senate Bill S4399A

Signed By Governor
2013-2014 Legislative Session

Relates to the powers of the State of New York Mortgage Agency

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Archive: Last Bill Status - Signed by Governor


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jul 12, 2013 signed chap.151
Jul 02, 2013 delivered to governor
Jun 19, 2013 returned to senate
passed assembly
ordered to third reading rules cal.480
substituted for a7833
Jun 17, 2013 referred to ways and means
delivered to assembly
passed senate
Jun 10, 2013 amended on third reading 4399a
May 08, 2013 advanced to third reading
May 07, 2013 2nd report cal.
May 06, 2013 1st report cal.543
Mar 26, 2013 referred to corporations, authorities and commissions

Votes

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May 6, 2013 - Corporations, Authorities and Commissions committee Vote

S4399
5
0
committee
5
Aye
0
Nay
0
Aye with Reservations
0
Absent
1
Excused
0
Abstained
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Committee Vote: May 6, 2013

excused (1)

Bill Amendments

Original
A (Active)
Original
A (Active)

S4399 - Bill Details

See Assembly Version of this Bill:
A7833
Law Section:
Public Authorities Law
Laws Affected:
Amd §§2402 & 2404, Pub Auth L

S4399 - Bill Texts

view summary

Relates to the powers of the State of New York Mortgage Agency.

view sponsor memo
BILL NUMBER:S4399

TITLE OF BILL: An act to amend the public authorities law, in
relation to the powers of the state of New York mortgage agency

Purpose of Bill:

This bill would (i) authorize the State of New York Mortgage Agency
(SONYMA) to originate second mortgage loans that provide borrowers of
SONYMA first mortgage loans with down payment and/or closing cost
assistance under certain limited circumstances, and (ii) amend the
definition of government sponsored enterprise (GSE).

Summary of provisions:

Section 1 of the bill expands the definition of "mortgage" in Public
Authorities Law (PAL) § 2402(5) to include loans made by SONYMA and
secured by mortgages secured by a second lien in cases where the
second lien: (i) secures a mortgage loan purchased by SONYMA, and (ii)
is made at the same time as a first lien securing a mortgage loan
purchased by SONYMA pursuant to its programs or by a government
sponsored enterprise.

Section 2 of the bill amends the definition of "government sponsored
enterprise" set forth in PAL § 2402 (17) to include Government
National Mortgage Association (Ginnie Mae).

Section 3 of the bill amends PAL § 2404 to renumber subsection (30) as
subsection (31) and to add a new subsection (29) to grant SONYMA the
power to originate loans secured by mortgages secured by a second lien
in cases where the second lien: (i) secures a mortgage loan purchased
by SONYMA, and (ii) is made at the same time as a first lien securing
a mortgage loan purchased by SONYMA pursuant to its programs or by a
government sponsored enterprise.

Section 4 of the bill provides for an immediate effective date.

Existing law:

SONYMA is only authorized to purchase second mortgages where the loan
purchased by SONYMA and secured by mortgages secured by a second lien:
(i) secures a mortgage loan purchased by SONYMA; and (ii) is made at
the same time as a first lien securing a mortgage loan purchased by
SONYMA pursuant to its programs or by a government sponsored
enterprise. SONYMA does not currently have the authority to originate
mortgages for second lien purposes.

Prior Legislative history:

Chapter 327 of the Laws of 2012 (S.6900/A.10049);
Chapter 208 of the Laws of 2010 (S.6150-A/A.9149-A); and
Chapter 432 of the Laws of 2009 (S.5551/A.5753).

Statement in support:

This bill would: (i) authorize SONYMA to originate mortgages
subordinate to a first lien where the second mortgage is made


simultaneously and with respect to the same secured property as a
first mortgage that is purchased by SONYMA or purchased or securitized
by a GSE; and (ii) expand the definition of GSE to include the Ginnie
Mae.

The ability of SONYMA, and other issuers of mortgage revenue bonds, to
fund mortgage programs by borrowing in the tax-exempt markets has been
negatively impacted by the Federal Reserve Board's (FRB) ongoing
policy of subsidizing interest rates through the purchase of
mortgage-backed securities (MBS) to support the US economic recovery.
Thus, the FRB's policy has eliminated SONYMA's traditional interest
rate advantage over conventional and FHA fixed-rate mortgage products.

These events have led the Agency to look to alternative fixed-rate
funding sources beyond the capital markets. In 2010, legislation was
passed authorizing SONYMA to purchase second loans made simultaneously
as first loans purchased by GSEs. SONYMA can now purchase closing cost
and/or down payment assistance loans in connection with non-SONYMA
first mortgage loans made at the same time, and purchased or
securitized by the GSEs. The legislation has enabled the Agency to
launch a conventional mortgage program in partnership with Fannie Mae,
whereby eligible New York home buyers and home owners can take
advantage of special pricing and certain underwriting advantages
offered by Fannie Mae to state housing agencies like SONYMA. The
program features a second mortgage where SONYMA provides down payment
and/or closing cost assistance.

SONYMA would like to expand its conventional rate program to include
loans insured by FHA and securitized by Ginnie Mae. FHA-insured loans
offer lower interest rates and more flexible underwriting than the
Fannie Mae loans. When offered with SONYMA. down payment and/or
closing cost assistance, the FHA product will be extremely attractive
to New Yorkers. However, HUD interprets the Housing and Economic
Recovery Act of 2008 (HERA) as prohibiting SONYMA from providing
secondary financing on FHA loans when "agents, including nonprofit or
for-profit enterprises, make the second lien, regardless of the source
of funds". Thus, under current law SONYMA's SONYMA can only purchase
loans, not originate them does not, in HUD's view, permit SONYMA to
expand its conventional rate program to include FHA insured loans,
since under SONYMA's current law, the lender must originate the
secondary loan, which SONYMA subsequently purchases.

Unless SONYMA is given authority to make second loans in conjunction
with the programs it offers, it will not be able to take advantage of
the FHA program to assist New York homebuyers and homeowners.

Further, to make the FHA program economically feasible, SONYMA needs
the ability to sell loans to or securitize loans with Ginnie Mae. In
order to do this, the Agency needs to expand the definition of
"government sponsored enterprise" in its statute to include Ginnie
Mae. This definition was inserted in SONYMA's statute when SONYMA
received legislative approval in 2010 to purchase second loans in
connection with programs involving government sponsored enterprises,
such as Fannie Mae, which though privately owned are publicly
chartered. Ginnie Mae does not fit within this definition, since it is
a wholly owned government corporation whose mortgage-backed securities


are backed by the full faith and credit guaranty of the United States
government.

Budget implications:

None.

Local Impact:

None.

Effective Date:

The bill would take effect immediately.

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

                                  4399

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 26, 2013
                               ___________

Introduced  by  Sen.  YOUNG  -- (at request of the Division of Housing &
  Community Renewal) -- 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 the powers of
  the state of New York mortgage agency

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

  Section 1. Subdivision 5 of section 2402  of  the  public  authorities
law,  as  amended  by  section  1 of chapter 208 of the laws of 2010, is
amended to read as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple or leasehold estate in real property located  in  the  state  and
improved  by  a residential structure, whether or not insured or guaran-
teed by the United States of America or any  agency  thereof.  The  term
"mortgage"  shall also include a loan owed to a bank secured by a second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed by the United  States  of  America  or  any  agency  thereof,
provided,  however,  that such second lien: (a) secures a loan purchased
by the agency, and (b) is made at the same time as a first lien securing
a loan purchased by the agency pursuant to its programs or by a  govern-
ment  sponsored  enterprise or is made at the same time as a new housing
loan purchased by the agency pursuant  to  section  twenty-four  hundred
five-c of this part[, provided that, in]. THE TERM "MORTGAGE" SHALL ALSO
INCLUDE  LOANS  MADE BY THE AGENCY AND SECURED BY MORTGAGES SECURED BY A
SECOND LIEN IN CASES WHERE THE SECOND LIEN:  (I) SECURES A MORTGAGE LOAN
PURCHASED BY THE AGENCY, AND (II) IS MADE AT THE SAME TIME  AS  A  FIRST
LIEN  SECURING  A  MORTGAGE LOAN PURCHASED BY THE AGENCY PURSUANT TO ITS
PROGRAMS OR BY A GOVERNMENT SPONSORED ENTERPRISE.   IN the case  of  any
second  lien  PURCHASED  OR MADE HEREUNDER, the mortgagor shall be obli-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09086-01-3

S. 4399                             2

gated to contribute from his or her own verifiable funds an  amount  not
less than such percentage as the agency shall determine, of the lower of
the  purchase  price  or  appraised value of the property subject to the
first  lien.  "Real  property" as used in this subdivision shall include
air rights.
  For the purposes of this title and of section one hundred  ninety  and
subsection (a) of section one thousand four hundred fifty-six of the tax
law, "mortgage" shall include housing loans as defined below. Except for
the  purposes  of subdivision seven of section two thousand four hundred
five and subdivision eight of section two thousand four  hundred  five-b
of  this part, "mortgage" shall also include a loan owed to a bank by an
individual borrower incurred for the purpose of financing  the  purchase
of  certificates  of stock or other evidence of ownership of an interest
in, and a proprietary lease  from,  a  cooperative  housing  corporation
formed  for the purpose of the cooperative ownership of residential real
estate in the state, secured by an assignment or transfer of  the  bene-
fits of such cooperative ownership, and containing such terms and condi-
tions as the agency may approve.
  S  2.  Subdivision 5 of section 2402 of the public authorities law, as
amended by section 2 of chapter 208 of the laws of 2010, is  amended  to
read as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United  States of America or any agency thereof. The term
"mortgage" shall also include a loan owed to a bank secured by a  second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed  by  the  United  States  of  America  or any agency thereof,
provided, however, that such second lien: (a) secures a  loan  purchased
by the agency, and (b) is made at the same time as a first lien securing
a  loan purchased by the agency pursuant to its programs or by a govern-
ment sponsored enterprise or is made at the same time as a  new  housing
loan  purchased  by  the  agency pursuant to section twenty-four hundred
five-c of this part[, provided that, in]. THE TERM "MORTGAGE" SHALL ALSO
INCLUDE LOANS MADE BY THE AGENCY AND SECURED BY MORTGAGES SECURED  BY  A
SECOND  LIEN IN CASES WHERE THE SECOND LIEN: (I) SECURES A MORTGAGE LOAN
PURCHASED BY THE AGENCY, AND (II) IS MADE AT THE SAME TIME  AS  A  FIRST
LIEN  SECURING  A  MORTGAGE LIEN PURCHASED BY THE AGENCY PURSUANT TO ITS
PROGRAMS OR BY A GOVERNMENT SPONSORED ENTERPRISE. IN  the  case  of  any
second  lien  PURCHASED  OR MADE HEREUNDER, the mortgagor shall be obli-
gated to contribute from his or her own verifiable funds an  amount  not
less than such percentage as the agency shall determine, of the lower of
the  purchase  price  or  appraised value of the property subject to the
first lien. "Real property" as used in this  subdivision  shall  include
air rights.
  Except  for  the purposes of subdivision seven of section two thousand
four hundred five of this part, "mortgage" shall  also  include  a  loan
owed  to  a  bank  by an individual borrower incurred for the purpose of
financing the purchase of certificates of stock  or  other  evidence  of
ownership of an interest in, and a proprietary lease from, a cooperative
housing  corporation formed for the purpose of the cooperative ownership
of residential real estate in the state, secured  by  an  assignment  or
transfer  of  the benefits of such cooperative ownership, and containing
such terms and conditions as the agency may approve.

S. 4399                             3

  S 3. Subdivision 5 of section 2402 of the public authorities  law,  as
amended  by  chapter  432  of  the  laws  of 2009, is amended to read as
follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United  States of America or any agency thereof. The term
"mortgage" shall also include a loan owed to a bank secured by a  second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed  by  the  United  States  of  America  or any agency thereof,
provided, however, that such second lien: (a) secures a  loan  purchased
by the agency, and (b) is made at the same time as a first lien securing
a  loan  purchased  by the agency pursuant to its programs or is made at
the same time as a new housing loan purchased by the agency pursuant  to
section  twenty-four  hundred  five-c of this part[, provided that, in].
THE TERM "MORTGAGE" SHALL ALSO INCLUDE LOANS  MADE  BY  THE  AGENCY  AND
SECURED  BY MORTGAGES SECURED BY A SECOND LIEN IN CASES WHERE THE SECOND
LIEN: (I) SECURES A MORTGAGE LOAN PURCHASED BY THE AGENCY, AND  (II)  IS
MADE AT THE SAME TIME AS A FIRST LIEN SECURING A MORTGAGE LIEN PURCHASED
BY  THE  AGENCY  PURSUANT  TO  ITS PROGRAMS OR BY A GOVERNMENT SPONSORED
ENTERPRISE. IN the case of any second lien, the mortgagor shall be obli-
gated to contribute from his or her own verifiable funds an  amount  not
less than such percentage as the agency shall determine, of the lower of
the  purchase  price  or  appraised value of the property subject to the
first lien. "Real property" as used in this  subdivision  shall  include
air rights.
  Except  for  the purposes of subdivision seven of section two thousand
four hundred five of this part, "mortgage" shall  also  include  a  loan
owed  to  a  bank  by an individual borrower incurred for the purpose of
financing the purchase of certificates of stock  or  other  evidence  of
ownership of an interest in, and a proprietary lease from, a cooperative
housing  corporation formed for the purpose of the cooperative ownership
of residential real estate in the state, secured  by  an  assignment  or
transfer  of  the benefits of such cooperative ownership, and containing
such terms and conditions as the agency may approve.
  S 4. Subdivision 17 of section 2402 of the public authorities law,  as
added by chapter 208 of the laws of 2010, is amended to read as follows:
  (17)  "Government  sponsored  enterprises".  Privately owned, publicly
chartered entities, AND WHOLLY-OWNED CORPORATE INSTRUMENTALITIES OF  THE
UNITED  STATES  WITHIN  THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
created by Congress to encourage lending and reduce costs  primarily  in
the housing sector of the economy.
  S  5. 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 MAKE LOANS SECURED BY MORTGAGES SECURED BY A  SECOND  LIEN  IN
CASES  WHERE  THE  SECOND LIEN: (I) SECURES A MORTGAGE LOAN PURCHASED BY
THE AGENCY, AND (II) IS MADE AT THE SAME TIME AS A FIRST LIEN SECURING A
MORTGAGE LOAN PURCHASED BY THE AGENCY PURSUANT TO ITS PROGRAMS OR  BY  A
GOVERNMENT SPONSORED ENTERPRISE.
  S  6. This act shall take effect immediately, provided that the amend-
ments to subdivision 5 of section 2402 of  the  public  authorities  law
made  by  section one of this act shall be subject to the expiration and
reversion of such subdivision pursuant to section 16 of chapter  915  of
the  laws  of  1982,  as  amended, when upon such date the provisions of

S. 4399                             4

section two of this act shall take effect; provided  further,  that  the
amendments  to  subdivision  5 of section 2402 of the public authorities
law made by section two of this act shall be subject to  the  expiration
and  reversion  of such subdivision pursuant to section 4 of chapter 208
of the laws of 2010 as amended, when upon such date  the  provisions  of
section  three of this act shall take effect; provided further, that the
amendments to subdivision 17 of section 2402 made  by  section  four  of
this  act  shall  not affect the repeal of such subdivision and shall be
deemed repealed therewith.

S4399A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A7833
Law Section:
Public Authorities Law
Laws Affected:
Amd §§2402 & 2404, Pub Auth L

S4399A (ACTIVE) - Bill Texts

view summary

Relates to the powers of the State of New York Mortgage Agency.

view sponsor memo
BILL NUMBER:S4399A

TITLE OF BILL: An act to amend the public authorities law, in
relation to the powers of the state of New York mortgage agency

Purpose of Bill:

This bill would (i) authorize the State of New York Mortgage Agency
(SONYMA) to originate second mortgage loans that provide borrowers of
SONYMA first mortgage loans with down payment and/or closing cost
assistance under certain limited circumstances, and (ii) amend the
definition of government sponsored enterprise (GSE).

Summary of provisions:

Section 1 of the bill expands the definition of "mortgage" in Public
Authorities Law (PAL) § 2402(5) to include loans made by SONYMA and
secured by mortgages secured by a second lien in cases where the
second lien: (i) secures a mortgage loan purchased by SONYMA, and (ii)
is made at the same time as a first lien securing a mortgage loan
purchased by SONYMA pursuant to its programs or by a government
sponsored enterprise.

Section 2 of the bill amends the definition of "government sponsored
enterprise" set forth in PAL § 2402 (17) to include Government
National Mortgage Association (Ginnie Mae).

Section 5 of the bill amends PAL § 2404 to renumber subsection (30) as
subsection (31) and to add a new subdivision (30) to grant SONYMA the
power to originate loans secured by mortgages secured by a second lien
in cases where the second lien: (i) secures a mortgage loan purchased
by SONYMA, and (ii) is made at the same time as a first lien securing
a mortgage loan purchased by SONYMA pursuant to its programs or by a
government sponsored enterprise.

Section 6 of the bill provides for an immediate effective date.

Existing law:

SONYMA is only authorized to purchase second mortgages where the loan
purchased by SONYMA and secured by mortgages secured by a second lien:
(i) secures a mortgage loan purchased by SONYMA; and (ii) is made at
the same time as a first lien securing a mortgage loan purchased by
SONYMA pursuant to its programs or by a government sponsored
enterprise. SONYMA does not currently have the authority to originate
mortgages for second lien purposes.

Prior Legislative history:

Chapter 327 of the Laws of 2012 (S.6900/A.10049);
Chapter 208 of the Laws of 2010 (S.6150-A/A.9149-A); and
Chapter 432 of the Laws of 2009 (S.5551/A.5753).

Statement in support:

This bill would: (i) authorize SONYMA to originate mortgages
subordinate to a first lien where the second mortgage is made


simultaneously and with respect to the same secured property as a
first mortgage that is purchased by SONYMA or purchased or securitized
by a GSE; and (ii) expand the definition of GSE to include the Ginnie
Mae.

The ability of SONYMA, and other issuers of mortgage revenue bonds, to
fund mortgage programs by borrowing in the tax-exempt markets has been
negatively impacted by the Federal Reserve Board's (FRB) ongoing
policy of subsidizing interest rates through the purchase of
mortgage-backed securities (MBS) to support the US economic recovery.
Thus, the FRB's policy has eliminated SONYMA's traditional interest
rate advantage over conventional and FHA fixed-rate mortgage products.

These events have led the Agency to look to alternative fixed-rate
funding sources beyond the capital markets. In 2010, legislation was
passed authorizing SONYMA to purchase second loans made simultaneously
as first loans purchased by GSEs. SONYMA can now purchase closing cost
and/or down payment assistance loans in connection with non-SONYMA
first mortgage loans made at the same time, and purchased or
securitized by the GSEs. The legislation has enabled the Agency to
launch a conventional mortgage program in partnership with Fannie Mae,
whereby eligible New York home buyers and home owners can take
advantage of special pricing and certain underwriting advantages
offered by Fannie Mae to state housing agencies like SONYMA. The
program features a second mortgage where SONYMA provides down payment
and/or closing cost assistance.

SONYMA would like to expand its conventional rate program to include
loans insured by FHA and securitized by Ginnie Mae. FHA-insured loans
offer lower interest rates and more flexible underwriting than the
Fannie Mae loans. When offered with SONYMA down payment and/or closing
cost assistance, the FHA product will be extremely attractive to New
Yorkers. However, HUD interprets the Housing and Economic Recovery Act
of 2008 (HERA) as prohibiting SONYMA from providing secondary
financing on FHA loans when "agents, including nonprofit or for-profit
enterprises, make the second lien, regardless of the source of funds".
Thus, under current law SONYMA can only purchase loans, not originate
them does not, in HUD's view, permit SONYMA to expand its conventional
rate program to include FHA insured loans, since under SONYMA's
current law, the lender must originate the secondary loan, which
SONYMA subsequently purchases.

Unless SONYMA is given authority to make second loans in conjunction
with the programs it offers, it will not be able to take advantage of
the FHA program to assist New York homebuyers and homeowners.

Further, to make the FHA program economically feasible, SONYMA needs
the ability to sell loans to or securitize loans with Ginnie Mae. In
order to do this, the Agency needs to expand the definition of
"government sponsored enterprise" in its statute to include Ginnie
Mae. This definition was inserted in SONYMA's statute when SONYMA
received legislative approval in 2010 to purchase second loans in
connection with programs involving government sponsored enterprises,
such as Fannie Mae, which though privately owned are publicly
chartered. Ginnie Mae does not fit within this definition, since it is
a wholly owned government corporation whose mortgage-backed securities


are backed by the full faith and credit guaranty of the United States
government.

Budget implications:

None.

Local Impact:

None.

Effective Date:

The bill would take effect immediately.

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

                                 4399--A
    Cal. No. 543

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 26, 2013
                               ___________

Introduced  by  Sen.  YOUNG  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and  Commissions -- reported favorably from said committee, ordered to
  first and second report, ordered  to  a  third  reading,  amended  and
  ordered reprinted, retaining its place in the order of third reading

AN ACT to amend the public authorities law, in relation to the powers of
  the state of New York mortgage agency

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

  Section 1. Subdivision 5 of section 2402  of  the  public  authorities
law,  as  amended  by  section  1 of chapter 208 of the laws of 2010, is
amended to read as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple or leasehold estate in real property located  in  the  state  and
improved  by  a residential structure, whether or not insured or guaran-
teed by the United States of America or any  agency  thereof.  The  term
"mortgage"  shall also include a loan owed to a bank secured by a second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed by the United  States  of  America  or  any  agency  thereof,
provided,  however,  that such second lien: (a) secures a loan purchased
by the agency, and (b) is made at the same time as a first lien securing
a loan purchased by the agency pursuant to its programs or by a  govern-
ment  sponsored  enterprise or is made at the same time as a new housing
loan purchased by the agency pursuant  to  section  twenty-four  hundred
five-c of this part[, provided that, in]. THE TERM "MORTGAGE" SHALL ALSO
INCLUDE  LOANS  MADE BY THE AGENCY AND SECURED BY A SECOND LIEN ON A FEE
SIMPLE OR LEASEHOLD ESTATE IN REAL PROPERTY LOCATED  IN  THE  STATE  AND
IMPROVED  BY  A RESIDENTIAL STRUCTURE, WHETHER OR NOT INSURED OR GUARAN-
TEED BY THE UNITED STATES OF AMERICA OR  ANY  AGENCY  THEREOF,  PROVIDED
HOWEVER,  THAT  THE  LOAN  MADE BY THE AGENCY AND SECURED BY SUCH SECOND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09086-02-3

S. 4399--A                          2

LIEN IS MADE AT THE SAME TIME AS A FIRST LIEN SECURING A  MORTGAGE  LOAN
PURCHASED  BY  THE  AGENCY  PURSUANT  TO ITS PROGRAMS OR BY A GOVERNMENT
SPONSORED ENTERPRISE. IN the case of any second lien PURCHASED  OR  MADE
HEREUNDER,  the  mortgagor  shall be obligated to contribute from his or
her own verifiable funds an amount not less than such percentage as  the
agency  shall determine, of the lower of the purchase price or appraised
value of the property subject to the first lien. "Real property" as used
in this subdivision shall include air rights.
  For the purposes of this title and of section one hundred  ninety  and
subsection (a) of section one thousand four hundred fifty-six of the tax
law, "mortgage" shall include housing loans as defined below. Except for
the  purposes  of subdivision seven of section two thousand four hundred
five and subdivision eight of section two thousand four  hundred  five-b
of  this part, "mortgage" shall also include a loan owed to a bank by an
individual borrower incurred for the purpose of financing  the  purchase
of  certificates  of stock or other evidence of ownership of an interest
in, and a proprietary lease  from,  a  cooperative  housing  corporation
formed  for the purpose of the cooperative ownership of residential real
estate in the state, secured by an assignment or transfer of  the  bene-
fits of such cooperative ownership, and containing such terms and condi-
tions as the agency may approve.
  S  2.  Subdivision 5 of section 2402 of the public authorities law, as
amended by section 2 of chapter 208 of the laws of 2010, is  amended  to
read as follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United  States of America or any agency thereof. The term
"mortgage" shall also include a loan owed to a bank secured by a  second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed  by  the  United  States  of  America  or any agency thereof,
provided, however, that such second lien: (a) secures a  loan  purchased
by the agency, and (b) is made at the same time as a first lien securing
a  loan purchased by the agency pursuant to its programs or by a govern-
ment sponsored enterprise or is made at the same time as a  new  housing
loan  purchased  by  the  agency pursuant to section twenty-four hundred
five-c of this part[, provided that, in]. THE TERM "MORTGAGE" SHALL ALSO
INCLUDE LOANS MADE BY THE AGENCY AND SECURED BY A SECOND LIEN ON  A  FEE
SIMPLE  OR  LEASEHOLD  ESTATE  IN REAL PROPERTY LOCATED IN THE STATE AND
IMPROVED BY A RESIDENTIAL STRUCTURE, WHETHER OR NOT INSURED  OR  GUARAN-
TEED  BY  THE  UNITED  STATES OF AMERICA OR ANY AGENCY THEREOF, PROVIDED
HOWEVER, THAT THE LOAN MADE BY THE AGENCY AND  SECURED  BY  SUCH  SECOND
LIEN  IS  MADE AT THE SAME TIME AS A FIRST LIEN SECURING A MORTGAGE LOAN
PURCHASED BY THE AGENCY PURSUANT TO ITS  PROGRAMS  OR  BY  A  GOVERNMENT
SPONSORED  ENTERPRISE.  IN the case of any second lien PURCHASED OR MADE
HEREUNDER, the mortgagor shall be obligated to contribute  from  his  or
her  own verifiable funds an amount not less than such percentage as the
agency shall determine, of the lower of the purchase price or  appraised
value of the property subject to the first lien. "Real property" as used
in this subdivision shall include air rights.
  Except  for  the purposes of subdivision seven of section two thousand
four hundred five of this part, "mortgage" shall  also  include  a  loan
owed  to  a  bank  by an individual borrower incurred for the purpose of
financing the purchase of certificates of stock  or  other  evidence  of
ownership of an interest in, and a proprietary lease from, a cooperative

S. 4399--A                          3

housing  corporation formed for the purpose of the cooperative ownership
of residential real estate in the state, secured  by  an  assignment  or
transfer  of  the benefits of such cooperative ownership, and containing
such terms and conditions as the agency may approve.
  S  3.  Subdivision 5 of section 2402 of the public authorities law, as
amended by chapter 432 of the laws  of  2009,  is  amended  to  read  as
follows:
  (5) "Mortgage". A loan owed to a bank secured by a first lien on a fee
simple  or  leasehold  estate  in real property located in the state and
improved by a residential structure, whether or not insured  or  guaran-
teed  by  the  United  States of America or any agency thereof. The term
"mortgage" shall also include a loan owed to a bank secured by a  second
lien on a fee simple or leasehold estate in real property located in the
state and improved by a residential structure, whether or not insured or
guaranteed  by  the  United  States  of  America  or any agency thereof,
provided, however, that such second lien: (a) secures a  loan  purchased
by the agency, and (b) is made at the same time as a first lien securing
a  loan  purchased  by the agency pursuant to its programs or is made at
the same time as a new housing loan purchased by the agency pursuant  to
section  twenty-four  hundred  five-c of this part[, provided that, in].
THE TERM "MORTGAGE" SHALL ALSO INCLUDE LOANS  MADE  BY  THE  AGENCY  AND
SECURED  BY  A  SECOND  LIEN ON A FEE SIMPLE OR LEASEHOLD ESTATE IN REAL
PROPERTY LOCATED IN THE STATE AND IMPROVED BY A  RESIDENTIAL  STRUCTURE,
WHETHER  OR NOT INSURED OR GUARANTEED BY THE UNITED STATES OF AMERICA OR
ANY AGENCY THEREOF, PROVIDED HOWEVER, THAT THE LOAN MADE BY  THE  AGENCY
AND SECURED BY SUCH SECOND LIEN IS MADE AT THE SAME TIME AS A FIRST LIEN
SECURING  A  MORTGAGE  LOAN  PURCHASED  BY  THE  AGENCY  PURSUANT TO ITS
PROGRAMS OR BY A GOVERNMENT SPONSORED ENTERPRISE. IN  the  case  of  any
second  lien, the mortgagor shall be obligated to contribute from his or
her own verifiable funds an amount not less than such percentage as  the
agency  shall determine, of the lower of the purchase price or appraised
value of the property subject to the first lien. "Real property" as used
in this subdivision shall include air rights.
  Except for the purposes of subdivision seven of section  two  thousand
four  hundred  five  of  this part, "mortgage" shall also include a loan
owed to a bank by an individual borrower incurred  for  the  purpose  of
financing  the  purchase  of  certificates of stock or other evidence of
ownership of an interest in, and a proprietary lease from, a cooperative
housing corporation formed for the purpose of the cooperative  ownership
of  residential  real  estate  in the state, secured by an assignment or
transfer of the benefits of such cooperative ownership,  and  containing
such terms and conditions as the agency may approve.
  S  4. Subdivision 17 of section 2402 of the public authorities law, as
added by chapter 208 of the laws of 2010, is amended to read as follows:
  (17) "Government sponsored  enterprises".  Privately  owned,  publicly
chartered  entities, AND WHOLLY-OWNED CORPORATE INSTRUMENTALITIES OF THE
UNITED STATES WITHIN THE DEPARTMENT OF HOUSING  AND  URBAN  DEVELOPMENT,
CREATED  PURSUANT  TO  12  USC 1717(A)(2)(A), ALL created by Congress to
encourage lending and reduce costs primarily in the  housing  sector  of
the economy.
  S  5. 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 MAKE LOANS SECURED BY MORTGAGES SECURED BY A SECOND LIEN ON  A
FEE SIMPLE OR LEASEHOLD ESTATE IN REAL PROPERTY LOCATED IN THE STATE AND
IMPROVED  BY  A RESIDENTIAL STRUCTURE, WHETHER OR NOT INSURED OR GUARAN-

S. 4399--A                          4

TEED BY THE UNITED STATES OF AMERICA OR  ANY  AGENCY  THEREOF,  PROVIDED
HOWEVER,  THAT  THE  LOAN  MADE BY THE AGENCY AND SECURED BY SUCH SECOND
LIEN IS MADE AT THE SAME TIME AS A FIRST LIEN SECURING A  MORTGAGE  LOAN
PURCHASED  BY  THE  AGENCY  PURSUANT  TO ITS PROGRAMS OR BY A GOVERNMENT
SPONSORED ENTERPRISE.
  S 6. This act shall take effect immediately, provided that the  amend-
ments  to  subdivision  5  of section 2402 of the public authorities law
made by section one of this act shall be subject to the  expiration  and
reversion  of  such subdivision pursuant to section 16 of chapter 915 of
the laws of 1982, as amended, when upon  such  date  the  provisions  of
section  two  of  this act shall take effect; provided further, that the
amendments to subdivision 5 of section 2402 of  the  public  authorities
law  made  by section two of this act shall be subject to the expiration
and reversion of such subdivision pursuant to section 4 of  chapter  208
of  the  laws  of 2010 as amended, when upon such date the provisions of
section three of this act shall take effect; provided further, that  the
amendments  to  subdivision  17  of section 2402 made by section four of
this act shall not affect the repeal of such subdivision  and  shall  be
deemed repealed therewith.

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