S T A T E O F N E W Y O R K
________________________________________________________________________
9826
I N A S S E M B L Y
April 12, 2016
___________
Introduced by M. of A. HYNDMAN -- read once and referred to the Commit-
tee on Housing
AN ACT to amend the state finance law, in relation to establishing the
community restoration fund
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
continues. Many New Yorkers are still unable to meet their mortgage
obligations. There are delays in the foreclosure process, homes are
sitting vacant or in a state of ill repair because of drawn out loan
modification and foreclosures, neighborhoods with high concentrations of
foreclosures are losing value and the owners are losing equity. Fore-
closures that were the result of the real estate downturn and great
recession will continue to be a problem within the state. The legisla-
ture finds that it is necessary to create a statewide program to stabi-
lize communities throughout the state by: (i) avoiding foreclosures and
ameliorating the effects of the mortgage foreclosure crisis; (ii) elimi-
nating blighted properties and vacant lots that bring down community
values and create attractive nuisances within communities; (iii) restor-
ing property tax income to counties and towns; and (iv) maintaining
affordable housing. Accordingly the legislature hereby creates the
community restoration fund.
S 2. Definitions. As used in this act, the following words and phrases
shall have the following meanings:
1. "Community development financial institution" or "CDFI" means an
organization located in this state which has been certified as a commu-
nity development financial institution by the federal community develop-
ment financial institutions fund, as established pursuant to 12 U.S.C.
4701 et seq.
2. "Fund manager" means a New York-based Community Development Finan-
cial Institution ("CDFI") fund manager.
3. "Program manager" means a property holding company that will own
and manage the assets purchased through the community restoration fund.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11044-02-5
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S 3. The state finance law is amended by adding a new section 99-x to
read as follows:
S 99-X. COMMUNITY RESTORATION FUND. 1. THERE IS HEREBY ESTABLISHED IN
THE CUSTODY OF THE STATE COMPTROLLER A SPECIAL FUND TO BE KNOWN AS THE
"COMMUNITY RESTORATION FUND".
2. THE COMMUNITY RESTORATION FUND SHALL CONSIST OF MONEYS DEPOSITED
THEREIN BY THE STATE COMPTROLLER FROM THE ATTORNEY GENERAL OF THE STATE
OBTAINED THROUGH JUDGMENTS AND SETTLEMENTS WITH LENDING INSTITUTIONS FOR
SUBPRIME AND PREDATORY LOANS, FOR MORTGAGE SERVICING AND SECURITIZA-
TIONS, CLAIMS RELATED TO MORTGAGE PRACTICES, MORTGAGE BACKED SECURITIES,
CASES RELATED TO MORTGAGE AND MORTGAGE SECURITIES IN THE LONDON INTER-
BANK OFFERED RATE AND OTHER MORTGAGE FORECLOSURE RELATED CASES AND FROM
FEDERAL, STATE OR LOCAL GOVERNMENTS AND PRIVATE INVESTORS. NOTHING
CONTAINED IN THIS SECTION SHALL PREVENT THE STATE FROM RECEIVING GRANTS,
GIFTS 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, TWO, THREE AND FOUR FAMILY HOMES
AT DISCOUNTED RATES WITH THE INTENT OF MODIFYING THE MORTGAGE TO AN
AFFORDABLE RATE TO KEEP CURRENT HOMEOWNERS IN THE PROPERTY; AND
(B) ACQUIRE HOMES AT DISCOUNTED RATES FROM LENDERS, AND PURCHASE HOMES
AT AUCTION OR THROUGH SHORT SALE WITH THE INTENT TO:
(I) RENT OR SELL BACK TO HOMEOWNERS WITH AN AFFORDABLE LOAN;
(II) FUND LOCAL, NOT-FOR-PROFIT-DEVELOPMENT EFFORTS TO TURN VACANT
PROPERTIES INTO AFFORDABLE HOUSING;
(III) REHABILITATE DISTRESSED PROPERTIES FOR NEW OWNERS IF THE PROPER-
TY WAS VACANT; AND/OR
(IV) DEMOLISH HOMES BEYOND REPAIR.
4. THE URBAN DEVELOPMENT CORPORATION SHALL SELECT THE FUND MANAGER AND
PROGRAM MANAGER THROUGH THE REQUEST FOR PROPOSAL PROCESS.
5. THE FUND MANAGER SHALL:
(A) BE RESPONSIBLE FOR THE RECEIPT, MANAGEMENT AND EXPENDITURE OF
MONIES HELD IN THE COMMUNITY RESTORATION FUND;
(B) MAINTAIN BOOKS AND RECORDS PERTAINING TO ALL MONIES RECEIVED AND
DISBURSED PURSUANT TO THIS SECTION;
(C) 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 ACQUIRE DISTRESSED ASSETS AND PURCHASE MORT-
GAGE NOTES ON ONE, TWO, THREE AND/OR FOUR FAMILY HOMES, WHETHER CURRENT,
DELINQUENT AND/OR IN FORECLOSURE, OCCUPIED, VACANT OR ABANDONED, WHERE
PURCHASED:
(I) BY A FUND MANAGER AT CURRENT APPRAISED VALUES;
(II) THROUGH NEGOTIATED SALES AT FHA DISTRESSED ASSET STABILIZATION
PROGRAM SALES;
(III) THROUGH AUCTIONS, SHORT SALES, REAL ESTATE OWNED PROPERTIES OR
PROPERTIES IDENTIFIED BY THE NOT-FOR-PROFIT ORGANIZATIONS ON THE COMMU-
NITY RESTORATION FUND COUNCIL;
(E) HAVE THE AUTHORITY TO TRANSFER DISTRESSED ASSETS TO THE PROGRAM
MANAGER;
(F) WORK WITH THE COMMUNITY RESTORATION FUND COUNCIL TO DEVELOP STRAT-
EGIES FOR ACQUIRING DISTRESSED ASSETS AND TO IDENTIFY OPPORTUNITIES TO
ACQUIRE DISTRESSED ASSETS;
(G) WORK WITH THE PROGRAM MANAGER AND THE COMMUNITY RESTORATION FUND
COUNCIL TO IDENTIFY NOT-FOR-PROFIT DEVELOPERS ABLE TO IMPLEMENT DISPOSI-
TIONS TAILORED TO LOCAL NEEDS, WHETHER SALES TO NEW HOMEOWNERS, USE AS
A. 9826 3
AFFORDABLE RENTAL PROPERTY, OR DEMOLITION AND REPURPOSING FOR OTHER
COMMUNITY USES;
(H) MAKE FUNDS DIRECTLY AVAILABLE TO NOT-FOR-PROFIT ORGANIZATIONS AND
DEVELOPERS FOR USE TO ACQUIRE, REHABILITATE AND/OR FINANCE PROPERTIES
DIRECTLY. THESE FUNDS WOULD BE MADE AVAILABLE THROUGH A REQUEST FOR
PROPOSAL PROCESS CONDUCTED BY A STATE AGENCY IN CONSULTATION WITH THE
FUND MANAGER;
(I) DEVELOP A PLAN TO MAKE THIS A REVOLVING LOAN FUND; AND
(J) APPLY FOR FEDERAL OR PRIVATE GRANT MONEY THAT BECOMES AVAILABLE TO
CARRY OUT THE PURPOSE OF THIS SECTION.
6. THE PROGRAM MANAGER SHALL:
(A) OWN AND MANAGE THE DISTRESSED ASSETS ACQUIRED BY THE FUND MANAGER;
(B) HAVE THE POWER TO MODIFY MORTGAGE NOTES ON THE ACQUIRED ASSETS;
(C) WITH THE INPUT OF THE COMMUNITY RESTORATION FUND COUNCIL, DEVELOP
DISPOSITION STRATEGIES TAILORED TO THE NEEDS AND MARKET CONDITIONS IN
THE LOCAL COMMUNITIES WHERE THE DISTRESSED ASSETS ARE LOCATED;
(D) WORK WITH THE COMMUNITY RESTORATION FUND COUNCIL TO DETERMINE
OPTIMAL OUTCOMES FOR ACQUIRED MORTGAGE NOTES AND PROPERTIES;
(E) HAVE A RELATIONSHIP WITH A SPECIALTY MORTGAGE SERVICER WHOSE ROLE
IS TO ASSIST WITH MODIFICATIONS OF ACQUIRED MORTGAGE NOTES;
(F) WORK WITH THE FUND MANAGER AND THE COMMUNITY RESTORATION FUND
COUNCIL TO DEVELOP MODIFICATION CRITERIA;
(G) WORK WITH LOAN SERVICERS AND HOUSING COUNSELORS TO ASSIST BORROW-
ERS WITH APPLICATIONS FOR LOAN MODIFICATIONS AND REFINANCING; AND
(H) WORK WITH THE FUND MANAGER AND THE COMMUNITY RESTORATION FUND
COUNCIL 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.
S 4. Community restoration fund council. 1. There is hereby estab-
lished the community restoration fund council consisting of thirty
members. The purpose of such council is to serve as an advisory board to
both the community restoration fund and the program manager, assist with
the identification of opportunities to acquire distressed assets, assist
in the development of disposition strategies tailored to meet the needs
and market conditions in the local communities where distressed 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 crite-
ria, and work with the fund manager and program manager 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.
2. The members of the council shall consist of:
a. The commissioner of the New York state department of economic
development;
b. The commissioner of New York state homes and community renewal;
c. Twenty-eight community based, not-for-profit members with two
members from each of the regional economic development regions, with the
exception of New York city where there will be two community based,
not-for-profit members from each borough.
3. No member shall receive any compensation for his or her services.
S 5. Annual report to the legislature. The urban development corpo-
ration shall submit a report to the governor, the speaker of the assem-
bly and the temporary president of the senate on or before the first of
October, and annually thereafter, describing the use of the community
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restoration fund pursuant to this act, including asset purchases, loan
modifications, home sales, rentals, property rehabilitations 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 urban development corporation is hereby authorized to promul-
gate rules and regulations in accordance with the state administrative
procedure act that are necessary to fulfill the purposes of this act.
Such rules and regulations are to be completed within one hundred eighty
days of the effective date of this act.
S 7. This act shall take effect immediately.