senate Bill S763

2011-2012 Legislative Session

Authorizes the establishment of the home equity protection insurance program

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to corporations, authorities and commissions
Jan 05, 2011 referred to corporations, authorities and commissions

S763 - Bill Details

See Assembly Version of this Bill:
A2520
Current Committee:
Law Section:
Public Authorities Law
Laws Affected:
Amd §2404, add §2405-f, Pub Auth L
Versions Introduced in 2009-2010 Legislative Session:
S1095, A4521

S763 - Bill Texts

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Authorizes the establishment of the home equity protection insurance program directing the agency to issue a commitment to insure and insure the full value of certain residences which are owner-occupied by persons who meet certain income qualifications.

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BILL NUMBER:S763

TITLE OF BILL:

An act
to amend the public authorities law, in relation to establishing a home
equity protection insurance program

PURPOSE:

To authorize the State of New York Mortgage Agency to institute a home
equity protection insurance program whereby the agency will insure
the value of residential real property against any loss thereof upon
resale of the property.

SUMMARY OF PROVISIONS:

This bill adds a new subdivision (30) to Section 2404 of the Public
Authorities Law and a new 2405-f to authorize the State of New York
Mortgage Agency (SONYMA) to establish and administer a home equity
protection insurance program. Under the program the agency would
insure the full value of an owner-occupied one-to-four family
residence, including a condominium or a cooperative. This program
would be restricted to middle-and low-income persons who meet the
income qualification threshold for a SONYMA forward commitment
mortgage. They would not have to obtain a SONYMA mortgage to be
eligible for the home equity protection insurance program. The
insured value of the residential real property would be determined by
either its purchase price, the purchase price plus the cost of
rehabilitation or an appraisal. The insurance would become effective
upon payment of a premium that shall be determined by SONYMA. The
insured homeowner could collect on the policy if upon resale of the
real property the sales price is less than the insured amount (i.e. -
the original purchase price) provided that the loss in value is not
predominantly from the owner's neglect of the property's physical
condition. In addition, in order to be eligible to collect
for any decrease in the policy holder/owner must have lived in the
insured residence for a minimum of three years. The bill also
provides that SONYMA must create a home equity protection insurance
fund into which it must deposit any moneys which may be available to
the agency from any source, including revenues received from
insurance premiums for the payment of any liabilities under the home
equity protection insurance program. It also requires the agency to
maintain in the fund a reserve equaling at least 20% of the total
amounts insured. Finally, the bill delineates the types of
investments in which the agency may invest the fund's moneys. These
investments correspond statutorily to the ones authorized for the
agency's mortgage insurance fund.

JUSTIFICATION:

This bill reflects an attempt to provide homeowners with the
confidence to invest and live in areas of the state that have
experienced depressed residential real property prices. These areas
include upstate cities, parts of New York City, and rural areas. The
bill is modeled after a municipal program in Syracuse which was


developed to help reverse that city's housing decline. By
guaranteeing that homeowners will never lose their equity investment
if they purchase home equity protection insurance, the bill is
designed to help protect low and moderate income homeowners from the
vagaries of the real estate market. Since SONYMA 'already provides
mortgage insurance for aggregates of its forward commitment housing
mortgages, it represents the ideal agency to initiate and manage the
home equity protection program.

LEGISLATIVE. HISTORY:

2009-10: S.1095/A.4521 Referred to Corporations, Authorities, and
Commissions
2007-08: S.356/A.4185 Referred to Corporations, Authorities, and
Commissions
2006: S.6249/A.9606 Referred to Corporations, Authorities,
and Commissions
2005: A.2748/S.6249 Referred to Corporations, Authorities,
and Commissions
2003-04: A.6486 Referred to Corporations, Authorities, and Commissions

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

One hundred eighty days after it becomes law.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   763

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  YOUNG  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and Commissions

AN  ACT to amend the public authorities law, in relation to establishing
  a home equity protection insurance program

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subdivision  30 of section 2404 of the public authorities
law, as renumbered by chapter 229 of the laws  of  2007,  is  renumbered
subdivision 31 and a new subdivision 30 is added to read as follows:
  (30)  TO  ESTABLISH  AND ADMINISTER A HOME EQUITY PROTECTION INSURANCE
PROGRAM IN ACCORDANCE WITH SECTION TWENTY-FOUR HUNDRED  FIVE-F  OF  THIS
PART.
  S  2.  The  public  authorities law is amended by adding a new section
2405-f to read as follows:
  S 2405-F. HOME EQUITY PROTECTION INSURANCE PROGRAM. (1) THE AGENCY  IS
HEREBY DIRECTED, TO THE EXTENT IT FINDS PRACTICABLE, TO ESTABLISH A HOME
EQUITY  PROTECTION  INSURANCE PROGRAM WHEREBY IT WILL ISSUE A COMMITMENT
TO INSURE AND INSURE THE FULL VALUE OF A ONE-TO-FOUR  FAMILY  RESIDENCE,
INCLUDING A CONDOMINIUM AND A COOPERATIVE, THAT IS OWNER-OCCUPIED BY ANY
PERSON  OR  PERSONS  WHO  MEET  THE  INCOME QUALIFICATIONS FOR A FORWARD
COMMITMENT MORTGAGE PURSUANT TO SECTION TWENTY-FOUR  HUNDRED  FIVE-B  OF
THIS  PART.  THE  FULL  VALUE  OF THE RESIDENTIAL REAL PROPERTY SHALL BE
DETERMINED BY EITHER ITS PURCHASE PRICE, THE  PURCHASE  PRICE  PLUS  THE
COST OF ANY REHABILITATION TO THE RESIDENCE, OR AN APPRAISAL. THE INSUR-
ANCE  SHALL  BE ISSUED BY THE AGENCY AFTER THE PURCHASE OR THE REHABILI-
TATION OF THE REAL PROPERTY UPON PAYMENT OF A PREMIUM  THAT  THE  AGENCY
SHALL DETERMINE.
  (2)  UPON THE SALE OF THE RESIDENTIAL REAL PROPERTY THAT IS INSURED BY
THE AGENCY THROUGH ITS HOME EQUITY INSURANCE PROGRAM, THE  AGENCY  SHALL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02506-01-1

S. 763                              2

PAY THE POLICY HOLDER/OWNER THE DIFFERENCE BETWEEN THE FACE VALUE OF THE
INSURANCE  POLICY  AND  THE  SALES PRICE OF THE INSURED PREMISES IF SUCH
SALES  PRICE  IS  LESS  THAN  THE  INSURED  AMOUNT  AND  IF  THE  POLICY
HOLDER/OWNER  HAS  LIVED  IN  THE PREMISES FOR A PERIOD OF NOT LESS THAN
THREE YEARS. THE AGENCY SHALL ESTABLISH PROCEDURES TO BE FOLLOWED  BY  A
POLICY  HOLDER/OWNER  IN  THE  EVENT OF A PAYMENT UNDER THE TERMS OF ANY
HOME EQUITY  PROTECTION  INSURANCE  POLICY.  THE  AGENCY  SHALL  NOT  BE
REQUIRED  TO  PAY  ON A CLAIM FOR A LOSS OF EQUITY IF IT DETERMINES THAT
SUCH LOSS OCCURRED PREDOMINANTLY FROM THE POLICY HOLDER/OWNER'S  NEGLECT
OF THE REAL PROPERTY'S PHYSICAL CONDITION.
  (3)(A) THE AGENCY SHALL CREATE A HOME EQUITY PROTECTION INSURANCE FUND
TO  BE  USED AS A REVOLVING FUND FOR CARRYING OUT THE PROVISIONS OF THIS
SECTION WITH RESPECT TO RESIDENTIAL REAL  PROPERTY  INSURED  THEREUNDER.
THE AGENCY SHALL PAY INTO SUCH FUND ALL MONEYS WHICH MAY BE AVAILABLE TO
THE  AGENCY FOR THE PURPOSES OF SUCH FUND FROM ANY SOURCE, INCLUDING BUT
NOT LIMITED TO THE MONEYS RECEIVED FROM PREMIUMS DERIVED FROM THE  ISSU-
ANCE OF HOME EQUITY PROTECTION INSURANCE POLICIES.
  (B)  THE  AGENCY  SHALL  MAINTAIN  IN  THE  EQUITY INSURANCE FUND AS A
RESERVE AN AMOUNT OF MONEY OR CASH EQUIVALENTS EQUAL  TO  NO  LESS  THAN
TWENTY  PERCENT  OF  THE  AMOUNTS INSURED UNDER THE AGENCY'S HOME EQUITY
PROTECTION INSURANCE CONTRACTS.
  (4) MONEYS IN SUCH FUND MAY BE INVESTED (A) IN  SPECIAL  TIME  DEPOSIT
ACCOUNTS  IN, OR CERTIFICATES OF DEPOSIT ISSUED BY, A BANK, TRUST COMPA-
NY, SAVINGS BANK OR SAVINGS AND LOAN ASSOCIATION LOCATED AND  AUTHORIZED
TO  DO BUSINESS IN THIS STATE; PROVIDED, HOWEVER, THAT SUCH TIME DEPOSIT
ACCOUNT OR CERTIFICATE OF DEPOSIT SHALL BE PAYABLE WITHIN SUCH  TIME  AS
THE PROCEEDS MAY BE NEEDED TO MEET EXPENDITURES ESTIMATED TO BE INCURRED
BY  THE  AGENCY  AND  PROVIDED FURTHER THAT SUCH TIME DEPOSIT ACCOUNT OR
CERTIFICATE OF DEPOSIT BE SECURED BY A  PLEDGE  OF  OBLIGATIONS  OF  THE
UNITED  STATES  OF  AMERICA OR OBLIGATIONS OF THE STATE, ANY CITY OF THE
STATE, OR OTHER  MUNICIPAL  CORPORATION,  SCHOOL  DISTRICT  OR  DISTRICT
CORPORATION  OF  THE  STATE  OR  OBLIGATIONS  OF AGENCIES OF THE FEDERAL
GOVERNMENT; OR (B) IN OBLIGATIONS OF THE UNITED STATES OF AMERICA OR THE
STATE WHICH MAY FROM TIME TO TIME BE LEGALLY PURCHASED BY SAVINGS  BANKS
WITHIN THE STATE AS AN INVESTMENT OF FUNDS BELONGING TO THEM OR IN THEIR
CONTROL,  OR IN OBLIGATIONS OF THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
PROVIDED SUCH OBLIGATIONS SHALL BE PAYABLE OR REDEEMABLE AT  THE  OPTION
OF  THE  OWNER  WITHIN  SUCH TIMES AS THE PROCEEDS MAY BE NEEDED TO MEET
EXPENDITURES ESTIMATED TO BE INCURRED BY THE AGENCY.
  S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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