the subsidiary\ncorporation (including, but not limited to, mortgage loans insured\npursuant to mortgage insurance contracts and housing insurance\ncontracts), except for dwelling units occupied by reason of ownership of\nstock in a cooperative and except for dwelling units that constitute\ncondominiums, shall be subject to the rent stabilization law of nineteen\nhundred sixty-nine, beginning immediately after initial rents, as\nestablished under applicable provisions of this chapter, section four\nhundred twenty-one-a of the real property tax law, section four hundred\neighty-nine of the real property tax law and/or subparagraph (m) of\nparagraph one of subdivision g of section 26-405 of the administrative\ncode of the city of New York for such dwelling units to become effective\non the basis of such rehabilitation, provided that any occupant in\npossession of a dwelling unit that first becomes subject to the rent\nstabilization law of nineteen hundred sixty-nine pursuant to this\nsection shall be offered a two-year lease notwithstanding any contrary\nprovisions of, or regulations adopted pursuant to, such rent\nstabilization law, at the initial rent established for such dwelling\nunit and provided further that such dwelling units, other than those\ndwelling units, the initial rents of which are established under\nsubparagraph (m) of paragraph one of subdivision g of section 26-405 of\nthe administrative code of the city of New York, shall remain subject to\nthe rent stabilization law in accordance with the provisions of this\nchapter, section four hundred twenty-one-a of the real property tax law\nand/or section four hundred eighty-nine of the real property tax law as\nthe case may be. Except to the extent to which dwelling units, which are\ncontrolled under other provisions of law, become subject to the rent\nstabilization law of nineteen hundred sixty-nine pursuant to the\npreceding sentence, no dwelling unit shall become subject to the rent\nstabilization law solely by reason of insurance of a mortgage loan by\nthe subsidiary corporation.\n 19. Employees of the subsidiary corporation. (a) Notwithstanding any\ninconsistent provisions of this section, the appointment and promotion\nof all employees of and for the subsidiary corporation shall be made in\naccordance with the provisions of the civil service law under the\njurisdiction of the city civil service commission and the compensation\nfor such employees shall be fixed by the subsidiary corporation.\n (b) The city, the corporation and the predecessor corporation shall\nhave the power to provide for the transfer to the subsidiary corporation\nof agents, employees and facilities of the city, the corporation or the\npredecessor corporation, as the case may be, to enable the subsidiary\ncorporation to fulfill its corporate purposes. Employees of the city,\nthe corporation or the predecessor corporation to be transferred to the\nsubsidiary corporation pursuant to this section shall be eligible for\nsuch transfer and appointment to offices and positions of the subsidiary\ncorporation without further examination, and all such employees who have\nbeen appointed to positions in city service in accordance with the\nprovisions of the civil service law under the rules of the city civil\nservice commission shall have the same status with respect thereto in\nthe service of the subsidiary corporation as they had in city service.\nEmployees who are members or beneficiaries of any existing pension or\nretirement system shall continue to have such rights, privileges,\nobligations or status with respect to such system or systems as are\nprescribed by law on the date this section takes effect, and all such\nemployees who have been appointed to positions in city service in\naccordance with the provisions of the civil service law under the rules\nof the city civil service commission shall have the same status with\nrespect thereto in the service of the corporation as they had in city\nservice.\n 20. Subsidiaries; how created. (a) The subsidiary corporation by\nresolution may direct any of its members, officers or employees to\norganize a subsidiary of the subsidiary corporation whenever, in the\nsole discretion of the subsidiary corporation, it has become necessary\nto acquire one or more housing accommodations or other real property in\nthe case of sale under foreclosure or in lieu of foreclosure and it is\nbeneficial to effectuate the purpose of this chapter for the subsidiary\nof the subsidiary corporation to hold title to such housing\naccommodations or other real property.\n (b) Each such subsidiary of the subsidiary corporation shall be wholly\nowned by the subsidiary corporation and shall be organized pursuant to\nthe business corporation law, the not-for-profit corporation law or\narticle two or article eleven of this chapter.\n (c) The subsidiary corporation may transfer to any subsidiary of the\nsubsidiary corporation any money, real and/or personal property or may\nconvey to it any housing accommodation or other real property in order\nto carry out the purposes of this article. Each such subsidiary of the\nsubsidiary corporation shall have all the privileges, immunities, tax\nexemptions and other exemptions of the subsidiary corporation to the\nextent the same are not inconsistent with the statute or statutes\npursuant to which such subsidiary of the subsidiary corporation was\nincorporated. Except as may be inconsistent with the provisions of this\narticle, such subsidiary, if organized pursuant to article two or\narticle eleven of this chapter, shall have all the rights and powers\ngranted to housing companies by this chapter and by any other statute\npursuant to which such subsidiary of the subsidiary corporation was\norganized.\n (d) No member or officer of the subsidiary corporation shall receive\nany additional compensation, either direct or indirect, other than\nreimbursement for actual and necessary expenses incurred in the\nperformance of such person's duties, by reason of such person serving as\na member, director, trustee or officer of any subsidiary of the\nsubsidiary corporation.\n