Assembly Bill A9565

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

                                  9565

                          I N  A S S E M B L Y

                             March 17, 2016
                               ___________

Introduced  by M. of A. WEINSTEIN, ROBINSON -- read once and referred to
  the Committee on Housing

AN ACT to amend the state finance law, in relation to  establishing  the
  community  reinvestment  program;  and establishes the community rein-
  vestment program fund council

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

  Section 1. Statement of legislative purpose and findings. The legisla-
ture  finds  and declares that New York's mortgage foreclosure crisis is
ongoing.  This state's communities have been devastated by the  dramatic
increase in foreclosures since the 2008 financial crisis. Many New York-
ers  are  working  to  keep  their  homes, but are faced with a mortgage
servicing system moving too slowly. Communities across the state  strug-
gle  to  cope with vacant,   distressed or abandoned properties that, if
repaired and returned to the market, would  be  affordable  housing  and
generate  tax  income for municipalities.  The legislature finds that it
is necessary to  create  a  statewide  program  to  protect  communities
throughout the state by: (i) preventing foreclosures when possible, (ii)
reducing blight, (iii) restoring property tax revenue, and (iv) support-
ing  affordable  housing  options.  Accordingly  the  legislature hereby
creates the community reinvestment program.
  S 2. Definitions. As used in this act, the following words and phrases
shall have the following meanings:
  1. "Asset" means real property or notes secured by mortgages.
  2. "Community development financial institution" or  "CDFI"  means  an
organization  which has been certified as a community development finan-
cial institution by the federal community development  financial  insti-
tutions fund, as established pursuant to 12 U.S.C. 4701 et seq.
  3. "Community reinvestment program fund" or "fund" means the community
reinvestment  program  fund  established  pursuant  to section 85 of the
state finance law.
  4. "Council" means the community reinvestment program fund council.
  5. "Fund manager" means a Community Development Financial  Institution
("CDFI") fund manager.

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

                                                           LBD13890-06-6

A. 9565                             2

  6.  "Not-for-profit  members" means members of the community reinvest-
ment program fund council who do not have a significant financial inter-
est in or control of a business or profit making entity involved in real
estate transactions or real estate speculation.
  7.  "Program  manager"  means a property holding company that will own
and manage the  assets  purchased  through  the  community  reinvestment
program.
  8.  "Real estate owned" means real property owned by a lender, includ-
ing a banking organization, or federal or state agency, which owns  such
property as the result of a default in payments on a mortgage.
  9. "Vacant" means real property which has no current residents.
  S  3.  The  state finance law is amended by adding a new section 85 to
read as follows:
  S 85. COMMUNITY REINVESTMENT PROGRAM FUND. 1. THERE IS  HEREBY  ESTAB-
LISHED  IN  THE  CUSTODY  OF  THE STATE COMPTROLLER A SPECIAL FUND TO BE
KNOWN AS THE "COMMUNITY REINVESTMENT PROGRAM FUND".
  2. THE COMMUNITY REINVESTMENT PROGRAM FUND  SHALL  CONSIST  OF  MONEYS
DEPOSITED  THEREIN  BY THE STATE COMPTROLLER.  NOTHING CONTAINED IN THIS
SECTION SHALL PREVENT THE STATE FROM  RECEIVING  GRANTS,  GIFTS,  MONIES
OBTAINED  THROUGH  JUDGMENTS AND SETTLEMENTS FROM THE STATE OR ANY OTHER
GOVERNMENTAL ENTITY, OR BEQUESTS AND DEPOSITING THEM INTO THE ACCESSIBLE
ELECTRONIC INFORMATION SERVICE FUND ACCORDING TO LAW.
  3. THE MONEYS IN THE FUND SHALL BE USED TO:
  (A) PURCHASE MORTGAGE NOTES ON ONE TO FOUR UNIT  HOMES  AT  DISCOUNTED
RATES; AND
  (B)  ACQUIRE  OR  SELL  HOMES  AT  DISCOUNTED  RATES FROM LENDERS, AND
PURCHASE HOMES AT AUCTION, THROUGH SHORT SALE, OR OTHER  SALE  WITH  THE
INTENT TO:
  (I)  WHERE POSSIBLE, MODIFY THE MORTGAGE TO AN AFFORDABLE RATE TO KEEP
CURRENT HOMEOWNERS IN THE PROPERTY;
  (II) RENT OR SELL BACK TO HOMEOWNERS WITH AN AFFORDABLE LOAN;
  (III) FUND LOCAL, NOT-FOR-PROFIT DEVELOPMENT EFFORTS  TO  TURN  VACANT
PROPERTIES INTO AFFORDABLE HOUSING;
  (IV) REHABILITATE DISTRESSED PROPERTIES FOR NEW OWNERS; AND/OR
  (V) DEMOLISH HOMES THAT ARE DILAPIDATED OR REASONABLY BEYOND REPAIR.
  4.  (A)  AS  USED  IN  THIS  SECTION, THE TERMS "COMMUNITY DEVELOPMENT
FINANCIAL INSTITUTION" "CDFI",  "FUND  MANAGER"  AND  "PROGRAM  MANAGER"
SHALL HAVE THE SAME MEANINGS AS ASCRIBED TO SUCH TERMS BY SECTION TWO OF
THE CHAPTER OF THE LAWS OF TWO THOUSAND SIXTEEN THAT ADDED THIS SECTION.
  (B)  AS  USED  IN  THIS  SECTION, "COMMUNITY REINVESTMENT PROGRAM FUND
COUNCIL" MEANS SUCH COUNCIL AS ESTABLISHED BY SECTION FOUR OF THE  CHAP-
TER OF THE LAWS OF TWO THOUSAND SIXTEEN THAT ADDED THIS SECTION.
  5. THE DIVISION OF HOUSING AND COMMUNITY RENEWAL, IN CONSULTATION WITH
THE  COMMUNITY  REINVESTMENT PROGRAM FUND COUNCIL, SHALL SELECT THE FUND
MANAGER AND PROGRAM MANAGER THROUGH THE REQUEST FOR PROPOSAL PROCESS.
  6. THE FUND MANAGER SHALL:
  (A) BE RESPONSIBLE FOR THE  RECEIPT,  MANAGEMENT  AND  EXPENDITURE  OF
MONIES HELD IN THE COMMUNITY REINVESTMENT PROGRAM FUND;
  (B)  MAINTAIN  BOOKS AND RECORDS PERTAINING TO ALL MONIES RECEIVED AND
DISBURSED PURSUANT TO THIS SECTION;
  (C) SEEK AND RECEIVE RECEIVE PUBLIC, SETTLEMENT AND  OTHER  FUNDS  AND
USE  THOSE  FUNDS  TO  PURCHASE  ASSETS THAT WILL BE HELD BY THE PROGRAM
MANAGER;
  (D) HAVE THE AUTHORITY TO RESEARCH, ACQUIRE AND PURCHASE DISTRESSED OR
UNDERPERFORMING ASSETS IN ORDER TO TRANSFER SUCH ASSETS TO  THE  PROGRAM
MANAGER;

A. 9565                             3

  (E)  WORK  WITH  THE  COMMUNITY  REINVESTMENT  PROGRAM FUND COUNCIL TO
DEVELOP STRATEGIES FOR  ACQUIRING  DISTRESSED  ASSETS  AND  TO  IDENTIFY
OPPORTUNITIES TO ACQUIRE DISTRESSED ASSETS;
  (F)  WORK  WITH  THE  PROGRAM  MANAGER  AND THE COMMUNITY REINVESTMENT
PROGRAM FUND COUNCIL  TO  IDENTIFY  NOT-FOR-PROFIT  DEVELOPERS  ABLE  TO
IMPLEMENT  DISPOSITIONS  TAILORED  TO  LOCAL NEEDS, WHETHER SALES TO NEW
HOMEOWNERS, USE AS AFFORDABLE RENTAL PROPERTY, OR DEMOLITION AND  REPUR-
POSING  FOR OTHER COMMUNITY USES; PROVIDED, HOWEVER, THAT IF NO NOT-FOR-
PROFIT DEVELOPER IS AVAILABLE IN A  PARTICULAR  LOCATION,  A  FOR-PROFIT
DEVELOPER  MAY, WITH THE CONSENT AND APPROVAL OF THE COMMUNITY REINVEST-
MENT PROGRAM FUND COUNCIL, BE SELECTED;
  (G) MAKE FUNDS DIRECTLY AVAILABLE TO NOT-FOR-PROFIT ORGANIZATIONS  AND
DEVELOPERS  FOR  USE  TO ACQUIRE, REHABILITATE AND/OR FINANCE PROPERTIES
DIRECTLY; PROVIDED, HOWEVER, THAT IF NO NOT-FOR-PROFIT ORGANIZATIONS AND
DEVELOPERS ARE AVAILABLE IN A PARTICULAR LOCATION, FOR-PROFIT  ORGANIZA-
TIONS AND DEVELOPERS MAY, WITH THE CONSENT AND APPROVAL OF THE COMMUNITY
REINVESTMENT  PROGRAM  FUND  COUNCIL, BE SELECTED.  THESE FUNDS WOULD BE
MADE AVAILABLE THROUGH A REQUEST FOR PROPOSAL PROCESS CONDUCTED  THROUGH
THE  DIVISION OF HOUSING AND COMMUNITY RENEWAL, IN CONSULTATION WITH THE
FUND MANAGER;
  (H) DEVELOP A PLAN TO MAKE THE FUND A REVOLVING LOAN FUND;
  (I) APPLY FOR FEDERAL OR PRIVATE GRANT MONEY THAT BECOMES AVAILABLE TO
CARRY OUT THE PURPOSE OF THIS SECTION;
  (J) COORDINATE WITH MUNICIPALITIES  TO  IDENTIFY  MORTGAGE  NOTES  FOR
PURCHASE; AND
  (K)  PERFORM  ANY AND ALL TASKS AND FUNCTIONS NECESSARY TO OPERATE THE
FUND.
  7. THE PROGRAM MANAGER SHALL:
  (A) HAVE THE AUTHORITY TO ACQUIRE, PURCHASE OR  SELL  DISTRESSED  REAL
PROPERTY  ASSETS  OR  MORTGAGE  NOTES ON ONE TO FOUR UNIT HOMES, WHETHER
CURRENT, DELINQUENT AND/OR IN FORECLOSURE,  OCCUPIED,  VACANT  OR  ABAN-
DONED, WHERE PURCHASED OR ACQUIRED:
  (I) AT OR BELOW REASONABLE AND CUSTOMARY PRICES;
  (II)  THROUGH  NEGOTIATED  SALES AT FHA DISTRESSED ASSET STABILIZATION
PROGRAM SALES OR AT ANY OTHER SUCH SALES CONDUCTED BY A GOVERNMENT ENTI-
TY;
  (III) THROUGH AUCTIONS, SHORT SALES, REAL ESTATE OWNED  PROPERTIES  OR
PROPERTIES  IDENTIFIED  BY  THE  MEMBERS  OF  THE COMMUNITY REINVESTMENT
PROGRAM FUND COUNCIL;
  (IV) THROUGH DONATION OR BY OTHER MEANS;
  (B) OWN AND MANAGE THE DISTRESSED OR UNDERPERFORMING ASSETS;
  (C) HAVE THE POWER TO MODIFY MORTGAGE NOTES ON THE ACQUIRED ASSETS;
  (D) WITH THE INPUT OF THE COMMUNITY REINVESTMENT PROGRAM FUND COUNCIL,
DEVELOP DISPOSITION STRATEGIES TAILORED TO THE NEEDS AND  MARKET  CONDI-
TIONS  IN  THE LOCAL COMMUNITIES WHERE THE DISTRESSED OR UNDERPERFORMING
ASSETS ARE LOCATED;
  (E) WORK WITH THE  COMMUNITY  REINVESTMENT  PROGRAM  FUND  COUNCIL  TO
DETERMINE OPTIMAL OUTCOMES FOR ACQUIRED MORTGAGE NOTES AND PROPERTIES;
  (F)  HAVE A RELATIONSHIP WITH A SPECIALTY MORTGAGE SERVICER WHOSE ROLE
IS TO ASSIST WITH MODIFICATIONS OF ACQUIRED MORTGAGE NOTES;
  (G) WORK WITH THE FUND MANAGER AND THE COMMUNITY REINVESTMENT  PROGRAM
FUND COUNCIL TO DEVELOP MODIFICATION CRITERIA;
  (H)  WORK  WITH  LOAN  SERVICERS,  HOUSING COUNSELORS AND ATTORNEYS TO
ASSIST BORROWERS WITH APPLICATIONS FOR LOAN MODIFICATIONS AND  REFINANC-
ING;

A. 9565                             4

  (I) WITH THE APPROVAL OF THE COMMUNITY REINVESTMENT PROGRAM FUND COUN-
CIL,  MAKE AVAILABLE REASONABLE EXPENSES TO NOT-FOR-PROFIT ORGANIZATIONS
FOR DIRECT DISPOSITION EXPENSES, INCLUDING WORKING  WITH  HOMEOWNERS  TO
ACHIEVE LOAN MODIFICATIONS AND OTHER WORKOUT OPTIONS;
  (J)  WORK WITH THE FUND MANAGER AND THE COMMUNITY REINVESTMENT PROGRAM
FUND COUNCIL TO IDENTIFY NOT-FOR-PROFIT  DEVELOPERS  ABLE  TO  IMPLEMENT
DISPOSITIONS  TAILORED  TO LOCAL NEEDS, WHETHER SALES TO NEW HOMEOWNERS,
USE AS AFFORDABLE RENTAL PROPERTY, OR  DEMOLITION  AND  REPURPOSING  FOR
OTHER COMMUNITY USES;
  (K)  MEET  WITH  THE  COMMUNITY REINVESTMENT PROGRAM FUND COUNCIL AT A
MINIMUM EVERY QUARTER OF THE CALENDAR YEAR,  AND  PROVIDE  SUCH  COUNCIL
WITH  THE  INFORMATION  NEEDED  TO  ASSESS WHETHER THE FUND IS OPERATING
WITHIN THE PURPOSES OF THIS SECTION; AND
  (L) PERFORM ANY AND ALL TASKS AND FUNCTIONS NECESSARY TO  OPERATE  THE
FUND.
  S  4.  Community reinvestment program fund council. 1. There is hereby
established the community reinvestment program fund  council  consisting
of  twenty-seven  members. The purpose of such council is to serve as an
advisory board to advise the program manager, assist with the  identifi-
cation of opportunities to acquire distressed or underperforming assets,
assist in the development of disposition strategies tailored to meet the
needs and market conditions in the local communities where distressed or
underperforming  assets  are  located,  work with the program manager to
determine optimal outcomes for acquired mortgage notes  and  properties,
work  with  the  fund  manager and program manager to determine the loan
servicer's modification criteria, work with the fund manager and program
manager to identify not-for-profit developers able to implement disposi-
tions tailored to local needs, whether sales to new homeowners,  use  as
affordable  rental  property,  or  demolition  and repurposing for other
community uses, and perform such functions  as  shall  be  necessary  to
operate the community reinvestment program fund.
  2. The members of the council shall consist of:
  a.  the  commissioner  of housing and community renewal, or his or her
designee, who shall be the chair of the council;
  b. the commissioner of economic development, or his or her designee;
  c. the chair of the senate  committee  on  housing,  construction  and
community development or his or her designee;
  d. the chair of the assembly committee on housing or his or her desig-
nee;
  e.    twenty-three  community  based,  not-for-profit members with two
members from each of the  regional  economic  council  areas,  with  the
exception  of  the city of New York.  These areas shall include: Western
New York, the Finger Lakes, Central New York,  the  Southern  Tier,  the
Mohawk  Valley,  the  North  Country, the Capital Region, the Mid-Hudson
Region and Long Island. One member shall be appointed from each  borough
of the city of New York; and
  f.  not less than seventy-five percent of the appointed members of the
council shall have experience with housing organizations, not-for-profit
corporations, advocacy  organizations,  civic  associations,  community-
based  organizations or similar entities with expertise in the fields of
housing, housing finance, municipal planning or community development.
  3. Members of the council shall serve terms of two years.  Members who
serve pursuant to paragraphs c and d of subdivision two of this  section
shall  serve  for  the  duration of their two year term and shall not be
removed unless there is good cause shown, after notice and  an  opportu-
nity to be heard.

A. 9565                             5

  4.  The  governor  shall  appoint the members of the council, with the
advice and consent of the  senate.    The  governor  shall  appoint  the
members of the council from a list of qualified persons submitted to the
division  of  housing  and community renewal by the chairs of the senate
committees  on  banks,  and housing, construction and community develop-
ment, and the chairs of the assembly committees on  banks  and  housing.
Such  list shall be composed of individuals who have knowledge or exper-
tise in housing issues within their region of the state.
  5.  Notwithstanding  the  provisions  of  subdivision  three  of  this
section,  of  the members of the council initially appointed, in accord-
ance with paragraph c of subdivision two of  this  section,  one  member
from  each  regional  council  area  and  the members appointed from the
boroughs of Manhattan and Staten Island shall be appointed for a term of
one year, and all subsequent appointees shall serve terms of two  years.
The  governor  shall  appoint  the  initial members, with the advice and
consent of the senate, within 180 days of the  effective  date  of  this
section.  Furthermore,  the  first  meeting of the council shall convene
within 90 days of the date upon which all members of  the  council  have
been appointed.
  6. The council shall meet at least quarterly or more frequently at the
call  of the chair of the council. At the initial meeting of the council
and annually thereafter the members of the council shall elect from  its
members  a  secretary  and such other officers as the council shall deem
necessary.
  7. The chair of the council shall establish committees for the purpose
of conducting special studies pursuant to the  duties  of  the  council.
Individuals  who  are not members of the  council shall be authorized to
be members of a committee to serve as resource persons for  the  commit-
tee.    No  person  who is not a member of the council shall be a voting
member of a committee or the council. All recommendations of a committee
shall be subject to the approval of the council.
  8. The members of the council shall receive no compensation for  their
services,  but  shall  be  allowed  their  actual and necessary expenses
incurred in the performance of their duties pursuant to  this  act.  All
such expenses shall be payable from the fund.
  S  5.  Annual  report  to the legislature. The division of housing and
community renewal shall submit a report to the governor, the speaker  of
the assembly, the temporary president of the senate, the minority leader
of  the  assembly and the minority leader of the senate on or before the
first of October, and annually thereafter, describing  the  use  of  the
community  restoration  fund  pursuant  to  this  act,  including  asset
purchases, loan modifications, home sales, rentals,  property  rehabili-
tations  and other information provided pursuant to this act, including:
the number of assets purchased, number  of  loans  modified,  number  of
properties  rented and a description of projects financed or assisted by
fund monies; the amount and source of funds leveraged;  and  such  other
information as the state agency may deem appropriate.
  S  6.  The  community  reinvestment program shall constitute a govern-
mental entity within the division of housing and community renewal. Such
program shall be the primary entity within the state for negotiating the
purchase of assets from distressed asset stabilization sales, in consul-
tation with municipalities and local  government  entities.  Such  local
governments shall enter into participation agreements with the community
reinvestment program to establish the terms of asset acquisition.  Local
government entities shall notify the program manager not less than thir-
ty  days  prior to making any distressed asset purchase, federal housing

A. 9565                             6

finance agency purchase, or purchase from any other  entity  engaged  in
the  sale  of  mortgage note pools for purposes substantially similar to
those enumerated in this act. In the event that the program  manager  is
able to expedite such purchases or reduce costs, he or she shall make an
effort to do so in consultation with the council.
  S  7.  The division of housing and community renewal is hereby author-
ized to promulgate rules and regulations in accordance  with  the  state
administrative  procedure act that are necessary to fulfill the purposes
of this act including, but not limited to, rules relating to the manage-
ment of the fund, distribution of monies therefrom, mortgage note acqui-
sition guidelines, council activities and meeting schedules, and afford-
ability guidelines. The rules shall include guidelines  to  ensure  that
fund  monies  are  expended  based upon demonstrable community needs. In
addition, these rules shall specify that no more than forty  percent  of
the  monies  of  the  fund  shall  be expended on an annual basis in any
single economic development council area. Furthermore,  such  rules  and
regulations  are  to be completed not later than one hundred eighty days
after the effective date of this act.
  S 8. This act shall take effect immediately.