Senate Bill S6413

2017-2018 Legislative Session

Relates to the powers of the New York State Housing Finance Agency and the New York State Mortgage Agency

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Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to housing, construction and community development
May 17, 2017	referred to housing, construction and community development

2017-S6413 (ACTIVE) - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: Private Housing Finance Law
Laws Affected:: Amd §44, Priv Hous Fin L; amd §§2427 & 2404, Pub Auth L

2017-S6413 (ACTIVE) - Summary

Relates to the powers of the New York state housing finance agency and the New York state mortgage agency.

2017-S6413 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S6413

 TITLE OF BILL :  An act to amend the private housing finance law and
the public authorities law, in relation to the powers of the New York
State Housing Finance Agency and the State of New York Mortgage Agency

 PURPOSE OF THE BILL :

This bill would grant: (i) the New York State Housing Finance Agency
("HFA") and the State of New York Mortgage Agency Mortgage Insurance
Fund (the "SONYMA MIF") authority to form one or more subsidiaries for
the purpose of taking title to property in connection with a
foreclosure or other exercise of remedies under a mortgage or other
security instrument held by HFA or the SONYMA MIF, in order to limit
the potential liability of HFA or the SONYMA MIF in connection with
taking ownership of a foreclosed property, and (ii) the State of New
York Mortgage Agency ("SONYMA") authority to sell its mortgages at
private sales.

 SUMMARY OF PROVISIONS :

HFA

Section 1 of the bill would add a new Private Housing Finance L. §
44(33) enabling HFA to create one or more subsidiaries to take title
to property in connection with a foreclosure or other exercise of

remedies under a mortgage or other security instrument held by HFA or
the SONYMA MIF, in order to limit the potential liability of HFA or
the SONYMA MIF in connection with taking such ownership.

SONYMA MIF

Section 2 of the bill would add Public Authorities L. § 2427(11) to
enable the SONYMA MIF to create one or more subsidiaries for the same
purpose as described in Section 1.

SONYMA


Section 3 of the bill would amend Public Authorities L. § 2404(9) to
remove the limitation on the SONYMA's authority to sell mortgages at
private sales.

Section 4 of the bill would provide for an immediate effective date.

 JUSTIFICATION :

HFA

Under current law, HFA has the power to foreclose, take possession of,
and otherwise take enforcement actions with respect to any property on
which it has made or financed a mortgage loan. However, current law
does not provide HFA the power to form a subsidiary for the purpose of
taking title to and possession of any foreclosed property.

In order to protect FIFA from potential liability in connection with
foreclosing on and taking ownership of a property on which HFA has
made or financed a mortgage loan following a default under such
mortgage, it would be prudent and desirable for a subsidiary of HFA to
take title to such property rather than HFA directly. Having a
subsidiary take ownership of a foreclosed property would help protect
FIFA against potential liabilities in connection with such property,
including environmental liabilities and third party tort claims. The
ability to create a subsidiary to own foreclosed properties is of
increased importance following HFA's acquisition of the State's

Mitchell Lama portfolio, which contains a number of nonperforming or
under-performing loans.

SONYMA MIF

Under current law, SONYMA MIF has the power to foreclose, take
possession of, and otherwise take enforcement actions with respect to,
any property which it insures. However, current law does not provide
SONYMA MIF the power to form a subsidiary for the purpose of taking
title to and possession of any foreclosed property.

In order to protect SONYMA MIF from potential liability in connection
with foreclosing on and taking ownership of a property on which it has
an insurance following a default under such mortgage, it would be
prudent and desirable for a subsidiary of SONYMA MIF to take title to
such property rather than the SONYMA MIF directly. Having a subsidiary
take ownership of a foreclosed property would help protect the SONYMA
MIF against potential liabilities in connection with such property,
including environmental liabilities and third party tort claims. The
ability to create a subsidiary to own foreclosed properties is of
increased importance given the importance of the SONYMA MIF in recent
years as a source of insurance support and as a funding source for
many of the State's affordable housing programs.

SONYMA

Under current law, SONYMA can only sell mortgages in private sales to
an agency of the federal government, the federal national mortgage
association, or to a bank from which it has originally purchased the
loans. This bill would allow SONYMA to avail itself of opportunities
to sell its loans to banks or other entities, especially when SONYMA
is unable to issue bonds, or when bonds are not the best financing
option. The mortgages would be sold at par. A number of New York State
lenders have expressed interest in purchasing SONYMA loans for their
own portfolios. Typically the best execution for SONYMA is to bond for
its mortgage acquisitions, but when access to capital markets is
negatively impacted it is prudent to have alternate sources of
mortgage acquisitions.

SONYMA's mortgage programs are continuously available to mortgagors
throughout New York State. Qualifying mortgage loans made to low and
moderate income homebuyers are delivered to SONYMA by its
participating banks on a weekly basis for purchase by SONYMA, at
stated rates of interest. SONYMA funds the loan purchases primarily
through the issuance of tax-exempt bonds in the capital markets.
Throughout its history, SONYMA had never been precluded from issuing
bonds on a regular basis and when needed to fund bond purchases.

The lack of capital market access that comes with fiscal crises, plus
the increased costs and lessened liquidity for variable rate bonds
make it imperative for SONYMA to avail itself of alternative ways of
acquiring funds to pay for its mortgage loan commitments, as provided
for in this bill.

 PRIOR LEGISLATIVE HISTORY :

none.

 FISCAL IMPLICATIONS :

none.

 EFFECTIVE DATE :
immediate.

2017-S6413 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6413
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               May 17, 2017
                                ___________
 
 Introduced  by  Sen.  LITTLE -- (at request of the Division of Housing &
   Community Renewal) -- read twice and ordered printed, and when printed
   to be committed to the Committee on Housing, Construction and Communi-
   ty Development
 
 AN ACT to amend the private housing finance law and the public  authori-
   ties  law,  in  relation  to  the powers of the New York State Housing
   Finance Agency and 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. Section 44 of the private housing finance law is amended by
 adding a new subdivision 33 to read as follows:
   33.  (A)  TO FORM ONE OR MORE SUBSIDIARIES FOR THE PURPOSE OF LIMITING
 THE POTENTIAL LIABILITY OF THE AGENCY WHEN  EXERCISING  THE  POWERS  AND
 DUTIES  CONFERRED UPON THE AGENCY BY THIS ARTICLE IN CONNECTION WITH THE
 EXERCISE OF REMEDIES  BY  THE  AGENCY  AGAINST  ANY  BORROWER  THAT  HAS
 DEFAULTED  IN  ITS OBLIGATIONS UNDER ITS LOAN AGREEMENT OR MORTGAGE WITH
 THE AGENCY AND FOR WHICH AN EVENT OF DEFAULT HAS BEEN  DECLARED  BY  THE
 AGENCY.  EACH  SUCH  SUBSIDIARY CREATED PURSUANT TO THIS SUBDIVISION MAY
 EXERCISE AND PERFORM ONE OR MORE OF THE PURPOSES, POWERS, DUTIES,  FUNC-
 TIONS,  RIGHTS  AND RESPONSIBILITIES OF THE AGENCY (OTHER THAN THE ISSU-
 ANCE OF INDEBTEDNESS) IN CONNECTION WITH REAL AND PERSONAL PROPERTY WITH
 RESPECT TO WHICH THE AGENCY HOLDS OR HELD A MORTGAGE, SECURITY  INTEREST
 OR  OTHER  COLLATERAL INTEREST INCLUDING: (I) BIDDING FOR, TAKING, HOLD-
 ING, SELLING, CONVEYING, ASSIGNING OR TRANSFERRING TITLE TO SUCH PROPER-
 TY; (II) ENTERING INTO LEASES, SUBLEASES, OPERATING AGREEMENTS, SECURITY
 AGREEMENTS, LOAN AGREEMENTS OR OTHER ENCUMBRANCES OR  ARRANGEMENTS  WITH
 REGARD  TO  SUCH  PROPERTY  AND  ACTING  IN A MANNER CONSISTENT WITH THE
 RIGHTS, OBLIGATIONS OR RESPONSIBILITIES OF THE OWNER  OF  SUCH  PROPERTY
 PURSUANT  TO  SUCH  AGREEMENTS  OR  ENCUMBRANCES; AND (III) ASSUMING ANY
 INDEBTEDNESS OR OTHER LIABILITIES SECURED BY SUCH  PROPERTY.    NOTWITH-
 STANDING  ANY  OTHER  PROVISION  OF  LAW  TO  THE  CONTRARY,  BUT IN ALL
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD10100-01-7

 S. 6413                             2
 
 INSTANCES SUBJECT TO THE PROVISIONS OF ANY  CONTRACT  WITH  BONDHOLDERS,
 THE  TRANSFER OF TITLE TO ANY SUCH SUBSIDIARY OR ANY OTHER ACTIONS TAKEN
 BY THE AGENCY OR SUCH SUBSIDIARY TO ENFORCE THE  AGENCY'S  RIGHTS  UNDER
 THE  MORTGAGE,  SECURITY  INTEREST  OR  OTHER  COLLATERAL INTEREST OR TO
 PROTECT, ACQUIRE, MANAGE OR DISPOSE OF THE PROPERTY SHALL BE  DEEMED  TO
 BE  A  CORPORATE PURPOSE OF THE AGENCY AND SHALL NOT IMPAIR THE VALIDITY
 OF ANY BONDS, NOTES OR OTHER OBLIGATIONS OF  THE  AGENCY  TO  WHICH  THE
 MORTGAGE, SECURITY INTEREST OR OTHER COLLATERAL INTEREST RELATES.
   (B)  EACH SUCH SUBSIDIARY AUTHORIZED BY PARAGRAPH (A) OF THIS SUBDIVI-
 SION SHALL BE ESTABLISHED IN THE FORM OF A PUBLIC BENEFIT CORPORATION BY
 EXECUTING AND FILING WITH THE SECRETARY OF STATE A CERTIFICATE OF INCOR-
 PORATION WHICH SHALL IDENTIFY THE AGENCY AS THE ENTITY  ORGANIZING  SUCH
 SUBSIDIARY  AND  SET  FORTH  THE  NAME OF SUCH SUBSIDIARY PUBLIC BENEFIT
 CORPORATION, ITS DURATION, THE LOCATION OF ITS PRINCIPAL OFFICE AND  ITS
 CORPORATE PURPOSES AS PROVIDED IN THIS SUBDIVISION AND WHICH CERTIFICATE
 MAY  BE  AMENDED  FROM  TIME TO TIME BY THE FILING OF AMENDMENTS THERETO
 WITH THE SECRETARY OF STATE. EACH SUCH SUBSIDIARY SHALL BE ORGANIZED  AS
 A PUBLIC BENEFIT CORPORATION, SHALL BE A BODY POLITIC AND CORPORATE, AND
 SHALL  HAVE  ALL  THE  PRIVILEGES,  IMMUNITIES, TAX EXEMPTIONS AND OTHER
 EXEMPTIONS OF THE AGENCY. THE MEMBERS OF EACH SUCH SUBSIDIARY  SHALL  BE
 THE  SAME  AS  THE  MEMBERS  OF THE AGENCY AND THE PROVISIONS OF SECTION
 FIFTY-SIX-A OF THIS ARTICLE SHALL IN ALL RESPECTS APPLY TO SUCH  MEMBERS
 WHEN ACTING IN SUCH CAPACITY.
   (C)  NOTHING  IN  THIS  SUBDIVISION  SHALL  BE CONSTRUED TO IMPOSE ANY
 LIABILITIES, OBLIGATIONS OR RESPONSIBILITIES OF ANY SUCH SUBSIDIARY UPON
 THE AGENCY AND THE AGENCY SHALL  HAVE  NO  LIABILITY  OR  RESPONSIBILITY
 THEREFOR UNLESS THE AGENCY EXPRESSLY AGREES TO ASSUME THE SAME.
   (D) EACH SUCH SUBSIDIARY CREATED PURSUANT TO THIS SUBDIVISION SHALL BE
 SUBJECT  TO  ANY  OTHER  PROVISION OF THIS ARTICLE PERTAINING TO SUBSID-
 IARIES OF PUBLIC AUTHORITIES.
   § 2. Section 2427 of the public authorities law is amended by adding a
 new subdivision 11 to read as follows:
   11. (A) TO FORM ONE OR MORE SUBSIDIARIES FOR THE PURPOSE  OF  LIMITING
 THE  POTENTIAL  LIABILITY  OF  THE  AGENCY ONLY WITH RESPECT TO INSURING
 MORTGAGE LOANS AND PROVIDING  DEVELOPMENT  CORPORATION  CREDIT  SUPPORT.
 EACH  SUCH  SUBSIDIARY CREATED PURSUANT TO THIS SUBDIVISION MAY EXERCISE
 AND PERFORM ONE OR MORE OF  THE  PURPOSES,  POWERS,  DUTIES,  FUNCTIONS,
 RIGHTS AND RESPONSIBILITIES OF THE AGENCY WITH RESPECT TO INSURING MORT-
 GAGE  LOANS  AND  PROVIDING  DEVELOPMENT  CORPORATION  CREDIT SUPPORT IN
 CONNECTION WITH REAL AND PERSONAL PROPERTY WITH  RESPECT  TO  WHICH  THE
 AGENCY  HOLDS  OR HELD A MORTGAGE, SECURITY INTEREST OR OTHER COLLATERAL
 INTEREST INCLUDING: (I) BIDDING FOR, TAKING, HOLDING,  SELLING,  CONVEY-
 ING,  ASSIGNING  OR  TRANSFERRING  TITLE TO SUCH PROPERTY; (II) ENTERING
 INTO LEASES, SUBLEASES, OPERATING AGREEMENTS, SECURITY AGREEMENTS,  LOAN
 AGREEMENTS  OR  OTHER  ENCUMBRANCES  OR ARRANGEMENTS WITH REGARD TO SUCH
 PROPERTY AND ACTING IN A MANNER CONSISTENT WITH THE RIGHTS,  OBLIGATIONS
 OR  RESPONSIBILITIES  OF  THE  OWNER  OF  SUCH PROPERTY PURSUANT TO SUCH
 AGREEMENTS OR ENCUMBRANCES; AND (III) ASSUMING ANY INDEBTEDNESS OR OTHER
 LIABILITIES  SECURED  BY  SUCH  PROPERTY.    NOTWITHSTANDING  ANY  OTHER
 PROVISION  OF  LAW  TO THE CONTRARY, BUT IN ALL INSTANCES SUBJECT TO THE
 PROVISIONS OF ANY CONTRACT OF INSURANCE, THE TRANSFER OF  TITLE  TO  ANY
 SUCH SUBSIDIARY OR ANY OTHER ACTIONS TAKEN BY THE AGENCY OR SUCH SUBSID-
 IARY  TO ENFORCE THE AGENCY'S RIGHTS UNDER THE MORTGAGE, SECURITY INTER-
 EST OR OTHER COLLATERAL INTEREST  OR  TO  PROTECT,  ACQUIRE,  MANAGE  OR
 DISPOSE OF THE PROPERTY SHALL BE DEEMED TO BE A CORPORATE PURPOSE OF THE
 AGENCY.

 S. 6413                             3
 
   (B)  EACH SUCH SUBSIDIARY AUTHORIZED BY PARAGRAPH (A) OF THIS SUBDIVI-
 SION SHALL BE ESTABLISHED IN THE FORM OF A PUBLIC BENEFIT CORPORATION BY
 EXECUTING AND FILING WITH THE SECRETARY OF STATE A CERTIFICATE OF INCOR-
 PORATION WHICH SHALL IDENTIFY THE AGENCY AS THE ENTITY  ORGANIZING  SUCH
 SUBSIDIARY  AND  SET  FORTH  THE  NAME OF SUCH SUBSIDIARY PUBLIC BENEFIT
 CORPORATION, ITS DURATION, THE LOCATION OF ITS PRINCIPAL OFFICE AND  ITS
 CORPORATE PURPOSES AS PROVIDED IN THIS SUBDIVISION AND WHICH CERTIFICATE
 MAY  BE  AMENDED  FROM  TIME TO TIME BY THE FILING OF AMENDMENTS THERETO
 WITH THE SECRETARY OF STATE. EACH SUCH SUBSIDIARY SHALL BE ORGANIZED  AS
 A PUBLIC BENEFIT CORPORATION, SHALL BE A BODY POLITIC AND CORPORATE, AND
 SHALL  HAVE  ALL  THE  PRIVILEGES,  IMMUNITIES, TAX EXEMPTIONS AND OTHER
 EXEMPTIONS OF THE AGENCY. THE MEMBERS OF EACH SUCH SUBSIDIARY  SHALL  BE
 THE  SAME  AS  THE  MEMBERS  OF THE AGENCY AND THE PROVISIONS OF SECTION
 FIFTY-SIX-A OF THE PRIVATE HOUSING FINANCE LAW  SHALL  IN  ALL  RESPECTS
 APPLY TO SUCH MEMBERS WHEN ACTING IN SUCH CAPACITY.
   (C)  NOTHING  IN  THIS  SUBDIVISION  SHALL  BE CONSTRUED TO IMPOSE ANY
 LIABILITIES, OBLIGATIONS OR RESPONSIBILITIES OF ANY SUCH SUBSIDIARY UPON
 THE AGENCY AND THE AGENCY SHALL  HAVE  NO  LIABILITY  OR  RESPONSIBILITY
 THEREFOR UNLESS THE AGENCY EXPRESSLY AGREES TO ASSUME THE SAME.
   (D) EACH SUCH SUBSIDIARY CREATED PURSUANT TO THIS SUBDIVISION SHALL BE
 SUBJECT  TO  ANY  OTHER  PROVISION OF THIS ARTICLE PERTAINING TO SUBSID-
 IARIES OF PUBLIC AUTHORITIES.
   § 3. Subdivision 9 of section 2404 of the public authorities  law,  as
 amended  by  chapter  1023  of  the  laws of 1971, is amended to read as
 follows:
   (9) Subject to any agreement with bondholders or noteholders, to  sell
 any  mortgages  or  other  personal  property  acquired by the agency at
 public or private sale and at such price or prices as  it  shall  deter-
 mine[,  provided,  however,  that  a private sale shall be limited to an
 agency of the federal government, the federal national mortgage  associ-
 ation,  or  a  sale of a mortgage to a bank from which it was originally
 purchased]. If the agency determines to sell mortgages at public sale, a
 notice of such sale shall be published at least once at least five  days
 prior  to  the  date  of  such  sale in a financial newspaper or journal
 published in the city of New York;
   § 4. This act shall take effect immediately.

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Senate Bill S6413

Sponsored By

Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

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2017-S6413 (ACTIVE) - Details

2017-S6413 (ACTIVE) - Summary

2017-S6413 (ACTIVE) - Sponsor Memo

2017-S6413 (ACTIVE) - Bill Text download pdf

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Sponsored By

Betty Little

Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Actions

2017-S6413 (ACTIVE) - Details

2017-S6413 (ACTIVE) - Summary

2017-S6413 (ACTIVE) - Sponsor Memo

2017-S6413 (ACTIVE) - Bill Text download pdf

Comments